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An Integral Approach to the Family Office - Part Two

Patricia Woo

4 February 2020

This is the second half of an article from the law firm Squire Patton Boggs on the psychological issues involved with family offices. The article is by from Patricia Woo, who is partner, Hong Kong co-head, at , in that firm’s family office practice. (To see the first half of this article, click here.)

Part 1 of this article featured two tables. To assist readers, here they are again here:

Different family member, different reality
The same framework, when applied to different family members, can explain the differences in the corresponding reality. A family member with no active role in the family office, family business and family council (thus, less active involvement in the lower-right dimension) might be less engaged and less appreciative of what is going on in the lower-left dimension. The challenge for the family office is how to instill in that individual the sense of belonging. Attending the family meeting once a year and having an annual distribution from the family trusts will not achieve much in that respect.

A family leader would have a completely different experience in the various dimensions. The sense of pride would be higher and more of his or her upper dimensions would be associated with the collective perspective in the lower dimensions, especially if that family is the main driving force behind the family office. 

Does a mentally incapacitated family member have no emotional and spiritually capacity? Such a family member would have an impact on other family members, and thus, the other three dimensions in the model. If some family members have dedicated religious/spiritual practices, would they feel that particular aspect of their lives is neglected if the family office only deals with the tangibles?

Intersubjective dynamics are of such complexity that it is overly simplistic to assume that the interior “we” is the summation of the interior “I”s. The essence of the lower-left dimension is rather “a shared communication and resonance among members of the group” (Wilber, 2006). This is a task to be facilitated by a successful family office.

Family offices should go beyond the lower-right
Most existing family offices, which deal with mainly investment, succession and family processes on a collective basis, are creatures of the lower-right quadrant. An internal fund, for example, segregates the economic interest in the wealth and the management rights. The family member would have an entitlement in the wealth in the family’s private fund, but does not have the right to manage, which is vested in the family office. A family trust, for instance, is set up to protect the wealth from creditors’ claims and manage tax costs, but most beneficiaries are passive recipients without individual participation in the management and administration. These structures are managed collectively.

Typical family offices focus on the collective (i.e. the family as a whole) and the tangible arrangements. There is very little attention paid to the interior states (e.g. mental, emotional and spiritual) of the family members. Families are essentially the family members, and the work of a family office is not complete if it does not take into account the impact it and its activities might have on the family members (both externally and internally).

This resonates with the view of Wilber, who sees that the medical/insurance and “managed care” industry supports only brief psychotherapy and pharmacological interventions, both right-hand approaches, and the interior psychologies are selected against (Wilber, 2000). Family offices have experienced similar trends. The investment side and succession planning side (also right-hand approaches) are capable of demonstrating returns and justifying expenditure and thus, be more developed than the left-hand dimensions. However, without the interior, one and his or her family cannot be complete. This is the time for family offices to change.

The real meaning of abundance
A client receives an extremely large sum of money from his father. He knows his father wants him to put the money to very good use and the client wants to know how he should deploy the money. My response is that he should resist the urge to invest for a short while. He is faced with an upper-right stimulus, and without considering the integral family office model, he would react immediately by an upper-right action (i.e. making investments). With this model, we are able to consider the event with additional dimensions. The lower-right dimension shows a change in the wealth organisation structure, giving him control in and/or access to a considerable size of family wealth. A corresponding change happens in the lower-left, where the family anticipates passing on not only the wealth, but also the responsibility and expectation. In the upper-left quadrant, the sense of responsibility heightens, followed by excitement (and perhaps mixed with anxiety), and for some, it is the best opportunity to reflect on not only life purposes, but also the spiritual and religious purposes. 

The best reaction is to take time to “digest” the impact of material abundance on the person’s internal reality and then make the appropriate decision, having also considered the impact on the other quadrants in the model. In this sense, abundance means not only monetary wealth, but also wealth in the interior and potential development to benefit the family and the society.

Self-awareness in the family context
A visionary client who is a self-made owner of many international businesses sees self-awareness as a fundamental process that made him or her successful. The visionary client wants to instill the practice of self-awareness in the family. Although the concept will be included in the family constitution (which is a lower-right item), the real process happens initially in the upper-left quadrant and along all three lines of development. Self-reflection helps one gain clarity in the internal dialogue of the mind and achieve emotional stability. In a transpersonal psychotherapy context, it is a process of awakening from a lesser to a greater identity (Wittine, 1989) and spiritual awakening, including the practice of self-awareness, reported increasing over time sense of life satisfaction and wellbeing (Louchakova, 2004). The family office should provide the appropriate right-hand environment that encourages the family members to share their reflections and make it a regular practice.

Training, counselling and sharing sessions can be organised.
Mandatory participation can be potentially tied in with the legally binding portions of the wealth holding structures. Forgiveness as a catalyst of development: I discussed forgiveness in the family office context in an article published last year, and how this commonly accepted virtue is rarely included in family constitutions (Woo, 2017). Forgiveness (of self or another) is a left-hand mental state experienced by a family member having made mistakes (and usually excluded from being a beneficiary and an office holder in the family business or family office). The family member will go through self-forgiveness, forgiveness by the divine/universe in a transpersonal context and by other family members who release the anger and decide to forgive.

The Integral Model, linking a left-hand mental state with the right-hand reality, provides a roadmap for one to observe and understand how forgiveness (and healing) happen and can be encouraged. For a family member excluded from the family system, he or she could be given a chance to be included again if he or she proves himself or herself in engaging in impact investing and charitable activities backed by the family but outside the family system. These examples in the right-hand dimensions will bring positive impacts to the left-hand quadrants. When the family as a whole and its members learn how to forgive, they “transcend the internal/external distinction” (Lewis, 2005) and leap forward in terms of the levels of development.

The Integral approach does not guarantee that a family office is evenly developed in all aspects, but offers the opportunity for an UHNW family and its family office to be “integrally informed” of their strengths and weaknesses. The awareness will be the basis for future development. An integral family office facilitates not only a more holistic organisation of the affairs of UHNW families, but also a culture and best practice of “multidimensional inquiry” (Ferrer, et al, 2005) that best enables transformation, a process with direct, profound impact on the self and the family, which “can be the beginning of a life-long deepening of transpersonal realisation” (Hunt, 2016)

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