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Financial Planning > Charitable Giving > SRI Impact Investing

Ethic Picks Up New $13 Million Series A Funding

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Following on the heels of partnering with Dynasty Financial Partners to list its impact investing products on the latter’s turnkey asset management platform, Ethic, the RIA and tech-driven asset manager, announced it secured $13 million in Series A funding. The funding was led by existing investor Nyca Partners, and was joined by Fidelity Investments and Sound Ventures, Ashton Kutcher and Guy Oseary’s venture capital fund.

“We’ve been really fortunate to benefit from a shift that has happened in the market separate from Ethic,” Jay Lipman, Ethic co-founder and president, told ThinkAdvisor. “We have had a dramatic level of demand and this funding enables us to really scale to meet that demand effectively.”

With the growth of sustainable investing — the U.S. Forum for Sustainable and Responsible Investing said strategies grew 38% from 2016 to 2018, to $12 trillion in assets — Lipman sees environmental, social and governance investing mimicking the growth of ETF investing a decade ago.

“If you look at this from a practice management standpoint, we believe that advisors 10-15 years ago made a decision to have a proactive ETF strategy,” Lipman says. “You know years ago people said, ‘OK passive investing is real. The transition is happening. Costs are getting squeezed. What are we going to do on ETFs? We can’t just take one thing off the shelf anymore. We have to have a strategy.’  We believe that transition to ETFs is now happening in a proactive transition to ESG.”

Advisors have the option of accessing Ethic through a network like Dynasty or through their custodian. “We essentially are an asset manager in that we create these separately managed accounts that then are traditionally transacted through the custodian the advisor is already integrated with,” he says.

Using Ethic’s solutions allows advisors to create custom SMA portfolios to match a client’s personal values and priorities, run a real-time “health check” on existing portfolios and benchmarks to identify any “blind spots” that might undermine a client’s goals, estimate the historical performance of “clean” portfolios with a strategy back testing tool, and provide reports that graphically explain the client’s portfolio breakdown.

(By Jay Lipman on ThinkAdvisor: 3 Sustainable Investing Questions Advisors Need to Be Able to Answer)

Lipman believes advisors who are ESG prepared will meet the needs of the generational wealth transfer, which “isn’t going to millennials but actually to people in their 50s … [Understanding ESG] empowers advisors to engage with that generation.”

Ethic’s team is backed up by some big names in the business, including Jennifer Grancio, who helped launch BlackRock’s iShares business, as well as Blake Grossman, former vice chairman of BlackRock and ex-CEO of Barclays Global Investors.

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