Money bags with plants growing on top

Family Offices and Impact Investing: A Great Fit

This week we’ll look at a couple of subjects that have been written about a lot over the past few years.

I’ve written about the family office space recently, and promised to write about more often.  Impact investing, on the other hand, I’ve not written about, yet.

It’s interesting that more people are beginning to realize that family offices and impact investing actually go together like peanut butter and jelly, or ham and cheese.

I’m not claiming to have unearthed anything new here, but want to comment on some aspects of this combination that give it so much potential.



Millennials on the Mind

Let’s start with the premise that many family offices are essentially investment vehicles for wealth that is owned by a family.

Let’s add in the fact that these families want to keep their wealth in the family, and that much of that wealth is often liquid wealth, which can be invested in a wide variety of asset classes.

And finally, let’s not forget that when the wealth (eventually) gets transitioned to the rising generation of the family, there are likely going to be some millennials involved.

If you Google “millennials impact investing” you will get all sorts of hits.

Much of the mindset that impact investors bring to the table overlaps almost perfectly with everything that I’ve ever read about millennials.



Family Engagement

Anyone who works with wealthy families knows that a key obstacle to successful wealth transitions has always been the difficulty in getting and maintaining the engagement of the younger generation of the family.

It’s only natural for young people to want to find their own way in the world, to explore and develop their own passions, and follow their own dreams.

Their parents, who are currently stewarding the family’s wealth, and who may have been involved in creating and growing it, often become anxious when their offspring do not show any interest in these efforts.


family Business office

Generational Priorities Converge

So for families who have liquid capital to invest in different asset classes, it isn’t much of a stretch to begin to look at investments in companies or funds that look to make a positive impact in an environmental and/or social fashion.

Impact investing is about making money first and foremost, just not at any cost.  If younger family members can identify potential investments that satisfy both a social benefit along with an opportunity to make a financial profit, it should be a no-brainer to consider such opportunities.

I’m thinking about this from the point of view of a family that is trying to find ways to combine what is important to all generations of the family.

For a family office to look seriously at impact investing even takes into account future generations, including young children and those who aren’t yet born.



Like Philanthropy, But Different

Some people confuse impact investing with philanthropy, so let’s address the comparison here.

Philanthropy is another way that some wealthy families use to bring the family together and help prepare the rising generation.  Working together on a family foundation is a nice way to learn financial literacy and how to work together with others.

Families who understand and teach their younger generations the importance of giving back to their community have realized that there are lots of win-wins here.

But impact investing is different, because it’s actually about finding ways to invest money for profit, not just out of a sense of charity.

It just isn’t about profit without regard to side effects and unwanted consequences.



Who Gets to Decide?

Of course it’s easy to say that family offices should take impact investing seriously and start doing it.  It’s another to figure out how to do it, including asking the questions around “who gets to decide?”

We’ve looked at “what” to do (impact investing) and we’ve explored a bit of the “why”, (because of the engagement of all generations), but that still leaves a lot of the “how” questions.

A few weeks back, in Putting “Family” in the Family Office, I noted:


Ideally, the goals of the family would also

be taken into consideration too, not to

mention the family’s mission and vision


Impact investing needs to be driven by the family’s vision to really succeed.

From Family Business to Family Office

Welcome to a new theme here at Shift your Family Business, (the website). In some ways it’s long overdue, and in others, well, it’ll be more of the same.


I’ve begun to realize that I haven’t written nearly as much about the Family Office space as I have about Family Business.


Of course there’s a huge overlap of topics that suit both areas, and these have been covered here at length.


But for some reason, I get way more questions from families about operating their businesses than from those who’ve made the transition to managing and transitioning their wealth.

What’s the Difference?

If you stop anyone on the street and ask them what a family business is, everyone will give you some kind of answer that would score at least a few points on any grading key.

I daresay that if you asked “what’s a family office”, a lot more people would ask you to repeat the question, or would have only some vague idea of what you were asking about.

I consider myself to be pretty good at explaining complex things in simple terms, and this one is a big challenge.

In the simplest explanation, a family office is a formal structure set up by a family to manage the family’s wealth and everything that goes with it.

Family Business Office People Working
I’m Too Sexy for my Wealth

In the last decade or so, the term “family office” has been discovered and co-opted by many professionals who work in the area of wealth management.

I come across examples regularly that make me shake my head, where I see this very broad term used as a label to describe a very narrow service offering.

The image I have in my head is of a hot dog stand with a sign that says “smorgasbord”, where you can have your hot dog with mustard, or ketchup, or both!

OK, but where’s the rest of it?

Not for the Mass Affluent

Financial institutions typically like to attract the clients with the most wealth, and they also have products and services geared to lower levels of wealth too.

There are terms that get used in their industry to segment different wealth levels, and they kind of make my skin crawl when I hear them.

There are the “mass affluent” with “only” a few million dollars, then you get to HNW (high net worth) and eventually UHNW (ultra HNW!)

Who qualifies for what level of services varies over time and from one institution to the next.

Let’s just say that family offices have historically been for families in the upper reaches of society, and so anyone who markets their services as “family office” is trying to be seen as more “big time”.

That, and the hope that families will use their services because then they can talk about “their” family office at cocktail parties, I guess.

How Do They Get There?

Historically, family offices are set up once a family has achieved a certain level of liquid wealth, and/or a certain level of complexity.

Liquid wealth is money that can be quickly transferred from one asset to another, like cash, stocks and bonds.

Family operating businesses and real estate are usually considered “illiquid”.

The most common way a family arrives in the land of a family office is after a liquidity event, i.e. the sale of a family business.

See: Liquidity Events in a FamBiz: Pros and Cons Part 1 and Part 2


Custom Made Mystery

But every family is different, and so every family has different needs.

Most families are not 100% sure of what they need, and they have an over-abundance of providers who are trying to convince them that “I am your solution”.

There’s an expression in family office circles that “If you’ve seen one family office, you’ve seen ONE family office”.  There are no two the same, nor should there be.

Family Office

Demystifying Family Offices

From discussions with families, acquaintances, and peers, I realize that some demystification is overdue.

So look for more frequent posts on this fascinating subject in this space going forward.


Looking to get a head start?

– See chapter nine of my book

SHIFT your Family Business, (the BOOK),

Chapter 9: Towards a Family Office Mindset

  • See this article by Jaffe and Grubman

“Development Stages of a Single Family Office”