Impact investing lies at the intersection of financial gains and social returns, posing a unique challenge for Family Offices. They must balance heart and intellect in their decision-making, navigating emotion-driven choices while honouring their history and building a strong legacy. Integrating Emotional Intelligence (EQi) strategies enhance these decisions, essential for the longevity of family businesses.
Investing with EQi: Rethinking the Rulebook
Financial resources and social progress are deeply intertwined. Effecting societal change requires a two-fold approach. First, it necessitates a financial investment and a return on that investment. Second, it involves creating metrics to measure and report on the impact.
This requires decision-maker individuals to think deeper about the impact of their money, where it goes, and what it will do.
Alternative investment portfolios are no longer financial receipts and growth. They are rather a reflection of a family business’s values, ethics, and purpose. This is especially the case with Family Office.
These alternative investments are vital representations of family values. But, they also interweave the emotional and traditional elements of family dynamics that influence business decisions.
This is where emotion clouds the clarity and flow of the alternative investment decision process as blood is thicker than water.
EQi for Emotional Resilience in Family Office Investments
Overlapping the diversity of values, experiences, traditions, and education within a family, dilutes a logical approach to an otherwise purpose-led alternative investment decision. Thus, understanding alternative investment through emotional resilience alongside logic is essential.
Imagine your family business with an opportunity to acquire a major stake in a company. This acquisition was aligned with values, financial, and future vision. Harriet, a second-generation decision maker, spent months conducting due diligence with both parties and legal to ensure a smooth and efficient acquisition. The paperwork was ready, and both parties were satisfied with the agreement. But, during the final review, Harriet’s father, David, the Family Office patriarch, refused to sign. His reason? A personal grievance with someone on the other side of the deal.
Harriet explained the financial benefits, future prospects, and potential opportunities. But David’s mind was set. As a result, the emotionally-driven decision withdrew the sale. Months of effort turned out to be fruitless. The consequence is a regression, redirecting from their future vision they all agreed to build together.
This created friction between Harriet and her father. Harriet questioned her desire to engage in the Family Office matters. Personal grievances are common and they muddy the business waters. They often make it difficult to separate the business deal from effective problem-solving. On the other hand, integrating EQi strategies allows Family Offices to step back, identify the root issue, and develop a plan.
EQi alongside IQ becomes essential for Family Offices
What is EQi? Emotional Intelligence, or EQi, is an individual’s dynamic set of skills, and how they emerge in action.
This subset of skills that make up EQi falls under three pillars: emotional and social functioning, well-being, and performance. They manifest in traits from impulse control, to problem-solving, to empathy, to stress tolerance, and more. But, an important aspect of EQi is an individual’s ability to build their skillset and adopt strategies to enhance their level of EQi. Improving EQi requires time, energy, and effort similar to IQ.
Remember David’s abrupt decision? He was afraid with a desire to protect his family and the success he already achieved. He avoided losing his purpose and footing in a modernised world. David is a smart investor. Yet, his emotional response created an unexpected rift in family dynamics. Even further, he has the potential to hinder well-considered future business decisions.
Looking at this situation through the lens of EQi suggests an alternative approach. By pausing and addressing his grievances with the family before the meeting, you create inclusivity. Here lies the opportunity to reach a consensus and decide on the next steps together.
Does that mean his decision to call off the deal was inaccurate? No. Not necessarily. But, by communicating and distinguishing between EQi and IQ, the family establishes a decision-making framework. This new framework enhances intra-family communication. It also optimises their approach to future generation engagement while achieving goals and impact.
Equati is a tool designed to integrate EQ into Family Offices’ alternative investment strategy. Discover alternative investments aligned with your family values through Equati’s scoring system. You can optimise time and foster meaningful conversations across generations through Equati’s platform.
3 Ways to Leverage EQ to Make Alternative Investment Decisions
Leveraging EQ begins with these 3 steps:
Reflection
Communication
Planning
Reflection
Many alternative investments are born from personal pain, passions, or a gap in the market. Equati’s platform allows you to select core values and articulate your investment thesis. Hence, this approach aligns your portfolio with your ethical and financial goals.
Communication
Equati creates a space for regenerative family communication. Everyone has a voice in this value-aligned progress. Equati involves key stakeholders by assigning roles to family members and advisors. This promotes collaboration and ensures everyone has equal opportunity in the decision process.
Planning
Equati understands the evolving emotions of impact investing. Equati platform helps families visualise how today’s decisions can ensure sustained tradition tomorrow. Discover investments aligned with your family values through Equati’s scoring system. Foster meaningful intergenerational conversations in Family Office. Equati optimizes your time and energy. With Equati, families and advisors experience a transparent, intuitive, and customer-centric investment process.
EQ is critical to decision making and legacy planning. It helps you and your family overcome emotional barriers that hinder progress.
Connecting human EQ with data and technology enables integrative strategies. Family Offices will be able to make informed, values-driven choices that honour their legacy and drive growth. To see how Equati can help your family enhance its EQ and leverage your legacy, schedule a demo here today.
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