Money For Good - Value Driven Wealth Management

Hello and welcome to the Philanthropy Impact Podcast. Listen on for insights into philanthropy, impact investing and sustainability. Good afternoon and welcome to our wait wait till some people come in. Is an outside? Oh okay. Too excited. Okay, we should just start then.

Good afternoon and welcome to our member series, Walk In My Shoes, where today we'll be discussing money for goods, values driven wealth management. My name is Bryson Masby and I'm the training executive at Philanthropy Impact and today is my job to introduce the session and fill in for Zoom. As a membership driven organisation, our main focus is to work with professional advisory space, offer networking and educational opportunities.

With the aim to support professional advisors to empower their private clients and their families to match their purpose-driven wealth management strategies with their values. This series is part of our free resource team and a wider network. We encourage the participation of all those in the space to collaborate and learn and share.

As this is a short 30-minute session, we encourage your participation in the chat. Please give your thoughts and ask questions. I'm here in the background if you have any issues and would like to know would like to know more information about the training that Today we are joined by a great panel of exceptional minds in the industry. We welcome Keris Gardner, a partner at Morris Turner Gardner, who heads up the charity and immigration team.

And joining Keris, we have James Broderick, the director of the Impact Investing Institute, and finally Sean Kieran, the CEO of Greengage, the digital merging. Facilitating this discussion today is John Pepin, the CEO of Philanthropy Empire. Thank you all for joining us today. Now hand you over to John. Great. Thank you very much, Brighton. Um

That's a really helpful introduction. Maybe I could ask each of the panelists to give a quick 30-second overview of who you are and what you're interested in this. And then I would ask you once we've done the three of you. to uh uh answer the question what does money for good mean? So uh uh Jamie, could you start off about uh who you are so people know? Yeah, gladly, John. I'm Jamie Broderick and I'm deputy chair at the Impact Investing Institute. And what we what we try to do.

Is promote the type of investment that flows capital into investments that create a positive social and environmental benefit alongside a financial. Great, thank you. And you're also on another board, I understand. I'm also on the board of philanthropy impacts, yes. That goes for several of us. Yes. Can you hear me, John? Yes.

Great, thank you. Yes, I'm a partner in a firm of private wealth firm called Morris Turner Gardner. My interest in this is that I act for a number of high net worth and ultra-high net worth clients. um, the majority of whom are very interested in philanthropy and supporting, obviously, good causes close to their own hearts. I too am on the board of Philanthropy Impact. Thank you. Um

Sean, who are you? So I I'm not on the board of Flentry. Um Sean Kiernan, the CEO of Greengage, which is a digital merchant banking pioneer. What we do is offer account services for businesses and high net worth. um with a personal relationship manager. And on the side we have a business where we can surface uh funding for them. Uh we care a lot about impact and and trying to help entrepreneurs do it do the right thing.

Thank you very much. So one person with a philanthropic perspective, the other from an impact investing, and the third from a crypto perspective. Would that be fair to say?

Okay, so the first question really is, what does money for goods mean and what does it look like? So Caris, if you could talk from a philanthropy. Yeah. Um obviously money for good is obvious though just just from the from the quote itself, uh it means money for good causes, but of course it means different things to different people because all my clients have very different ideas of

the good that they are seeking to um s achieve and obviously the charities that they want to support. So very much it depends on the individual. But having said that, in an overall general viewpoint, it means um putting your

your hopefully substantial contributions uh towards um a good cause or causes that are close to one's heart. That's how I see it. That's how most of my clients would see it. Uh there are probably many other um interpretations of money for good, but uh that's certainly the one I come across mostly when I'm talking to my my clients. And do they use that term money for good? No, they don't. They don't actually. They would normally say, um, I want to put my money uh

to I suppose they would use the word good, but they would know normally think of it as doing good as opposed to they would the phrase money for good. Um so it yeah, th the the the word good comes into it all the time. So in that in that sense it's uh uh a well recognized term. Yeah. And uh is there any um uh sense of harm versus good? And I'll come to Jamie in a second around that as well.

Um, yes, uh yes to a degree, in the sense that um uh when they're looking at setting up their own charities, of course, and then they're looking at um uh investing in particular in this situation, uh there's a quite a strong feeling that investing must be for good, which includes avoiding investing and causing harm by one's investment. So that tends to be where that crops up more than more than anywhere else.

Jamie, is is that your perception of what's happening and what's your what does money for good mean for you and what's it look like? From an impact of the perspective. Well, we operate we operate less in the philanthropic uh area, although we think there's a continuum between investment all the way into philanthropy. In many respects, we're trying to do some of the same things.

Achieving them in different with different approaches. But I think money for good to me is simply a recognition that when you invest there you can work the you can work your money harder. You can both get a financial return and if you're intentional.

You can also apply it to things that are generating positive impacts socially or environmentally. So there's an intentionality about deploying your investment assets that allows you to get your return, but also do other things, but you have to be focused on it. Is there is there um um is does is there discussion about the harm versus good concept um when you're talking to people who are doing impact investing?

Yes, I think there's I think most people think about their money doing good, but the the reality of of the world is that. When you deploy capital, you're going to do some good and some bad. And what you're really trying to do is optimize the good and minimize the bad.

