The 7 Habits of Highly Effective People is a self-improvement guide by Stephen Covey that teaches you how to change your mindset and achieve personal and professional effectiveness. The 7 habits are: be proactive, begin with the end in mind, put first things first, think win/win, seek first to understand then to be understood, synergize, and sharpen the saw. In this article, we will explore how successful family offices apply these principles every day to serve high-net-worth families.
Habit 1: Be Proactive
Leading family offices are proactive in managing their principals’ wealth and providing them with customized services. They do not wait for problems to arise, but anticipate and prevent them. They also do not rely on external factors, such as market conditions or regulations, but create their own opportunities and solutions. They conduct routine reviews and audits of their principals’ portfolios and financial plans, and make adjustments as needed. They seek out new investment opportunities and strategies that align with their client’s appetite and objectives. They monitor and mitigate potential risks to their principals’ assets and reputation, such as cyberattacks, fraud and litigation. And they keep the lines of communication open, making sure principals are informed of changes and developments, as they happen.
Today’s family offices hold a significant portion of global capital, giving them the power to shape the future by allocating their wealth for maximum positive impact. While external factors like interest rates and geopolitical uncertainties are beyond their control, family offices should still strive for more than financial returns. By proactively focusing on making a positive global impact and setting specific objectives, family offices can become champions of change.
Habit 2: Begin With The End In Mind
Beginning with the end in mind means having a clear vision of your desired outcome, and aligning your actions and decisions with that vision. It also means defining your purpose and values, and living by them. Family offices get this, and they start by understanding their principals’ vision, purpose and values. They “Begin with the End in Mind” too by:
- Working with principals to create a comprehensive wealth management plan that covers all aspects of their financial life, such as investment, tax, estate, philanthropy and education.
- Helping principals to articulate their family mission, vision and values, and incorporate them into their wealth management plan.
- Assisting principals in establishing and managing family governance structures, such as trusts, foundations, or family councils, that ensure the continuity and sustainability of their wealth and legacy.
- Educating and mentoring the next generation of family members on financial literacy, stewardship and leadership.
Habit 3: Put First Things First
Putting first things first means prioritizing tasks and solving the right problems. Fortunately, today’s family offices don’t need to wonder what their priorities are (hint: a principal’s priorities are your priority). Top family offices quickly figure out these priorities, determine what they are capable of solving, and how quickly, and delegating or outsourcing work that doesn’t fall within their core strengths. Successful family offices also put first things first by:
- Allocating sufficient resources and staff to each client, and ensure that they have the necessary skills and expertise to meet their needs.
- Using technology and automation to streamline and optimize their processes and operations, and reduce errors and inefficiencies.
- Providing principals with access to a network of trusted and vetted professionals and partners, such as lawyers, accountants, bankers or advisors, who can assist them with specific tasks or projects.
Habit 4: Think Win/Win
Thinking win/win means seeking mutually beneficial and satisfying solutions for all parties involved, rather than competing or compromising. Successful family offices think win/win by creating value for their principals and themselves, and aligning their interests and incentives. They also help their principals create value for their family and society, and support their philanthropic and social causes. A family office that thinks win/win might:
- Charge their principals a fair and transparent fee, based on the scope and quality of their services, and the results and outcomes they deliver.
- Share their knowledge and insights with their principals, and provide them with unbiased and objective advice and guidance.
- Collaborate with other family offices and organizations, and leverage their collective resources and expertise, to create synergies and opportunities.
- Encourage and facilitate their principals’ charitable giving and impact investing, and help them measure and report their social and environmental impact.
By fostering a culture of development within the office, and focusing on adding value for all parties involved, family offices can navigate complex operational challenges with a positive-sum mindset.
Habit 5: Seek First To Understand, Then To Be Understood
Seeking first to understand, then to be understood means listening empathetically and attentively to others, and understanding their perspective and feelings, before expressing your own. It also means asking effective questions, and acknowledging and validating others’ concerns and needs.
Family offices bridge the gap between financial and non-financial elements, necessitating a deep understanding of both a family’s intentions and its potential for broader societal impact. Family offices that are well-aligned with their principals do this by:
- Conducting thorough and regular assessments and surveys of their principals’ satisfaction and feedback, and use them to improve their services and performance.
- Using various communication channels and methods, such as phone calls, emails, newsletters, reports, or meetings, to keep in touch with their principals and update them on their progress and results.
- Using simple and concise language, and avoiding jargon and technical terms when explaining complex or unfamiliar concepts or issues to their principals.
- Soliciting and welcoming a principals’ opinions and suggestions, and addressing their questions and concerns promptly and respectfully.
Habit 6: Synergize
Synergizing means combining the strengths and talents of different people, and creating something greater than the sum of its parts. Family offices create synergy through collaboration and innovation. They partner with service providers that align with their unique needs and values, enhancing their operations and achieving greater collective value. Synergizing also extends to fostering a spirit of collaboration between a family and the family office, addressing challenges quickly and maintaining alignment. A few ways that leading family offices are synergizing include:
- Fostering a collegiate and inclusive work environment, where all staff contribute and learn from each other, and where ideas and feedback are valued and rewarded.
- Using a holistic and interdisciplinary approach to solving problems and making decisions, and considering multiple perspectives and scenarios.
- Experimenting and testing new ideas and strategies, and learning from both failures and successes.
- Organizing and facilitating family meetings and retreats, where family members can share their views and aspirations, and work together on common goals and projects.
Habit 7: Sharpen The Saw
Sharpening the saw means renewing and improving in four dimensions: physical, mental, emotional, and spiritual, to reach a place of balance and harmony. Successful family offices sharpen the saw by investing in their own growth and development:
- Providing staff with continuous learning and training opportunities and encouraging them to pursue their passions and interests.
- Promoting a healthy and positive work culture, where work-life balance, health and wellness are celebrated.
- Helping their principals achieve their personal and professional goals, such as starting a new venture, or deepening the mission behind their philanthropic activity.
By applying these timeless principles, the nation’s top family offices are navigating the evolving landscape of wealth management and creating lasting value for generations to come.
