The other day my mother, the rainmaker on our team and a 30-year industry veteran, asked me to show her how to “pitch” impact investing. For a few days I couldn’t quite figure out why I was so annoyed by her simple request, and then it dawned on me: When I think about investing with impact, it’s akin to how I feel about the plastic grocery bag debate.
We all know plastic grocery bags are bad on so many levels. Even though something is proven to be bad for our society, however, doesn’t mean that every person will adopt a new habit that affects their daily life. Why is that? Culture helps explain the values of a society, and our prevailing culture (of the past 50 years) is one of consumption, convenience, and efficiency. It’s fair to say that the culture of the next 50 years is one focused on consciousness and conservation. The plastic grocery bag is a symbol that embodies a paradigm shift that’s taking root and building momentum.
On one side of the debate, certain people may find it appalling that they would have to bring their own bag to the grocery store because, frankly, they are used to getting one when they shop and it’s easier and more convenient. In sum, they don’t have to think about it when they consume, they can just shop and go home. Meanwhile, other people may find it equally as offensive that someone should feel entitled to a grocery bag that will end up being used once and then will pollute the earth. Does this sound like a familiar scene at a Whole Foods parking lot near you? A person shows up to the store on a whim and proceeds to empty the contents of her purse (his bag) into the backseat of their car, just to avoid using a plastic bag (and a dirty look at the register). Such is a day in the life of a person amidst this paradigm shift in our society, wanting to make habitual changes in daily life to live more sustainably but not quite on top of it at all times (I confess, today I found an avocado in my purse and it could have been disastrous!).
The good news is: We do not need to pick sides in this debate (which is more complicated than it seems). Regardless of where we as individuals sit on this issue, we as advisors ought to be aware of the fact that our prevailing view on investing is much more akin to the one of the past 50 years than the culture of the next 50 years. Therefore, even if you find yourself sitting in the camp of consumption and efficiency and are pro-plastic bags, you also must be aware of the shift that already has taken place and now is building momentum in order to remain relevant as an advisor.
Investing with impact just now is becoming mainstream for many reasons, the most significant reason is that the consumers (and investors) of the next 50 years just now are starting to earn, inherit, and invest wealth. Another important factor that cannot be ignored is that many more women are in charge of family finances, are inheriting, and are investing, and women tend to be more conscious and conservative as investors. And, in an interesting twist on risk management, numerous boards in charge of huge sums of institutional dollars are realizing that, as fiduciaries of assets that are to last into perpetuity, they must consider risks beyond the balance sheet and seek out investments that focus on sustainability of profits on multiple levels (I call this the “business case” for impact investing).
In sum, there isn’t the perfect “pitch” for impact investing, because it’s the product of a culture that has taken root in the United States and will continue to flourish for decades to come. No catchy tag line or value proposition can encompass what impact investing represents to someone who is interested in investing in this way.
Noel Brown is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Honolulu, Hawaii. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.
