Investing with the Inner Life in Mind

May 28

When Kōbō Daishi sought a headquarters for establishing Shingon Buddhism in Japan, it was of little surprise that he settled on Koyasan. Legend has it that he threw a charm from China, where he studied, and wherever it landed, he would establish his school.

What luck then, that it became wedged in a tree in a small town nestled in the plateau basin of Mount Koya, surrounded by eight low mountain peaks, reminiscent of a lotus flower. This heavenly place is home to Okunoin¹, the largest cemetery in Japan.

A monk who lives in the town, Nobu, has asked travelers, “What shape is the mind?… the mind is like the moon, it changes shape, shining bright and full when we experience happiness and shrouded in darkness in sadness or anger. The moon sits up there, appearing alone, but it actually reflects its light across bodies of water all over the planet. So if we shine brightly and positively, we are never alone, and our influence can travel far and wide.”

Okunoin (奥の院) means ‘inner sanctuary’. Fitting for the Buddhist, those who hold different worldviews or philosophies may seldom consider the roots of their passions, values, and trust. These traits also develop with external influences; shared emotions, social dynamics, and learned yet subconscious biases form a cognitive topography that is anything but easy to understand.

The more I have spoken with high-net-wealth investors, whether or not they focus on the impact of their investments, the clearer it has become that we are poor logicians, and that a problem’s presentation strongly influences our choices.²

What has also become increasingly apparent to me is that, while one would think many investors are optimizing for a single objective called “returns”, they are actually navigating a collection of competing internal motives, often without language to describe what they seek.

Money is one of the few tools humans use to translate our innermost values into external action. My original exploration of impact investment decision-making has shifted toward the coherence of impact investment principles through individual and collective discernment.

The following explores the principles of an “ethical investor”, why this behavior is rational (especially in the context of families), and presents why it is integral to learn from their approaches to unpack the ego patterns that keep wealth defended and static.

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“The human brain bears the stamp of 400 million years of trial and error… Brain scientists have vindicated the evolutionary view of the mind. They have established that passion is inseverably linked to reason. Emotion is not just a perturbation of reason but a vital part of it. This chimeric quality of the mind is what makes it so elusive.” - E.O. Wilson

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The essence of an impact investment strategy is inseparable from our psychology. I have recently had the opportunity to research Maslowian Portfolio Theory, an underutilized concept for understanding this tension. Proposed by Philippe De Brouwer as an extension of Behavioral Portfolio Theory, he posits a human premise in that people organize capital around innate drivers and life goals rooted in identity, fulfillment, and the search for meaning, rather than abstract utility functions.³ In parallel to the language of Thomas Aquinas, the concept can be seen as a question of how the intellect and the will are ordered toward what we take to be good and prudent - in his words, prudence is “right reason applied to action,” the habit of aligning concrete choices with the ends we judge to matter most.⁴

Inspired by Maslow’s hierarchy of needs, the theory suggests that investors implicitly construct layered portfolios as such:

At the base sit investments designed to meet foundational needs such as financial security and general well-being - relevant for most people, with or without a Financial Advisor/Planner.
Above that are allocations tied to social standing, autonomy, and personal identity - think of brands, experiences, or real assets people associate with their lifestyles and philosophies.
At the highest levels are investments that express purpose, legacy, and self-actualization - perhaps mostly relevant for high-net-wealth bands of the wealth spectrum who can give/invest entirely with this layer in focus.

The concept aligns closely with what behavioral finance has long observed but struggled to formalize. Investors engage in complex mental accounting, separating capital into buckets that serve different emotional and psychological roles, negotiating among internal voices, producing outcomes that no single preference could explain on its own. While not descriptive in the literal sense (i.e., investment advisors would not actually bucket portfolios as such), what the Maslowian theory provides is a coherent explanation for why these compartments might exist in the mind in the first place.

In this light, impact investing is less a layer of the hierarchy than a natural expression of higher-order investment needs. Returning to Aquinas, the flourishing of human beings lies in the right ordering of desire through reason, which, in this case, is a rational act of aligning economic behavior with a higher conception of virtue.

This perspective may help explain why debates about whether impact investors are “sacrificing returns” so often miss the point. The friction arises when these higher-order motivations merge into frameworks designed exclusively for lower-order needs, such as volatility minimization or short-term performance comparisons. Perhaps it is time to redefine what it means to be a “prudent investor”.

