Sustainable, responsible, impact (SRI) investing is changing the role of the wealth manager from the outside in. After decades of being considered a niche practice offered by a select few forward thinking advisors, the rising generation of clients is actively seeking ways to invest assets in portfolios that reflect their values. They also understand that the historic definition of SRI – that to invest in social themes requires sacrificing returns – is no longer relevant. SRI done right can be just as financially rewarding as traditional approaches to investing.
What was a quiet inquiry among outlier clients is steadily becoming a mainstream groundswell. Indeed,A 2016 U.S. Trust report notes that 45% of all respondents are either interested or engaged in impact investing, with participation among millennials up 40% and among women up 50% over two years.
Progressive advisors are recognizing that to set the stage for their future growth, they should develop a practice around SRI. The benefits are clear, as linking values and investments allows advisors to deepen their relationships with clients. But how can financial advisors appeal to this growing set of SRI clients without losing the trust of traditional investors?
Longview connected with some of the pre-eminent thinkers in the space to gain a better understanding of the answer. The consistent feedback was that there is no shortcut, but the benefits are extensive:
- Darby Hobbs, specialist in helping advisors incorporate SRI into their practice, has seen successful transitions among those who truly explore through open exercises what clients value, what drives their decisions, and how to build the bridge between what they are passionate about and their investment strategy.
- Jeff Gitterman, founder of Gitterman Wealth Management and frequent speaker on SRI, noted that knowing the heart of client social concerns and the nuances of relevant investments allows him and his team to not only alleviate concerns, but to forge greater trust in their ability to support areas their clients are passionate about.
- Reynders, McVeigh Capital Management has for decades served as a socially progressive investment advisor. They maintain a keen discipline around delivering a consistent message about how their approach considers the potential returns on both a social and financial level.
For a deeper dive into the topic, check out our discussion paper, “Are Financial Advisors On Message With SRI?”
