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, Stephanie Cordes, vice-chair of the Cordes Foundation and Nexus Network member and Vanessa Grellet, chair of Nexus Working Group on Impact Investing.

Ellis: Stephanie, at the Nexus Impact Investing Group salon I attended recently at your home there were several asset managers speaking about their firms’ available strategies in impact investing.

Please give our readers some background on how the Cordes Foundation does impact investing.

Cordes: My parents started the family foundation in 2006 when my Dad sold his business, Asset Mark, to a global insurance company. The intention was and still is to use most of the foundation’s assets to create a bigger societal impact.

In 2008, we began raising the percentage of assets invested in impact strategies because they were outperforming the rest of our portfolio. In 2014, we decided to invest 100 percent of the foundation’s assets in impact strategies.

Since then, I have been leading our investments in ethical fashion and working within the artisan sector to find new opportunities.

Ellis: Vanessa, tell us how the Nexus Impact Investing Group started.

Grellet: Nexus is a 3,000 member global community of nextgen wealth holders and social entrepreneurs with growing demand for impact investing opportunities. Rachel Cohen Gerrol, one of our founders, asked me to create the Impact Investing Group within Nexus so we could respond to this demand.

Last year at our United Nations global summit, 50 members came together to brainstorm what we wanted to achieve and developed the Impact Investing Group’s three main goals. The first is to educate our members, the second is to empower them and the third is to enable them to collaborate with each other on investments.

Then we created a speaker series for our members to meet the leaders in the impact investing world. Our first salon was held at the SOCAP15, Social Capital Markets conference last year. This year, we’re having monthly meetings in cities in Europe and Latin America, as well as locations in the U.S. We partner with the major business conferences in the impact space and collaborate with universities and other institutions.

Ellis: Advisors often think that there are not enough impact strategies available to meet their clients’ needs for diversification and liquidity. Are they right?

Cordes: We invest across all asset classes and have increasingly found great opportunities that are aligned with our impact profile and risk/return objectives. These opportunities include public debt and equity as well as private debt and equity investments. I’m most excited about a recent private equity investment in an ethical fashion enterprise, Soko, based in Nairobi, which uses a technology platform enabling artisan staff to be more easily connected with merchants sourcing their products for direct shipment to retailers like Nordstrom. This increases by four times the wages the artisans receive, which they can reinvest in their business or apply to family needs.

We invest in education companies like Bridge International Academies, a network of low cost schools in Kenya also funded by the Gates Foundation. We are also an equity investor in Microvest Holdings, an asset management firm investing in underbanked markets via a family of funds.

For public equity and debt we hire managers to advise us on different strategies. U.S. Trust advises us on public debt portfolios managed through Breckinridge Capital Advisors and Community Capital Management. First Affirmative Financial Network advises us on public equity strategies, including separately managed accounts with Everence and Pax World, both of which have outperformed their respective benchmarks since the foundation’s date of investment through November 1, 2016.

Ellis: Stephanie, your website says that all new investments being made by the Cordes Foundation’s endowment are impact focused as well. Where are you finding opportunities?

Cordes: We are global in our approach with investment exposure in over 75 countries.

Ellis: Vanessa, what is driving the expansion of impact investing asset classes and strategies?

Grellet: This year the Nexus Group included ESG strategies in our definition of impact investing. Diversification of risk is an important part of this expansion. People with large portfolios want more choices across asset classes.

Many investors don’t understand that impact investing is not an all or nothing proposition. Advisors can start small for their clients, investing in one impact product. Investors should decide what impact strategies are important to them, then have their advisors research the available products.

As the pace of the millennial wealth transfer increases, advisors must be more innovative and learn about the investment preferences of their clients’ children as well as the generation controlling most of the wealth now. This approach creates more trust and stickier assets. It’s a win- win for investors and their advisors.    

Ellis: Are there tools that advisors can use to facilitate this engagement with their clients?

Cordes: I think there’s an education barrier for investors and advisors regarding impact opportunities and how to begin the conversation. I participated in the the Harvard IRI (Institute for Responsible Investing) nextgen program, run in collaboration with the World Economic Forum, which engaged 30 millennial impact investors and included training on how to have a credible conversation with your advisor about aligning your portfolio with your values.

Grellet: Creating a community of like-minded young investors exchanging ideas with members you know have already faced a situation you find yourself in is what we’re trying to build. Nexus members also participate in other investor groups that exchange information.

Resources for their financial advisors include USSIF, The Forum for Sustainable and Impact Investing, which supports its investment industry members through education and advocacy programs. The Global Impact Investing Network (GIIN), SOCAP, Confluence, Big Path Capital and others put on conferences that can help advisors begin the conversation with clients and develop a peer support group.

Ellis: Where do Nexus members find information to share with others in the network?

Grellet: We curate useful information for our members to make it available through social media, our salons, speaker series and our conferences. We also encourage our members to participate in and speak at other conferences to spread the word about Nexus. We have a research and reports section on our website available to the public where you will find the latest reports on impact investing organized by themes cutting across asset classes, sector and geography. We also offer annual sponsorships opportunities for advisors who want to participate in our impact investing journey.

Ellis: Stephanie, aren’t there more millennials actively engaged today in managing wealth for family foundations and family offices than there were even a few years ago?

Cordes: Yes, today the conversations around how to make changes for the better within family wealth management are shifting toward alignment of investment choices with personal values. This is happening across generations and not just with millennials.      

Paul Ellis founded Paul Ellis Consulting to work with financial advisors who want to integrate sustainable and impact investment strategies for their clients.

 

To read other article in the series, click on the links below:

http://www.fa-mag.com/news/the-wise-woman-and-the-millennial-23738.html

http://www.fa-mag.com/news/millennials-leading-the-way-in-sustainable-investing-24019.html

http://www.fa-mag.com/news/millennials-mainstreaming-impact-investing-24487.html

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/news/like-minded-people-with-purpose-and-passion-25457.html

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/news/sri-investing-well-positioned-for-growth-26394.html

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/news/making-a-positive-impact-27853.html

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