Rather than allowing family values and ethics to hinder a business's growth and success, they should be leveraged to enhance it: Equati is the catalyst that makes this happen.
In a rapidly changing technology landscape, agility and evolution are the driving forces in successful business management. This is a turning point in world development, which puts immense pressure on family offices to preserve their legacy, both financially and ethically. This is often in direct conflict with tradition.
Innovation Relies on Agility
The current family office framework is being challenged due to tradition and lapses in intergenerational communication. The intricate dynamics of balancing family values and the individual values of family members create a friction in the long-term success of alternative investment and impact investing decisions.
With less than 10% of family offices surviving past the third generation, the need for technology solutions to solve these problems for family offices is more urgent than ever.
Peeling back the dynamics of alternative investments for family offices begins with establishing a new language and its meaning. For example, distinguishing between return on investment and return on impact is crucial when making sustainable business decisions. The primary goal of any business is to turn a profit, often driven by Return on Investment (ROI). Focused solely on financial gain, ROI aims to regain and exceed the initial investment.
When the goal is keeping the legacy alive, it's not just about financial stability but also honouring family values. That's why alternative investment strategies and choosing impact investments that align with those values are imperative for family offices.
This also is where family offices hold a unique advantage: by fusing their family and individual values with meaningful initiatives, they can harness this powerful intersection to deliver strong returns while achieving global impact.
This is why Return on Impact is just as if not more vital for family offices than Return on Investment because it marries financial returns with global benefits.
The global benefits of impact investing pertain to many areas and dimensions, for example:
Climate Change: Investments aimed at reducing carbon footprints and/or promoting sustainable energy.
Gender Lens: Focusing on supporting underrepresented founders and promoting gender equality.
Stewardship: Being a good steward of assets, which could manifest in healthcare initiatives and/or support for third-world countries.
Now, as you can imagine, the complexity of making value-based decisions with this modern approach creates a roadblock for family offices and more often lends to intergenerational miscommunication and misperception, and potentially a legacy lost in translation.
Lost in Translation
This key challenge in syncing family values with alternative investment strategies lies in the evolving definition of these “values”—what they mean today versus what they meant in the past. A family business is founded on pillars of values, which subsequent generations build upon by blending new perspectives with the old. Some of these values may align and some may not within this modern language. This leaves some generations with a misperception of the balance between tradition and innovation where outdated principles might hinder progress. While others believe that new ideas might disrupt core values.
It’s not just about following tradition; it's about focusing on the future and the legacy.
Now, let’s Imagine a family office evolving from alternative investments in real estate, art, and technology to a portfolio that includes real estate, art, technology, and impact investments like NFTs, and climate initiatives. For example, George, the family office patriarch who values traditional assets like art and real estate, while Ethan, his grandson, is pushing new innovative trends like NFTs (modern art) and climate action. The pair believe they have conflicting values, however, the misalignment is merely a misperception stemming from the misunderstanding of the language.
Communication and mutual understanding are essential to bridge this intergenerational gap as to preserve the legacy for future generations.
Equati as a translator: Bridging the Generational Gap with Data and Technology
Equati stands out as the first intelligent legacy technology solution, revolutionising how family offices navigate the complexities of values-aligned investing. By streamlining data collection, Equati synchronises family values and business strategies, acting as a single source of truth to facilitate multi-layer decision modelling for family offices, for their impact investing. This enhances communication and promotes effective intergenerational understanding of values. Now, families can focus on legacy preservation while honouring their traditions and origin stories.
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