In an era where financial returns are only one part of the equation, families seek deeper meaning in how they allocate their capital. Values-based investing ensures that portfolios reflect what matters most to a family across generations.

By embracing a framework that goes beyond risk and return, families can create a legacy rooted in shared beliefs and long-term vision.

Understanding Values-Aligned Investing

Values-aligned investing, also called purpose-driven investing, integrates a family’s core beliefs into every investment decision. It considers environmental, social, and governance (ESG) factors alongside traditional financial metrics.

For many families, transferring values is more important than transferring wealth. When wealth and values move in sync, investments foster unity and purpose.

Family Investment Policy

A Family Investment Policy (FIP) is a governance tool that translates a family’s abstract values into concrete guidelines. It defines shared objectives, risk tolerance, and decision-making processes for family offices and wealth managers.

Choosing the right FIP type ensures governance matches a family’s communication style and trust level.

Investment Policy Statement

An Investment Policy Statement (IPS) outlines financial objectives—risk, return, liquidity, tax, and time horizon—while embedding a family’s impact goals and constraints. It aligns portfolios with both performance targets and ethical preferences.

By integrating a Values-Aligned Diagnostic and market opportunities, the IPS becomes a clear reflection of shared aspirations.

Investment Charter

An investment charter precedes the IPS and captures a family’s philosophy, agreed compromises, and behavioral guardrails. It guides how to handle disagreements and maintain focus on sustainable investing principles.

This tool is invaluable when beneficiaries have divergent priorities or when constructing a sustainable and impact investing portfolio within a broader strategy.

Benefits of Aligning Investments with Family Values

• Stronger family relationships and trust
• Enhanced multigenerational engagement in wealth stewardship
• Clear sense of identity, purpose, and legacy
• Reduced exposure to ESG-related risks through a long-term risk mitigation lens
• Positive societal and environmental impact alongside returns

Practical Steps to Implement Values-Aligned Investing

• Step 1: Clarify core family values by identifying 3–5 guiding principles such as sustainability or education.
• Step 2: Define investment orientation based on family culture, trust, and conflict resolution style.
• Step 3: Design an inclusive process by engaging all generations and branches through facilitated discussions.
• Step 4: Build the governance structure by assigning decision-making roles to a family council or board.
• Step 5: Integrate values into portfolio strategy via exclusionary or thematic investing across asset classes.

Strategic Considerations for Sustainable & Impact Investing

• Start with family values and pick a pillar to focus on.
• Think of SII as part of a larger portfolio, not a standalone strategy.
• Acknowledge trade-offs between best-in-class screens and benchmark tracking error.
• Collaborate with like-minded investors to catalytic influence of family capital.

Applying these principles ensures sustainable and impact allocations enhance the overall portfolio without compromising objectives.

Navigating Conflicts and Ensuring Long-Term Success

Common tensions arise between current beneficiaries seeking liquidity and future generations focused on long-term impact. Differences in risk tolerance or desired income streams can challenge cohesion.

Resolving competing interests requires transparent communication, clear governance guardrails, and a commitment to the shared purpose articulated in the investment charter.

By aligning investments with family values, families cultivate resilience, strengthen relationships, and secure a legacy that transcends financial returns.

Embracing values-aligned investing transforms portfolios into powerful vehicles for purpose, ensuring that wealth serves not just today’s needs but the aspirations of generations to come.