You can add an impact investing solution to your business that is in line with your existing philosophy, and uses your current systems. In fact, this is the best way to assure a successful launch since everyone at your firm will already be familiar with the tools needed to run the strategy and the philosophy behind it.
Hurdle 3: I don’t want to give up returns.
There used to be an understanding that impact investing meant giving up returns in exchange for doing good work. Much of that can be attributed to some of the first mutual funds in the socially responsible investing space not investing in Philip Morris (now Altria). Philip Morris added so much financial return to the index that many funds that didn't hold it paled in comparison.
Solution: Study after study shows that the performance myth is no longer true. It's been debunked repeatedly, as shown in this exhaustive meta-study.
Hurdle 4: I don’t know how to talk to my clients about impact investing.
From not understanding the alphabet soup and confusing vocabulary of the impact investing space, to not knowing how to phrase marketing materials or have client conversations around impact and sustainability, the language issue can feel like a big hurdle.
Solution: You’ll get there! Learn the lingo, take a class, create your investment offering and be true to your personal and firm values. Once you’ve made it over the hurdles 1 through 3, this last hurdle should seem less intimidating since you’ll know the language and have a portfolio or offering to talk about. Wait to create marketing materials until after you've designed investing solutions so that your materials can be reflective of the approach you have adopted. Use language and words that resonate with you or your firm, and that accurately reflect your approach to implementing impact investing in your practice.
Lastly, and this is important. Tell stories of the impact side of the investments. Learn some of the impact stories from inside of your portfolios. Be able to tell them to a client or prospect in a relatable, re-tellable way. It can be a story about a portfolio company's innovative product or solution. Or if you are investing in mutual funds that focus on management and shareholder engagement, it can be a story of a successful engagement that drove both positive business changes and good financial outcomes. These stories are an excellent differentiator and can make your clients feel more connected to their investments and to you.
Don’t miss an opportunity to talk to clients and prospects about impact investing. There is no doubt that impact investing is here to stay, so let’s move from interest to adoption. Is your business ready?
Sonya Dreizler, the founder of Solutions With Sonya, is a former financial services CEO with 15 years of industry experience. She helps growing financial services firms to deepen client relationships and increase revenues using impact investing, and create efficient and scalable practices so advisors can spend more time with clients, doing the work they love.