How to Help Clients Make an Impact

Aligning interests and investments may be more important to them than you realize — and easier than you think.

Every year on “Giving Tuesday,” the global day of giving following some of America’s annual two largest shopping days (Black Friday and Cyber Monday), I donate to a research hospital that is working on treatments for a rare form of cancer that my mom was diagnosed with in 2013. While she’s lucky they caught her cancer early, most are not, and making a small annual donation towards a cure feels like the least I can do to make an impact.

Now imagine if my financial advisor knew about my annual donations to the research hospital and recommended strategies to align my portfolio with my desire to support oncological research and bio-technology innovations. There are a few ways in which my advisor could recommend aligning my investment portfolio to these interests.

Align, integrate or target: personalizing your portfolio

My advisor could suggest screening out companies or even entire industries with business activities that are considered harmful to human health: things like tobacco, alcohol, sugar, or fast food. This would be a great strategy for a client who wants to avoid investing their portfolio in things their doctor might tell them to stay away from.

In addition to applying these screens, my advisor could recommend an ETF that tracks biotech and pharmaceutical indices, intentionally giving my portfolio exposure to companies working on solutions and cures to diseases around the world.

What if my advisor went a step further? They could recommend a strategy that is designed to capture opportunities in the biotech industry, focusing on companies that are expanding medical access to untapped and underdeveloped markets and measuring the outcomes of that work.

Some investment strategies focused on opportunities in health might also consider avoiding exposure to pharmaceutical companies that have produced harmful drugs, like opioids. Even if a company has great financial returns today, the fund may avoid investing in it to avoid any future volatility. Should the company continue to produce drugs that cause significant harm to people, it could lead to lengthy legal or public relations crises and settlements that affect the value of the company.

Not only would my portfolio be aligned with something I care deeply about, but by investing in ways that intentionally seek unique opportunities related to my personal interests, while avoiding specific risk factors in the investment process, the long-term growth and value of my portfolio might ultimately be better than it would by simply investing in a strategy that would broadly expose my portfolio to the industry.

The point that’s often missed about sustainable investing in the public markets is that it is just another approach to personalizing a client’s portfolio. Sustainable investing is an opportunity to connect with your clients in a meaningful way and identify the things that matter most to them. If your client cares about the food they put into their body, the type of development that occurs in their neighborhood, or even where they donate their philanthropic dollars, why wouldn’t they also care about what their investment portfolio is allocated to?

Carlee Griffeth is an ESG data and research analyst for Envestnet PMC’s sustainable investing team. Her work is focused on ESG and thematic impact due diligence.




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