There’s a war for talent in the family office world. An astonishing 60% of new hires now come from outside traditional family office networks, and to compete, families need to go the extra mile.

The best people expect more than a pleasant environment and a steady paycheck, they want to participate in the upside they help create.

In July, Morgan Stanley and Botoff Consulting released their latest compensation report for family offices. Today, we’re looking at their findings and what it means for family offices.

Long-term incentive (LTI) plans are fast becoming standard practice rather than a nice-to-have benefits.

Structured properly, they align everyone’s interests around performance, accountability, and staying the course through market cycles.

Let’s look at what’s actually happening, and why so many family offices are rethinking how they pay and motivate their teams.

According to the 2025 Morgan Stanley + Botoff Consulting report, 62% of investment-focused family offices now have an LTI plan in place.

That’s up from 54% last cycle.

And if you look at the largest firms (those with more than $1 billion AUM) the figure jumps to 71%.

Why the jump?

In a word: competition.

When everyone’s fishing in the same small talent pool, you can’t fall behind.

LTIs help create stickiness. They keep people engaged for the long haul, not just the next bonus cycle.

As Mirko Tagliabue of family office and executive recruiter Tagliabue & Partners says, it’s all about meeting the expectations of the candidates:

“To secure top talent from outside the family-office sphere, we’re seeing LTI plans evolve into multi-year, performance-vested packages—combining co-investment, carried interest, and tailored ESG milestones—to meet candidate expectations shaped by private equity and hedge-fund norms.”

The report breaks LTIs into a few core categories.

Co-investment opportunities (57% of family offices with LTIs used these)
Employees can put their own money into specific investments alongside the family.
This is the most popular approach. Sometimes key employees put in their own capital, sometimes they’re offered leverage, with either recourse or non-recourse loans.
Having “skin in the game” aligns incentives without handing over equity in the family office itself.

Co-investments can also act as a useful signal to the family about employees’ confidence in specific investments and portfolios.

Deferred incentive compensation (56%)
This is incentive pay that is earned now but only paid out in the future after vesting periods.
Basically, bonuses that vest over time. These locks people into the family for longer periods.

Carried interest or “phantom carry” (38%)
Carried interest provides a share of investment profits over a hurdle rate, similar to a classic private equity model.
Some family offices set up carry pools, sometimes real, sometimes synthetic, so that top talent gets a cut of any big wins.

Profit-sharing plans (19%)
These plans distribute a portion of annual profits to employees based on predefined formulas. They allow employees to share gains in line with the family office returns.

Operating company equity or phantom equity (8% and 7% respectively)
Employees receive real shares or synthetic equity linked to the value of an operating business.
More common when the family office manages big operating businesses in addition to financial investments.

For insight on who gets LTI plans, how performance is measured, plus a word of caution…