Long-term incentives and carry in family offices: the data

Long-term incentives are now used by a majority of US single family offices and by a growing minority elsewhere. Morgan Stanley's 2025 data puts prevalence at 54% of all single family offices and 62% of investment-focused ones, with co-investment overtaking deferred compensation as the most common structure for the first time since the series began. Carried interest is the leading instrument in the UK, US and Asia among those who receive an LTIP according to KPMG and Agreus, while phantom equity remains rare.

How many offices use them

Morgan Stanley's 2025 Single Family Office Compensation Report found 54% of all single family offices and 62% of investment-focused offices operate a long-term incentive plan. Size matters: 71% of investment-focused offices above $1bn use one, against 54% below. Trish Botoff of Botoff Consulting told Family Wealth Report in 2025 that LTI use across family offices has risen to 54% over ten years, reaching 72% at offices with $2.5bn or more, and that among family investment firms above $2.5bn it rose from 62% to 86%.

Outside the US the figures are lower. The KPMG and Agreus 2025 Global Family Office Compensation Benchmark Report found 28% of individual respondents globally receive an LTIP, with 33% in the US and the Americas and 26% in continental Europe. Campden Wealth and HSBC's European Family Office Report 2024 found 80% of European offices pay bonuses, supplemented by co-investment opportunities at 26%, profit shares at 12% and phantom equity at 5%.

Which structures are used

Morgan Stanley's 2025 report notes that co-investment overtook deferred incentive compensation as the most prevalent LTI type for the first time since data collection began in 2015. Botoff described deferred compensation, co-investment and carried interest as the three main instruments in the market.

The KPMG and Agreus 2025 regional data shows how the mix shifts by geography. Among US LTIP recipients, 68% receive carried interest, 61% co-investment and 41% a three or five year target bonus. In the UK carried interest leads at 50%, with co-investment at 30%. In Asia carried interest is 62% and co-investment only 23%, with rolling target bonuses at 46%. Heidrick & Struggles' 2025 survey found that long-term instruments such as carried interest and phantom equity play a larger role in European packages than in US ones, where cash bonuses dominate.

How the plans are built

Morgan Stanley's 2025 report describes the mechanics in some detail. Among investment-focused offices with an LTI, 94% extend eligibility to executives, 52% to management and 38% to staff. 76% provide upside sharing rather than static awards, and 76% of firms with LTI plans provide a bonus or reward to encourage participation. Performance is measured on annual returns at 52% of offices; 57% of those with LTIs use absolute return measures and 45% use relative return.

Co-investment is almost always voluntary. 96% of offices in Morgan Stanley's 2025 data report that participation is optional, and 52% run it through special purpose vehicles or sidecars rather than direct participation in the main balance sheet. The design questions follow from the investment model: an allocator can offer deferred bonuses tied to portfolio returns; a direct investor can offer deal-by-deal carry or co-investment that mirrors private equity economics.

Why offices adopt them

The stated purpose is retention. The AlTi and Campden 2025 Family Office Operational Excellence Report found 54% of large and 61% of mid-sized offices have difficulty retaining staff, and named an unclear long-term career path as the main obstacle in investment roles. A multi-year incentive with vesting substitutes, in part, for the promotion ladder that a small office cannot offer. Adam Ratner of Campden Wealth told Crain Currency in 2024 that senior packages increasingly include co-investment, phantom stock and discretionary bonuses. Retention more broadly is covered in retaining non-family executives.

Closing

The benchmarks show LTIs moving from exception to norm at larger US offices, with co-investment and carry displacing deferred cash. Smaller and non-US offices lag, and the KPMG and Agreus 2025 finding that 65% of individual respondents receive no performance bonus at all suggests the gap between the best-structured offices and the rest remains wide. Pay benchmarks are in family office compensation in 2026.