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Investment Reporting gaps causing misalignment with values

Updated: Dec 13, 2023

As families grow and diversify, so too do their financial interests and investment portfolios. The "Investment Policy Statement" (IPS) should offer insights into the intricate world of family wealth management.

Central to most investment philosophies is the aim to grow capital while managing risk, ensuring enough income to meet the needs of family members. This approach underlines an understanding that wealth is not just about numbers but also about personal fulfillment and the freedom from the burden of managing wealth.

Long-Term Premium

The family's investment beliefs are grounded in the understanding that market-related risk significantly impacts returns. They prioritize long-term investments, often spanning over a decade, to leverage what they see as a “long-term premium”.

We are increasingly seeing this long-term premium implemented via the benefits of illiquid assets. This is particularly true for those with little need to access the funds or rely on them for income. 

Often, the family has accumulated wealth by being particularly skilled at managing a specific asset class (eg Property) or sector (eg Tech, manufacturing).   This adds power to their unique advantages, such as an exceptionally long investment horizon and flexibility in their financial dealings.

Governance is equally crucial, with an investment committee overseeing asset stewardship and the use of external advisers to manage a portion of the assets.

However, there are concerns about potential reporting gaps and misalignments with family values. For instance, while families often set aside a portion of wealth to be managed independently by family members, there's a risk that these investments could diverge from the family's overall values or strategic objectives.

Moreover, the reliance on external managers and advisors, while beneficial for expertise and diversification, could lead to a misalignment if these firms do not fully adhere to the family's investment philosophy and ethical standards.

More Than Just Returns

Investment is more than a financial exercise; it's often a reflection of your values and legacy. The IPS highlights the delicate act of balancing financial objectives with the need to maintain integrity, reputation, and family harmony. As such, families must remain vigilant, ensuring their investment strategies align not only with their financial goals but also with their core values.

Action Points for Family Offices

  • If you have a “long term premium” ensure that the portfolio benchmarking aligns with that outcome and that efficacy can be monitored.

  • A philosophy poorly implemented can mean heartache down the line.

  • Values that are to be reflected in the portfolio should be clearly defined. If they can’t be implemented, there is a case for removing them.  

About Hall Road Services: We are a Partner COO firm, assiating family offices with their ongoing investment operational needs. Please reach out if you would like our two-pager service overview.


Shaun & James

co-Founders, Hall Road Services.


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