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Now, let’s think about this from the context of families. Recently, qualitative research on the purpose of wealth has shown how wealthy families enact their values and engage in structured conversations about meaning and responsibility. These accounts, along with my firsthand experience, have reinforced the reality that wealth is a layered construct that serves different needs across life stages.

The LGT Wealth for Impact study finds that many wealth holders first understand wealth as security, education, and optionality. As those foundational needs are met, wealth takes on a more complex emotional character, including responsibility, guilt, isolation, and the quiet burden of privilege.⁵ This shift mirrors the Maslowian movement from lower- to higher-order needs (i.e. once survival is assured, questions of identity, purpose, and self-actualization move to the foreground.) Investors who report the highest levels of engagement and fulfillment are often those who are encouraged to define what wealth means to them, rather than to inherit a predetermined script.

And while an estimated 57%⁶ of high-net-wealth families have plans for family engagement, in my view, exploring this dynamic further and addressing the other 43% of relationships is paramount. This is precisely where the idea of collective purpose and intelligence has persisted in my mind: is the pursuit of purpose at the individual level sufficient to sustain this dialogue or alignment across a system as complex as a family? Plans on paper rarely guarantee psychological security or a genuinely shared sense of direction, and it seems as though individual quests for purpose, pursued in isolation, can actually increase divergence and friction.

Kant proposed that moral worth arises from adherence to principles that could be willed universally, and that true autonomy lies in self-legislation aligned with universal moral law.⁷ This is a striking parallel to investors who commit to consistent principles even when markets, incentives, or family politics deviate from them.

It is not uncommon to hear that impact investment allocations are constrained by differences in identity-driven definitions of impact among family members, and what constitutes responsible behavior or impact within a family system. Impact principles and definitions, expressed in an Investment Policy Statement or a family constitution, demonstrate the deeply personal nature of the ways families believe they should steward their wealth.

In Kant’s terms, this is where investors begin to act in accordance with self-authored principles and coherently will a standard for others, turning private sentiment into norms that endure collective scrutiny and time for all family members. Without these articulations, unspoken fears/desires, erosions of trust, or disruptive actions can arise, ultimately preventing families from discovering their full potential together.

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In the natural world, ants and bees offer a striking contrast, even though they have wondrously coexisted for tens of millions of years without anyone in charge.

“If you watch an ant try to accomplish something, you’ll be impressed by how inept it is,” says Deborah Gordon, a biologist at Stanford University who studies ant behavior.

She adds, “Ants aren’t smart. Ant colonies are.”

Thomas Seeley and Kirk Visscher, peer biologists of Gordon who specialize in bee behavior, have shown that honeybee swarms achieve remarkable collective decisions by distributing information widely, encouraging diverse scouting, and aggregating signals without central command.

Seeley argues that the convergence between bees and brains can inform human decision-making. “Living in groups, there’s a wisdom to finding a way for members to decide collectively rather than individually,” he said.⁸

Finance, as a complex adaptive system⁹, seldom meets these conditions. Markets amplify ego, status, and short-term incentives, with each investor bringing fear, aspiration, and personality into the decision-making process. Patterns of wealth creation further diversify risk attitudes, where those who see themselves primarily as inheritors often display greater risk aversion (associating wealth with stewardship and loss) than those who identify as wealth creators (associating wealth with agency and learning.)

Against this backdrop, investors of any ilk may be susceptible to anchoring. “In deciding, people often start with a specific piece of information or trait (anchor) and adjust as necessary to come up with a final answer.” ¹⁰

The same researchers add, “The bias is for people to make insufficient adjustments from the anchor, leading to off-the-mark responses. Systematically, the final answer leans too close to the anchor, whether or not the anchor is sensible.” Applying a Maslowian lens, anchoring seems to be intensified by a mismatch between the psychological layer an investment serves and the tangible benchmark used to evaluate it.

In a family system, a piece of the antidote is reinforcement of a simple yet explicit articulation of principles and shared expectations. Though this still requires human nurturing of the collective; a document cannot counteract anchoring, biases, and narrow framing on its own.

And while the presenter’s paradox in framing impact remains, this applies to all investments. No frame is superior to another; they are all valid but incomplete views of reality. For example, at Capria, we observed that framing impact primarily in terms of essential needs and corresponding financial outcomes increased resonance among both traditional and impact-oriented investors. From a Maslowian perspective, it makes sense that framing impact as economically foundational allows it to sit lower in the hierarchy, closer to safety and sustainability, rather than being perceived as a discretionary, values-only layer.

