Impact investing is growing. The Global Impact Investing Network surveyed investors and asset managers in 2016 and estimated the sector to be $22.1 billion in assets under management. In 2017, that estimate grew to doubled to $228 billion in 2018., representing a 5-fold year-on-year increase, and then
Financial Advisor Magazine noted four common hurdles faced by investment advisors and wealth managers when approached by clients seeking impact investment options. Whilst investors may know what is important and in their opinion impactful, working in collaboration with an investment advisor can help them realize their impact goals as part of an investment strategy. In Chapter 8 of my book, Integrated Investing, working with your financial advisor is one of the integrated investment relationships you can develop to help put impact investing into practice. In this post, I’ll examine two of those hurdles and address the other two in a future post.
Hurdle 1: I’m not sure what counts as impact or ESG. How do I know which products are actually impactful?
Impact is personal, however there are frameworks for identifying, articulating, and communicating the impact that aligns with your values, goals, and investment strategy.
At Pique, we break things down into the why, who, and what of impact. We talk about investing as “taking care of the village”, which means ensuring that we, our families, neighbours, community, planet, and future generations have access to the essential resources needed to survive, thrive, and be happy.
- To survive, thrive, and be happy is the why,
- We, our families, neighbours, community, planet, and future generations are the who, and
- Access to the essential resources is the what.
In an earlier post, we describe the different categories of essential resources and levels of access. We articulate impact as the improvement in access to essential resources, which we believe empowers people and creates more equal societies.
Hurdle 2: How do I add this in a way that complements my existing practice?
Making decisions about investment opportunities that take care of the village and help create a better world needs to be baked into all aspects of your advisory practice. Here are some things to think about:
- The vision and mission statements for your practice.
- Market fit – what do your customers want and what do they trust you to advise on?
- Access to products – what impact investment products do you have access to? Does your network include impact investment opportunities? Who do you need to speak with to extend your network to include such alternatives?
At Pique, we are receiving more and more inquiries from investment advisors seeking impact investment opportunities for their clients. Our impact fund offerings – Pique Fund and Pique Fund II have caught their attention. This is a noticeable change we’ve witnessed over the last five years.
In a future post, we’ll take a look at two more common hurdles to adopting impact investing.
For more details on the concepts of access to essential resources and impact investing as taking care of the village, buy Integrated Investing: Impact Investing with Head, Heart, Body, and Soul, available at all major online book retailers.
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