Financial Advisor contributor Paul Ellis recently interviewed Jeff Gitterman, co-founding partner of Gitterman Wealth Management, to discuss the motivation behind the creation of their ESG portfolios.
Ellis: Jeff, please give our readers some background on Gitterman Wealth Management (GWM).
Gitterman: The story of GMW’s development goes back to 1990 when I began focusing on college professors as a target market. The firm grew slowly until 1996 when I got a slot in the New Jersey Alternative Benefit Plan. At the time it was a $6 billion plan managed by TIAA-CREF and we got added to the plan with AETNA Financial Services as our plan sponsor for 403-B and 401-A plan options for the individual Defined Contribution (DC) plan.
Once that happened it soon became clear that I could not service 30,000 faculty members in the system, so I started hiring other advisors to grow and support that market. In 20 years, GWM has grown to 25 employees and three offices with approximately $1.5 billion under advisement, which includes our assets under management, DC plan assets and assets outside the plan, which we manage for retired faculty.
Ellis: You’ve built a very successful RIA practice in that market. What has motivated you after 20 years to create ESG (Environmental, Social and Governance) portfolios and begin directing time and resources from your RIA, including your personal commitment, to the sustainable investing market place?
Gitterman: I’ve always been focused on personal growth and development through meditation and other learning practices. Unfortunately that was separate from business growth and development, with no clear way to align the two ideologies.
As an advisor, I’ve always done what’s best for my clients, but the investment strategies I offered were solely return-on-money focused. I had not found an investment solution for the mass-affluent client that put planet first, people second and profit third.
When Morningstar launched their globe analytics system, it dawned on me that my personal creative efforts in film making and writing could be combined with a similar investment philosophy and model that allowed me to pour my passion into my wealth management business with global reach.
Ellis: So now you’re a year into the process of ESG research and portfolio modeling for your clients and beginning to offer the research to other RIAs. What’s the benefit to GWM and what has motivated you to extend this effort beyond you own RIA practice?
Gitterman: I started looking for an ESG solution in the RIA world and couldn’t find any for the mass-affluent market. There are a number of solutions out there for the high net-worth client, but we didn’t find any suite of solutions for clients with a $500k IRA. So, we began constructing our own portfolios, as well as talking to other RIAs and advisors in the Greater New York area.