Seeds Investor, the developer of an environmental, social and governance analytics platform, has added two taxable fixed-income options to its offerings for financial advisors and their clients who care about values-aligned investing, said Seeds founder and CEO Zachary Conway.
The added managers are Nuveen and BlackRock. They join AllianceBernstein, who partnered with Seeds earlier this year to bring tax-free municipal bond exposure with impact to Seeds’ platform.
These fixed-income ESG managers were chosen to complement what Seeds does on the equities side, which is create and manage custom stock portfolios for advisors and their clients. These additional fixed-income options are now a differentiator between Seeds and its competitors, as the majority of ESG investing platforms focus on equities.
And there’s good reason for that, Conway said.
“On fixed income, there are two layers of analysis. The first layer is who’s actually issuing the debt? How do you view that company? Then on the second layer, you have to ask what is the issuance being raised for? What are they spending the money on?” he said. “Equities are difficult to begin with, and that’s just one layer. But the second layer that’s added in fixed income, that adds a lot to the complexity of these investments.”
Conway said at some point Seeds will develop their own customization capabilities for fixed-income investing. “We want to be at the forefront of that development. We want to offer impactful investing in all asset classes across an entire portfolio.”
Conway, who is also a registered investment advisor, said financial advisors are overwhelmed with ESG options and with pressure to make sure the process truly matches the label. “How are they quantifying impact, or are they not? Do they just have a [vague] idea of impact? Seeds offers vetting by a third party,” he said.
The Seeds platform lets advisors deliver complete portfolios to clients that align with both personal values and financial goals, beginning with a brief questionnaire to unpack how a client prioritizes the many issues that fall under the ESG umbrella. Once a customized portfolio is generated, the platform can also import a client’s non-ESG portfolio for comparison, so both the client and the advisor can confirm that performance is not sacrificed for impact.
“There is a wild, wild disconnect between how we are wanting to align our money and what financial advisors are showing as the possibilities,” he said, pointing to Google trend statistics that show the number of times people have searched for “ESG investing” has quadrupled over the last decade. “People are googling it themselves because advisors aren’t bringing it up in conversations.”