Commitment to Impact
Most advisors tell me they entered this business to help their clients achieve their goals and improve their lives. ESG is the opportunity of a lifetime to deliver that experience.
Dana M. D’Auria, CFA | Co-Chief Investment Officer
At Envestnet, Financial Wellness means more than just meeting your financial goals – it’s also about reflecting on the impact you want your wealth to have on the world.
As an advisor, engaging with your clients on impact is a way to help them do both.
Impact investing is one of the fastest growing areas of the managed money universe and offers investors and advisors an investment approach that addresses both their financial goals and environmental and social values. Envestnet’s impact investing platform offers advisors unparalleled access to best-in-class impact and ESG investment strategies and technologies and provides ongoing practice management and education in this exciting and evolving space.
Compelling Business Opportunity
Deeper Client Engagement
Better Portfolios, Better Outcomes
Impact investing is the fastest growing segment of the professionally managed money universe, driven primarily by the appeal of “doing well by doing good”. Today there is more than $12T invested with sustainable, responsible, and/or impact investing criteria.
While this movement is being driven by younger generations, it’s not just the Millennials who want to invest with impact. More than half of Gen-X and Baby Boomer investors want to align their investments with their values, and those numbers are only trending upwards.
With an unprecedented transfer of wealth about to take place, the demand for impact investing solutions is only likely to expand. According to the Pew Research Center, millennials are currently the largest generation on the planet, and over the next 25 years, they’re set to inherit $68 trillion from their parents.
Impact investing is complex and nuanced, making it difficult for investors to achieve success without the support of an advisor. Until the industry has fully adopted impact investing, this is still a key area of differentiation for advisors, and as more money flows into the hands of those who want to generate greater impact with their investments, there’s a compelling case for integrating impact investing into your advisory practice.
In a world where advice is becoming commoditized (and replaced entirely with robos), integrating each investor’s individual values into the advisor/investor discussion takes on increased importance- and provides that opportunity for differentiation. Industry surveys are starting to show that investors whose values are reflected in their financial planning and investment decisions have much higher satisfaction levels with their advisor relationships, and advisors who use impact investing as a lens for getting to know their clients better are finding faster growth and less volatility in their books of business.
As advisors and investors start to build more personalized, values-aligned portfolios, the depth of the relationship deepens and those investor clients are less likely to seek advice elsewhere. Envestnet’s impact investing platform is built to allow that hyper-customization that investors are seeking in their portfolios.
Portfolios that satisfy an investor’s financial goals and their social and environmental outcomes are inherently more interesting - and impactful! - than portfolios with only a singular outcome. Innovations in impact reporting are helping investors better understand the true impact of their investments, which is reinforcing the notion that you can “do good and do well” at the same time.
Long gone are the days when “socially responsible” investing meant giving up performance. Today, focusing on positive social and environmental outcomes can actually enhance investment performance. This is especially true with ESG integration, an approach that focuses on measurable, industry-specific environmental, social and governance (ESG) factors that often help create more resilient portfolios by identifying and mitigating intangible risks and driving long-term outperformance by identifying and investing in long-term demographic and economic shifts.
Personalizing portfolios can introduce active risk and a deviation from market rate returns, but with Envestnet’s guidance you can build – and your clients can benefit from – portfolios that achieve both expected returns and values-based outcomes.
Data as of December 31, 2020.
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