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Making an 'Impact' on Clients With Impact Investing

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As the wealth management landscape undergoes significant change, many advisors are concerned that the concept of money management is rapidly becoming commoditized. The rise of digital portals and FinApps, combined with stricter regulation, is challenging many advisors to rethink their value propositions.  As the new model evolves, it’s unclear how many clients will be willing to pay for simple, low-cost, passive portfolio solutions. 

That uncertainty underscores the need for advisors who put money management at the center of their value propositions to find creative solutions to satisfy their clients, and at the same time, differentiate their practices.  

It’s always a challenge to adapt a value proposition because it requires a different way of thinking. I find it ironic that one of the industry’s hottest topics right now may actually provide a solution to some advisors in this regard.

It’s impossible to read any industry publication today without seeing a discussion of impact investing, a portfolio segment that aims to deliver a measurable environmental, social and governance good, coupled with a potential financial return. Women and millennials find it especially appealing.  In fact, 84% of women and 76% of millennials, according to a recent Morgan Stanley survey, state that values-based investing is a central goal for them. 

This is an interesting trend because it shows demand for this type of investing from two consumer segments many advisors tell me they struggle to gain traction with: women and younger investors.  We set out to answer the question:  “If there’s a growing need for impact investing solutions, are advisors actually using it?”  It seems like the answer should be “Yes!”   

But as we looked into hundreds of thousands of accounts on our platform, we noted only 11% of advisors on our platform are integrating impact strategies into their clients’ portfolios, a figure we believe falls far short of the growing demand for investing with an eye toward a greater societal good.  Why is this so? 

One reason centers on education—or more precisely, the lack of it. While many investors demonstrate high interest in impact strategies, they are not aware of how to incorporate values-based investing into their portfolios. Advisors need to take the lead in explaining impact investing’s benefits to clients, the various ways to implement it, and why it makes sense for their portfolios.

A second concern is the misconception that “doing good” means “not doing well”—that impact portfolios sacrifice performance. 

We looked at impact-focused SMA products on our platform and compared their performance over a complete market cycle to non-impact SMA product performance, and what we found was surprising. 

The impact vehicles actually outperformed the overall universe. Although, as you know well, past performance does not guarantee future results, our research showed investors didn’t have to give up performance to make a difference. It has prompted us to come up with a new slogan: “Doing good and doing well may not be mutually exclusive.” 

(Please refer to Envestat, Volume 4, Issue 5, “Doing Well and Doing Good Are Not Mutually Exclusive,” at

Impact investing gives advisors a tool to begin a dialogue with clients as to how they can use their investment dollars to become more thoughtful and concerned global citizens, and model that same behavior for their children. And that’s something that resonates with millennials—remember, millennials are participating in the greatest wealth transfer in years, as Boomers hand down over $30 trillion in assets.  Millennials happen to be the largest demographic group in the workforce, so it behooves advisors to seek them out. 

Impact investing, which caters to millennials’ values-based mantra, can be the inroad. Don’t ignore it. 

It’s a challenging time in the advisory business. Advisors must differentiate their businesses and demonstrate their value to clients by clearly articulating it, and then guide clients through important investing decisions as they relate to life circumstances.  Providing access to impact investment strategies and products, and educating clients about their benefits, is one way advisors can adapt and articulate their value propositions.    

Author’s disclaimer: The opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities, or investment advice or a recommended course of action in any given situation. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon, and risk tolerance. Information obtained from third party resources are believed to be reliable but not guaranteed. This paper may contain ‘forward-looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader.



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