“I see in Texas the culture of possibility. My view on Texas was informed by the space program,” he said. “Texas is seen as the land with no rules, but that can create extraordinary accomplishments. We saw a lot of leadership in ESG on the East and West coasts, it was time to turn up the volume in the middle of the country.”
Texas is still an energy state, but there’s a shift happening in Texas towards more renewable energy, said Knapp.
But because wealth management deals primarily with the senior members of families, some resistance persists.
“Conversationally, if I go in to meet a family with a traditional viewpoint, let’s say a family whose business has been brick-and-mortar retail, I’ll tell them that they don’t have to like Amazon, but it’s turning companies upside down, causing disruption and a massive industry shift,” he said. “It makes sense to look to allocate capital into those areas. We can still adhere to investment principles in terms of quality, but we can also point the needle towards where the world is going.”
Climate issues have also come home to Texas, not just in the recent deep freeze that paralyzed much of the state’s energy grid, but also in tropical cyclones like 2017’s Hurricane Harvey, which dropped more than three feet of rain on areas adjacent to Houston, causing catastrophic flooding and over $40 billion in damage.
Texas is also diverse, and the multigenerational families Knapp works with are now often a blend of ethnicities and races, especially in younger generations.
“When I am challenged by someone skeptical, I ask them if they would ever want their daughter or granddaughter to work for a company that had never promoted a woman, that never had a woman in their corporate leadership, that didn’t have women on their board,” he said. “Diversity also gives people more connections to ESG issues. A family with four generations often has someone going to the University of Texas or Texas A&M who has a classmate, best friend or roommate from places like Bangladesh or India, so families are more likely to have contact with someone who has experienced living with little access to clean water, or have been affected by climate issues.”
At Collaboration and now at Robertson Stephens, Knapp creates teams that can pitch forward-looking strategies to skeptical senior generations of client families while embracing the ideas that most appeal to younger generations, which requires a collaboration of professionals with differentiated expertise and communication skills.
And Texans are responding, said Knapp.
“Increasingly, people are calling us, they’re saying we’re the first people to talk to them about ESG, and they’re telling us that they want to see and hear more,” said Knapp. “Our job as financial advisors is to try to help our clients feel better about their investments and their financial lives, and that does mean that we need to deliver across the spectrum of risk and return, but it also means that we need to key into this global phenomenon.
“This is how we are now thinking about the future of Western-style capitalism and for-profit enterprise itself. It survives by becoming sustainable, and then getting more people on the bus to be part of the system," he said. "That message resonates with clients.”