Burgess COMMENTARY

Peter Burgess

Impact Investing Offers Opportunity for Wealth Managers!

Recently I was having a conversation with a private banker who manages wealth portfolios, and she lamented the difficulty of getting her HNW clients interested in Impact Investing. She was recounting to me the challenges she was having in getting her HNW clients interested in Impact Investing. Having heard this so often, I needed to be blunt with her why she was not succeeding.

'The reason you can't seem to convince your client about ESG or Impact Investing, is because you are not good at getting buy in'. The Private Bankers all seem to live in fear of their clients. They don't lead them but follow them. How can you engage with your clients, if you are afraid of them (afraid them leaving), you don't understand values based investing, and you don't engage with clients on Impact Investing (illiquid investments with a story) that would provide a sense of fulfilment, and you still operate in a ghetto of limited information. The best part is when Private Bankers all tell me 'Clients are not interested in Impact Investing'. I laugh my head off. One even went so far as saying 'none of our clients (100%) are interested in sustainable investments'. I never encountered anything that has 100% success or failure rate.

Client Engagement

Asset owners who meet with their wealth managers are often confronted with the comment 'sorry your portfolio is down, because interest rates are so low'. That conversation is a dead conversation. It is not inspiring, joyful, or interesting. The liquid part of the portfolio often represents 80-90% of the portfolio. So hearing that 80-90% of your portfolio is down because of low interest rates won't put a spring in your step.

The part that represents a very small percentage of the portfolio, alternative investments or illiquid investments is the part where wealth managers can really engage, particularly the part called Impact Investment. If you look at the 10-20% of a client's portfolio and within that you might find a razor thin part that could be considered 'impact investing'. It is that tiny part of the portfolio that wealth managers can really engage with the client, and get clients passionate,excited, and most of all a feeling that the wealth managers made the client's day. Isn't that something to which to aspire.

You can't find 100% of anything anywhere who believe the same, unless you are a private banker. How about waking up, smell the roses, engage with your client, gain some fulfilment, and get your bonus?

For the number crunchers who still need convincing.

• The Millennial generation will inherit an estimated $41 trillion from the baby boomer generation, over the next four decades. Havens, John J. and Paul G. Schervish. 'Why the $41 Trillion Wealth Transfer Estimate is Still Valid: A Review of Challenges and Questions'. Boston College Social Welfare Research Institute, 2003. http://www.bc.edu/content/dam/files/research_sites/cwp/pdf/41trillionreview.pdf

• Bank of America in 2011 noted that assets transferring to a spouse move to another firm 55% of the time while assets transferring to children move as much as 98% of the time.

• According to the 2014 Deloitte Millennial survey, nearly 30% of Millennials believe the number one priority of business should be to improve society. They believe business can do more to address society's challenges of resource scarcity (56%), climate change (55%) and income inequality (49%). Big demands and high expectations: The Deloitte Millennial Survey. January 2014.

Robert Rubinstein For 20 years, Robert Rubinstein and TBLI Group, has integrated Values Based Investing (VBI) into the financial world.