Though family offices date back to the 19^th century, they haven’t garnered that much publicity until recently. Why? An increasing number of hedge fund managers have decided to give their outside capital back to the institutional investors and convert their public hedge fund to a family office, where they can manage their own capital.  This in turn, has led to a rise in the number of opportunities available for hedge fund professionals to diversify their experience.

There are a number of reasons why these managers have decided to make this transition, with one of the main benefits being that they don’t have to register with the SEC as an investment adviser.  As a result, family offices don’t have to answer to the same level of governmental oversight. In addition, according to a recent New York Times article, opening a family office gives the family these three important things: control, security, and quality.  Control comes from knowing the people who work at the office work on the family’s behalf; security means that only the family members know what they have; and quality suggests they have employees who are invested in best industry practices.

However, this trend toward family offices doesn’t only benefit the family running the office, but other professionals who work at hedge funds as well. “The rise of the family office has led to an uptick in demand for portfolio managers and analysts, as well as other hedge fund professionals,” explains Sara Katz, Director of The Execu|Search Group’s Financial Services division.  “Though family offices specifically manage the family’s personal fortune, they need to be treated like a well-run hedge fund.  As a result, the family office needs to hire high quality investment professionals who they can trust to oversee and manage the family’s capital.”

Those who make the transition from a hedge fund to a family office may enjoy a variety of benefits including:

• The flexibility that comes with working for one person (or one family)
• More leeway on mandates and investment strategies
• “Sticky money” –  Since capital is invested with a long-term horizon, there is less risk of capital being withdrawn from the family office if the investments perform poorly one month or quarter

“If you have experience working at a hedge fund and are ready to make a change to something smaller, you’re in an excellent position to make a move to a family office,” notes Sara.  “As we move further into 2014, we expect more of these opportunities to become available, so now is the time to start considering a change.”