Editor’s note: This article is part of a continuing series in which Paul Ellis, a well-known advisor and consultant on sustainable investing strategies, interviews industry professionals on the topics of millennials and sustainable investing. What follows is an interview with two industry experts from ImpactAssets, a nonprofit financial services firm that increases the flow of capital into investments that deliver financial, social and environmental returns: Mackenzie Colgan, regional director, distribution and Beth Stelluto, chief growth officer.

To read the first article in the series, click here: /news/the-wise-woman-and-the-millennial-23738.html

To read the second article in the series, click here: /news/millennials-leading-the-way-in-sustainable-investing-24019.html

 

Paul: Kenzie, how did you get involved in the sustainable and impact investment field?

Kenzie: I was in Nairobi when I was 18, working for a nonprofit. I watched the flow of development capital coming into countries trying to solve huge issues and saw the waste and lack of accountability in that system. When I returned to the U.S., I went to work initially for the Clinton Foundation. From there, I joined a mainstream asset manager to learn the capital markets. I married the two approaches in the impact investment space, working to source deals for the Acumen Fund’s health portfolio back in Nairobi. Then I got a call to interview with ImpactAssets and joined the organization.

Paul: Beth, you’ve been at ImpactAssets for two years. How did you get there?

Beth: I took a different route than Kenzie did. I’ve spent my whole career in financial services, the bulk of it at Schwab where I led several marketing and product development teams, so I understand capital markets and the mindset of the individual investor and advisor. But philanthropically, I’m interested in global microfinance and environmental issues. When Ron Cordis, an ImpactAssets board member called to say “ Beth, we really need someone like you to help us scale,” I jumped at the chance to work with him and the other members of their team.

Paul: Kenzie, you were already on board when Beth joined the firm. Did the two of you start working together immediately?

Kenzie and Beth: Yes!

Beth: We’d love to have 50 Kenzie’s with her belief in the end result of impact investing. Her first-hand experience in Nairobi and knowledge of capital markets make her valuable to financial advisors and investors in the impact investing space. She also has boat-loads of enthusiasm!

I believe that millennials can mentor us while we mentor them. Kenzie is a master networker and has developed an incredible blend between her work life and personal life.

Paul: Kenzie, how have you brought your experience and passion from working in the field to your partnership with Beth?

Kenzie: Beth joined our firm at a critical moment. We were working to bring products to market as passionate people deep into impact investment structure but less connected to mainstream asset management. With Beth’s help, we better understand how particular firms work and how our products fit into their particular framework for financial services. How this knowledgeable impact team engaged Beth’s institutional experience was amazing.

Paul: Beth, talk about how your team members can live the passion of their work while negotiating the labyrinth of major asset management firms?        

Beth: Kenzie leads with her passion for the ImpactAssets mission. That, along with her experience, professionalism and knowledge has driven her success. My expertise helps shape that knowledge. For example, we might review how a firm that custodies their own accounts differs from an independent RIA. I’m a big believer that you let people fly and be there to back them up. Since Kenzie is in New York, the nexus of where these large firms are, she leads these important relationships.

Paul: How has this changed the work for you, Kenzie?

Kenzie: We’re now able to focus the conversation on both investment products as well as philanthropy. Before we launched our new Notes, our discussions were primarily with philanthropy teams. Now we lead with investment products.

Paul: So you have two products: the donor-advised fund and the just launched investment notes. How do you integrate the two?

Beth: We focus on the mission of ImpactAssets, which is to expand capital flow into impact investing and reduce barriers to that flow. First, we reduced barriers through the donor-advised fund, and second through the investment notes. When you look at the process through the lens of the mission, they complement each other beautifully.

Now we have broader, richer conversations with advisors. Wealth management firms often have different philanthropy and asset management teams. It’s important to understand the mindset of each team and how you pitch to them.

Paul:  Who manages that process?

Beth: Kenzie is the lead. I’m thinking of an example where we have a good relationship with the philanthropic team at the firm. Kenzie asked them to make an introduction to the asset management team.

Paul: Kenzie, how do you get initial access to firms and teams where you don’t have established relationships?

Kenzie: I attend as many events as possible and meet with people all the time. I belong to several active women’s business groups in New York, and I see people from member firms at various events.

Paul: Are these women’s organizations specific to financial services?

Kenzie: Yes, WISE, which is “Women Investing for a Sustainable Economy”, meets every month.

Beth: Also, we’ve been in impact investing for a while and have built a strong network through our board members speaking at conferences.

Paul: Beth, as part of senior management, what’s your relationship with the Board?

Beth: I attend the board meetings where we decide on strategy. The board models a healthy respect for different points of view, and I’m the megaphone for clients and advisors.

Kenzie: We’re trying to embed the DNA of impact investment firms within the DNA of large asset management firms. We want to integrate the heart of impact outcomes. Several of our board members have 100% of their own assets in impact strategies and are very vocal members of this community.

Paul: Beth, what’s it like for you in this part of your career to bring so much passion to the work?

Beth: It’s terrific! I’ve been fortunate in my work to help scale investment services to move more mainstream.

Paul: How do you see millennial professionals like Kenzie shaping our industry’s future?

Beth: I think the millennial generation will demand that impact investing become the mainstream. We are being led by millennials to hold companies accountable for delivering sustainable products and services. Over time the companies doing that will be successful and others won’t. Millennials are three times more likely to seek employment with companies that promote sustainable business practices.

Paul: Kenzie, what do you say to young professionals seeking careers in impact investing?

Kenzie: Lead with your intentions and don’t be intimidated by naysayers. Keep your standards high and educate yourself and your clients.

Beth: Much of the interest in impact investing at large wealth management firms is being driven from the top down, with slower implementation at the advisor level. At more independent firms, the drive to impact investing is client led through the relationship managers with more resistance from investment committees.

Paul: So hurdles to investment implementation can be firm specific?

Kenzie: Yes, and the key to mainstreaming impact investing is advisor education driven by millennial investor demand. Millennials basic distrust of the financial services industry means we prefer to work with advisors who use a sustainable and impact approach to investment strategies.

 

 Paul Ellis founded Paul Ellis Consulting to work with financial advisors who want to integrate sustainable and impact investment strategies for their clients. Mackenzie Colgan is a regional director of distribution at ImpactAssets. Beth Stelluto is the chief growth officer at ImpactAssests.