Can Financial Advisors Embrace Impact?
By Jessica Droste Yagan
Impact Engine has been fortunate to work with a lot of first-time impact investors. While we may be their first introduction to impact investing, we very much want to support them in doing more, and often share content or host events meant to introduce them to the range of possibilities across asset classes and impacts.
Unfortunately, because impact investing is not (yet) broadly embraced, investors can find it challenging to get started by working with their financial advisors. While some advisors are strong advocates for impact investing and very knowledgeable, many are not jumping up and down to help, either because they don’t know what to do or don’t want to do it, or both. If you’re not one of the lucky few who has great support from your advisor, here are three approaches that we’ve seen work.
Convince your advisor to learn.
While not all financial advisors understand or offer impact investing options, some of them will put in the effort to learn if you push hard enough. If they are willing to make the effort, you may want to be patient and be a partner in exploring with them: you could learn together and perhaps create even more impact by supporting the development of expertise and products that could then be offered to other clients, thus moving even more assets in the direction of positive impact. If you want to go this route, try showing them why it’s in their interest or that it’s been around long enough to demonstrate competitive financial returns. Once they’ve indicated they might try, you could share articles like “How Wealth Advisors Can Facilitate Impact Investments” from Arabella Advisors, or Impact Investing: Frameworks for Families from The ImPact, so they can get started with the basics. Or, show them some examples of families that have done this.
Find a new advisor that has embraced impact investing.
Unfortunately, not everyone will see the light. If your current financial advisor doesn’t offer impact investing options and is clearly not interested in learning, a second option is to find someone who is already doing it. We have not vetted any advisors in this space and can’t specifically recommend who you should work with, but a good list to consider would be those that are registered B Corporations. B Corps are for-profit companies certified to meet standards of social and environmental performance, accountability, and transparency. Here, you can see a list of B Corps self-described as investment advisors. We know and like many of them.
If you have enough money, you could do both.
We’ve seen a few of our investors try both paths at the same time and succeed! While this requires extra effort, sometimes it is the best outcome. It can send a signal to your current advisor that you are serious about your interest: nothing says “I’m serious about this” better than actually moving your money. Yet, it also gives them another chance to try to learn, and has the benefit mentioned above of paving the way for other clients in the future. At the same time, you don’t waste time waiting, you start learning from someone who knows that they are doing.
While there is no exact formula for building a portfolio that perfectly integrates impact investments, there is clear evidence that impact investing is growing and that people and products do exist. So don’t take no for an answer: if you want to be an impact investor, make it happen!
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