Family Offices: Catalyzing Impact Investing and Microfinance Highlights

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Lively panel discussion enjoyed by the audience

The FWA Impact Investing Committee and the NY Microfinance Club  with the generous support of S&P Global organized a panel of Family Office (FO) asset owners and advisors experienced in bridging FO investment financial goals while creating positive social, environmental and governance outcomes.

Mary Rose Brusewitz, Esq. moderator of the panel, advocated for the role that Family Offices can make in creating a fair and just society through their  financial wealth.  The panel included  Joan Trant, Director of Marketing and Impact of TriLinc, Steven Godeke an independent impact investment advisor who works with foundations, corporations and non-profit organizations to integrate their philanthropic and investment goals and Sam Bonsey Director of Operations for The ImPact, an organization focused on empowering positive social, environmental and economic impact of investments.

Panelists with FWA Members

Panelists with FWA Members

Each panelist highlighted the personal journey that led them to the Impact Investing space.  Working in Tanzania, one panel member recalled how a poor farmer commented that 50 years ago technology landed a man on the moon and yet the farmer was still using 100+ year old labor intense farming methods.   Another panelist shared the experience of being exposed at a young age to many different cultures and acknowledged that all people shared similar aspirations: to take care of their family members and be productive citizens.  The panelists noted that the playing field for economic  well being was not level and that better financial models  were needed to ensure a more fair and equitable distribution of wealth and better environmental and social returns.

Natural resource scarcity, climate change, gender inequality and political instability are global  problems, but, as one panelist noted, present big opportunities for the capital markets.  Asset owners have a right to reclaim ownership of their assets and understand what they own in their basket of stocks, bonds and private equity and to be engaged in bringing positive change with their wealth.

The panel agreed that seeking investment professionals trained in ESG integration/alignment was a first step. Other important talking points:

  • There is a growing trend of “three-generations” involved in wealth management decisions. Balancing different values sometimes makes it difficult to make impact investing decisions that work for everyone.
  • Ensure open dialogue to understand the decision-maker and what is of importance to them (e.g. supporting the local arts v. economic development abroad).
  • Younger generations and women sometimes don’t understand what they own. Bring them into the conversation.
    • $41T of intergenerational wealth transfer from baby boomer generation to their children.
    • 98% of women change financial advisors within one year of losing their spouse (from Power of the Purse).
  • Every investment has E&S issues/consequences, every investment will be affected by ESG issues (negatively or positively).
  • Structure really matters. Need to be creative about building products that are similar to what investors are buying today with the same (similar) risk/return characteristics and fit within their Investment Policy Statements (IPS) which outline the objective and constraints for investment management.
  • Some IPS’ are very conservative (e.g. no investment in first time funds, for others these opportunities are sought out).
  • Wealth managers need to help clients understand the risk/return/impact characteristics of impact products and help educate that these don’t need to fall into the “philanthropic bucket”.
  • Growing interest in tying impact products to the United Nation’s Social Development Goals.
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