Rennich: I was working in the retirement plan division with Principle Financial Group after starting my financial services career as an advisor with Ameriprise in 2003.
Ellis: Matt, you are a portfolio manager for private wealth management clients at Pekin Singer and, as Colin said, you also manage the firm’s shareholder advocacy efforts. What were you doing before that?
Blume: Yes, I have also worked at Pekin Singer since 2012. Prior to that, I was a financial advisor for a small retail advisory firm.
Ellis: So both of you started as financial advisors and now work in asset management to support financial advisors and their clients.
Rennich: Matt and I have both been in the financial advisors’ shoes. We understand what is helpful to them and how we can support them with education or business development opportunities.
Ellis: Anything to add, Matt?
Blume: Having been a financial advisor is a big help in the work that I do with individual and institutional private clients at Pekin Singer.
Ellis: Let’s talk about your role as manager of shareholder advocacy for the firm.
Blume: Shareholder advocacy represents a way for us to make a positive impact on the various companies whose shares our investors own. Of course, no company is perfect; even best-in-class companies have opportunities for improvement. Our shareholder advocacy efforts allow us to help well-managed companies become even better.
Ellis: What does “best-in-class” mean?
Blume: When our team is vetting potential investments, we look very closely at fundamentals and valuation, but we also go through a rigorous screening process in which we examine company performance across a number of environmental, social and corporate governance (ESG) factors. We consider a wide range of non-financial factors that could affect a company’s future, such as controversies related to labor standards, human rights violations and environmental performance, for example. This process helps us identify companies that are stronger performers related to ESG factors, have management teams that are long-term oriented in their outlook and risk profiles that are more likely to be lower than the industry average. Our goal is to identify high quality companies for investment in the Appleseed Fund that have minimal downside risk and significant upside potential.
Ellis: Advisors often say to me, “That’s all very good, but doesn’t the process limit the universe of companies that we can select from and thereby reduce the potential for my client’s portfolio to achieve competitive returns?”
Blume: We view ESG screening as a risk-reduction process from an investment standpoint. Think of a company that has a significant environmental issue resulting in government fines or shareholder lawsuits. These issues may result in real financial impact to companies, sometimes just as a result of the industries they operate in. In our opinion eliminating some of these companies from our universe reduces risk.