| July 3
July 3 Financial adviser Mark Rogers had his
doubts about investing strategies that aim to promote social
good while also making money for clients.
Rogers, a Morgan Stanley adviser in Farmington Hills,
Michigan, was used to a more traditional way of doing good with
money during his 30 years in the business: Invest first, make a
return, then give.
But younger advisers who recently joined his Morgan Stanley
team convinced Rogers of the demand for so-called "impact
investing," and the opportunities it can create for their
practice. "The younger people on the team kept saying we need to
do more for our clients than just make money," said Rogers,
whose team oversees $1 billion for family offices and
The business potential is not insignificant. About $1 of
every $9 is invested in sustainable and responsible investing
strategies in the U.S., according to a 2012 report from US SIF:
The Forum for Sustainable and Responsible Investment.
Interest among younger investors is likely to boost that
figure. Three-quarters of high net worth investors under age 40
said that driving social impact is extremely or very important,
compared to just under half of those ages 60 and older, in a
survey early this year by Paris-based Capgemini, a
consulting and technology firm, and RBC Wealth Management, a
unit of the Royal Bank of Canada.
Some investors and advisers misconstrue the term "impact
investing" as an asset class, say industry experts. It is an
investing style that allows for a range of choices, everything
from excluding coal or firearm companies from a portfolio to
investing only in companies that follow strict environmental or
Possibilities also include investing in a private start-up
whose technology may help solve global problems such as lack of
access to clean water.
A community foundation client is one success story for
Rogers' team. The foundation publicized an investment that
focused on companies with good environmental and social
policies, which triggered an increase in donations. The boost
meant there were more foundation assets for the team to invest,
Morgan Stanley has offered a range of impact investing
products since 2012. An investor, for example, could choose a
mutual fund that excludes tobacco or firearms companies. Last
fall, it launched an initiative to help support research and
development of impact investing. Morgan Stanley is $2 billion
into a five-year goal of attracting $10 billion of client assets
for impact investing.
Advisers who want to ensure satisfaction should bring up the
topic of impact investing before clients do, said Lloyd Kurtz,
chief investment officer at Nelson Capital Management in Palo
Alto, California, a $1.8 billion registered investment adviser
affiliated with Wells Fargo Asset Management, a unit of Wells
Fargo & Company.
"There are clients who want it, there is a market, and if
you choose to ignore it, you may miss out," Kurtz said.
(Editing by Suzanne Barlyn and Chizu Nomiyama)