Gateways to an impactful practice

I spent my entire career in private wealth management before joining Calvert Impact Capital, so I genuinely appreciate the value of financial advisors.

In the 1980s the main advantage of financial advisors (stockbrokers) was that they had more information than the average investor--think Gordon Gekko and Bud Fox.

The wealth management sector has changed rapidly over the past three decades and advisors have shifted from selling the "hot stock" to providing comprehensive financial planning. Technological advances like robo-advisors have disrupted the wealth management practice, meaning retail investors now have access to the same tools that professional advisors use.

How do advisors stay relevant in the next phase of wealth management?

Advisors need to add another layer to their business. My advice is to peel back the onion, start a more challenging--but ultimately more rewarding--conversation with your clients about building their portfolio with their values in mind.

How? There are plenty of resources to start learning about the world of values-based or sustainable, responsible, and impact investing. A few include:

Where in your practice can you incorporate this conversation?

New client onboarding. When getting to know a new client, ask them about the impact they want to have on the world. What do they want their legacy to be? What organizations do they currently support through philanthropy? Do they volunteer anywhere? This will help you get an understanding of what issues are important to your client and you can begin to sort opportunities by sector, geography, and impact.

Estate planning review. Financial planning should include a conversation about what your clients want their legacy to be. What do they want the world to look like for their children and grandchildren? Are their investments working to support that vision? For example, if a client says affordable and clean energy is important, check if their portfolio holdings reflect that.

Are they invested in companies (public or private) that support that vision? Or are some of their mutual funds' top holdings in oil and fracking? Ask if they would be open to investing with an eye towards supporting clean energy. You could use tools like the UN's Sustainable Development Goals (SDG) brochure or the SDGs in Action app to facilitate a conversation (affordable and clean energy is SDG #7).

Change the way you talk about their investments

What do you think your clients are feeling when they leave your office? I have talked to a lot of people after they meet with a financial advisor, and hardly any report that they are inspired. Almost all advisors have been trained to walk clients through numerous portfolio reporting tools. Let's face it, most clients already know what their portfolio is returning before they come in to meet with you (that's the joy of technology). And talking about alpha, beta, and standard deviation is important, but not very inspirational.

Start talking about what their portfolio is doing, not just what it's returning. Include stories from investments your clients have made. What progress has happened in gender equity? Who has a new low-cost medical technology that is saving lives? At Calvert Impact Capital we share stories from our borrowers regularly through our quarterly report, as well as through our annual impact report (stay tuned, our latest report will come out in October!). And you can explore all the borrowers in our portfolio through our new portfolio list.

Get the conversation going

If you're a financial advisor, most of your clients probably aren't aware that they can invest this way; be the one to introduce them to a new world and activate their ability to invest for impact. You don't need to change their entire portfolio. No matter what firm you are with, no matter what asset class you are trying to allocate to, there are products available to get started (mutual funds, ETFs, SMAs).

So start small, but start. If you need help, shoot me an email and I'll be happy to talk with you. Let's invest to create a more equitable and sustainable world.