Investment banks, fed up with private-equity firms poaching their junior bankers, are asking trainees to codify intentions and disclose more about their employment plans.
Goldman Sachs will ask analysts to confirm their loyalty every three months and that they haven’t lined up jobs elsewhere, Bloomberg reported earlier this week. Morgan Stanley told analysts in May they must promptly disclose if they have secured future employment or risk disciplinary action, including being fired, The Wall Street Journal reported. Last month, JPMorgan Chase told incoming graduates they will be fired if they are caught accepting a job before they complete their first 18 months at the firm.
In response, some private-equity firms, including Apollo Global Management and General Atlantic, have already said they would back off and not extend job offers as early.
But there is still tension between banks and asset managers over talent. Competition for top recruits remains high and each side is doing what they can to keep them in their seats, or lure them into a new one.
Family offices are also competing in a talent pool that is too small to meet the demand. Will they start asking employees to formally declare and reiterate their loyalty like the banks?
Recruiters interviewed by Modus could not recall a family office that required employees to explicitly confirm their dedication when they were hired, or on a rolling basis. They were also unaware of any offices that required employees to promptly disclose future employment or face some kind of discipline, including being fired.
Family offices ask workers to sign standard employment contracts as well as non-disclosure and non-compete agreements. Employees often know personal information about the beneficiaries and have access to confidential information about operating companies a family owns. In some cases, part of an office’s investment management could be proprietary and it will work to protect that. A garden leave, when someone remains an employee but is relieved of their work duties and is prohibited from working for a competitor, is rare.
An explicit pledge to an office isn’t necessary because offices are so thoughtful about their hiring and already expect fealty.
Family office jobs have “baked in loyalty,” said David Chie, founder of Maple Drive, an “AI-first” recruiting firm for family offices and asset managers.
“You've hired these individuals because they're going to be stewards of your capital. You're allowing them access to your deepest secrets, and they wouldn't have done that and given you that sort of honor if you didn't have some mutual relationship, mutual respect,” Chie said.
Before he begins a search, Brian Adams, a partner at the recruiting firm Mack International, said offices will often give him a list of places he can’t recruit candidates from. Clients want to avoid irritating a friend or colleague, or spoiling professional relationships, by poaching one of their employees, he said. There is less consideration in investment banking and private equity, where high performance is prioritized.
“Some of these families have been doing business together for a very long time, or have known each other socially for a very long time,” Adams said. There’s a “cultural difference between working with a family versus working with an institutional platform with public market shareholders that they just want quarterly returns.”
Candidates are thoughtful, too, because they don’t want to have a bad reputation in the small family-office universe and miss out on opportunities. There are only about 3,500 single-family offices in North America and executive positions — if the family has their way — only turn over every 10, 15 or even 20 or more years. By the time a candidate narrows down their search by location, professional fit, personal connection and other factors, the number of openings shrinks fast, often to zero.
“If a person leaves you in the lurch, 30 days before tax season, and they’re a CFO, that's just a bad look. Nobody wants to do that,” Adams said. “And I think for a lot of families that are high functioning, they understand that talent is going to leave and they would rather have a good relationship with them so that they can leverage that relationship for deal flow or experience share or networking purposes.”
Loyalty in writing might not be happening at offices now, or ever, but that could change. Family offices continue to grow in size, professionalize, and adopt best practices from other industries and companies, including employment practices, Chie said. How exactly offices will evolve in the future can’t be known.
An attempt to formalize or force loyalty could also backfire.
“As someone with an HR background, I would say a company that needs to request a loyalty pledge every three months has more fundamental issues. Look around at the headlines about graduate and campus recruitment, and large employers simultaneously reducing their intake of grads due to AI. It is no wonder that analysts want to keep their options open and even have a back-up plan,” Katherine Travell, CEO and partner at Stryde Search, a recruitment firm focused on family offices, said.
Travell added: “Family offices are not recruiting cohorts of junior talent in the way that IBs do. Loyalty, trust, and relationships are common features of many family offices. I think a loyalty pledge would need to be framed in a constructive way to be healthy and helpful.”
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