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“True character arises from a deeper well than religion. It is the internalization of the moral principles of a society, augmented by those tenets personally chosen by the individual, strong enough to endure through the trials of solitude and adversity. The principles are fitted together into what we call integrity, literally the integrated self, wherein personal decisions feel good and true. Character is, in turn, the enduring source of virtue. It stands by itself and excites admiration in others. It is not obedience to authority, and while it is often consistent with and reinforced by religious belief, it is not piety.” - Pascal

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While it is clear that impact investing is a personal journey that compels investors to confront their beliefs, motivations, and assumptions, there is reason to believe that, in the context of complex family systems and biased markets, the pursuit of collective purpose and intelligence is both ethically attractive and instrumentally rational. Obviously, families are navigating more than optimal nesting sites; family dialogue, codified principles, and collaborative processes with advisors and peers can create what a group can defend together as coherent and justifiable among contested morals.

We are beginning to see that the way wealth is given and transferred underscores a broader evolution in how purpose is understood. While philanthropic and impact investment approaches vary widely, there is growing recognition, especially among rising generations, that holistic impact and systems change require real investment capital. Now that we know impact-oriented strategies can achieve competitive financial returns¹¹ ¹² ¹³ ¹⁴, moving beyond the stubborn goal-dilution bias (among others) that once framed impact as inherently riskier or concessionary is imperative.

Everyone stands at the crossroads of money and humanity. To me, finance meets the soul at the moment capital becomes a vehicle for identity, purpose, and responsibility - when investment decisions stop being solely about outcomes and begin reflecting who we believe ourselves to be.

Behavioral finance reminds us that investors are human before they are rational, and Maslowian Portfolio Theory helps explain why purpose, identity, and meaning inevitably surface in capital allocation.

When we acknowledge this to design capital architectures and implement decision processes that honor the whole hierarchy of human needs, we move closer to an investment ecosystem that reflects not just how money grows, but how people do.

The “shape” of the mind is revealed in what it perceives, but also in the rules it gives to one’s inner sanctuary and the duties it refuses to ignore. “We don’t receive wisdom; we must discover it for ourselves after a journey that no one can take for us or spare us”¹⁵ - and part of that journey, in the realm of capital, is learning to see both self and others as bearers of dignity, never merely as means.

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Additional work in this space

There has been a slew of innovative finance initiatives across the field that have transformed the copy-paste of traditional finance into the impact sector into new and creative projects. Small Giants, Impact Frontiers, Innovative Finance Initiative, Roots of Impact - all leading examples.

The Enough Project - Robert and Brent’s critical platform - asks wealth holders to really look at what we all have/do/feel is ‘enough’. This is a portal into a world of perspective change - and unlocking impact potential.

Investing for Impact: Case Studies Across Asset Classes (Bridges Ventures and The Parthenon Group)

Finance or philanthropy? Exploring the motivations and criteria of impact investors (Philip Roundy, Hunter Holzhauer, and Ye Dai)

Personal values as drivers of socially responsible investments: a moderation analysis (Manjit Singh; Manju Mittal; Pooja Mehta; Himanshu Singla)

Categorical cognition and outcome efficiency in impact investing decisions (Matthew Lee, Arzi Adbi, and Jasjit Singh)

What Do Impact Investors Do Differently? (Shawn Cole, Leslie Jeng, Josh Lerner, Natalia Rigol, Benjamin N. Roth)

Intentionality and Decision-Making in Impact Investing — Understanding Investment Motivation and Selection Criteria of Impact Investors (David C. Heinz and Vivek K. Velamuri)

The Role of Institutional Investors as Responsible Investors (Rajna Gibson Brandon and Philipp Krueger)

How Investor Behavior Affects Investment Decisions (H. Kent Baker, Ph.D., CFA, CMA; and Victor Ricciardi, APC)

The Impact of Investor Psychology on Investment Decisions (Jiarui Xie)

The Philanthropy As One Big Impact Investment: A Framework For Evaluating A Foundation’s Blended Performance (Aggarwala, R.T.; Frasch, C.A.)

The Rise of Socially Responsible Investment Funds: The Paradoxical Role of the Financial Logic (Shipeng Yan, Fabrizio Ferraro, and Juan (John) Almandoz)

The Institutionalization of Social Investment: The Interplay of Investment Logics and Investor Rationalities (Alex Nicholls and Rob Paton)