But all financial interventions are gonna create a combination of good things and bad things. And you know, you can picture that with uh electric cars would be a good example because it leads it it helps an investment in electric cars. helps promote the electrification of the transport system, but at the same time it has

negative impacts in the uh in the sourcing of the raw materials to build them. So you really, you really need to balance, be aware of the both the positive and the negative impact, and then balance those. Um as you make your investment decisions, if you're trying to do

So people use different terms, impact investing, ESG investing, et cetera, et cetera. Is there a distinction that has to be made in this discussion about money for good? Well, I like the the I like the term money for good because it's very straightforward and clear. I think the ESG investing is an extremely ambiguous term and nobody quite knows what. It it's used ambiguously. So some people mean one thing and other people mean another.

I like money for good because it's about deploying money to do good things. That's a pretty intuitive concept. I think impact investing is a bit similar in the sense that you're investing and trying to create a positive impact. Um that's a pretty intuitive. Um, I have a dog now barking at the door, Sean. Sorry about that. Sean, from a crypto perspective, from your perspective.

What does money for good mean? And is the controversy that exists within crypto in the last year or so having an impact on that? Oh uh definitely. Uh I I think and first I'll just explain what we deal with in in terms of crypto. Um so a large part of our clients that we offer the uh corporate accounts to are are crypto companies and we also then work with

both the traditional sources of funding, so family offices, credit funds, et cetera, to provide debt to our clients, as well as some of the new sources of funding, the likes of uh what crypto can open up. Um And so we we work with these technologies and we think they're fascinating in terms of the traceability and and the the plumbing, if you will, of efficiency for the back end of moving money around.

Um, but there's also a lot of negatives that we've had to to cope with. And we we mentioned ESG. I think the E in terms of the energy use um for for running some of these systems is being worked on. Um, but I I think the one bit that I'd like to highlight uh is the idea of effective altruism, um, which was um something that was uh a a tagline used for um Sam Nekman Fried at FTX and I think that has definitely hit the spotlight um in terms of how he's uh probably not the best advocate.

um of of tracing funds and and looking how we can make um money that are uh money that are given towards good things uh have have more of a technocratic um aspect to to understanding how that all fits together. I think that is a useful tool, for example, and crypto can help facilitate that with um the likes of transparency and efficient tracking.

But I think it's probably not the be all and end all um by any means of of properly giving for good. Um and I'm sure the panel will explore that. Is there uh uh actually crypto for good? I think so. Um I I think th there's a lot of uh individuals in the space that care a lot about um what's good in society. I think initially it started out as a more libertarian movement.

um but not exclusively. And uh people that have made money or who are uh engaged in the space are often um doers, uh if you will, and they're often keen to to to do something not just for purely financial aspects, but to give back. Um I would I would exclude probably the more speculative trading uh individuals in in that um analysis, but I uh and again there are a few of them who are quite keen to to give back. And I know we had one of them attend.

Crypto for good breakfast that we held uh together recently at CMS. I'm an individual who made a lot of money and and was keen to to say thank you by by engaging in philanthropic philanthropic endeavors with the funds he'd earned. Just to go back to Jamie for a second and maybe Sean is the um Is the whole issue of people being uh certain people being against ESG investing?

Um uh that seems to be coming up, not so much in this country yet, but um is that going to be an issue that's going to impact on uh on the whole concept of money for good? Well, I think that's a good example of uh ambiguity, the the ambiguity that I was referring to, because I think ESG investing. Really has two significant dimensions. One is looking at environmental and social and governance issues that affect the value of the company.

And that just looks like good investing. Of course, you when you assess a company, you look at whether uh the governance is good, whether they're making a hash of their employee relations, and whether they're creating uh environmental. But the other piece of ESG investing, this is the ambiguous part, is for many people it also means you're looking at the extent to which the companies are having a positive impact on society and the environment.

The backlash against ESG Investing is against the second one, not the first. I think everybody, regardless of political ideology, can agree when you try to figure out whether a company is a good investment, you should look at the impact of its environmental, social behaviors, and then its governance. That just is so straightforward. But what's happened is

The proactive stuff is now contaminated the first. And so you now have situations in the US where it's now not permitted to take account of some very basic investment concepts in assessing the value of a company. Okay, thank you. And the governor of Florida is one of those from what I've been reading in the press. There's a couple of states, yeah. Yeah, okay. Sean, do you have any comments on that?

I I think Jamie covered it well. Okay. Um and is the concept within crypto and in the area that you operate in, do they uh use terms like ESG investing, impact investing, that kind of thing? Increasingly, yes. Um I think as the sector grows up, uh uh there there's a certain trend. Um I I I I think we're all familiar with the UN development goals, but the i the idea of firms then engaging with professional capital markets.

needing to step up and and and and correspond with best practice. Uh that's definitely been a trend that we've seen with the bigger firms. Um it it it runs against to a certain extent the um the earlier libertarian uh ideology I think ESG is is working through through that. But um as soon as you hit a certain size um and and you engage with sophisticated monies, um this is This is how um we we need to operate these data.

Okay. Uh Keris, are you picking up on any of this stuff with your clients at all as a part of of the uh nature of discussions or anything like that? Well a bit in the sense that clearly picking up on Jamie's point. um everyone agrees that um we do need to uh help the environment. Uh everyone no one would say that you know supporting and improving social

social issues, society in general are bad things. But um when it comes to ESG as the concept that we're talking about now, I think most of them would say that they are talking to their investment advisors about that. They don't really come to me to talk about the investment side so much as um

Uh also all I hear is sometimes people rolling their eyes, which could pick up on Jamie's point that um the second of his two two um uh prongs there uh seems to be the one that people think of when they think of ESG. Which isn't necessarily a good thing because it's give it's almost giving it a bad name and I don't think it really should have a bad name, if you see what I mean. Yeah, thank you.

Um, I'd like to talk a bit about research for a second and and uh if you could uh uh discuss the implications of it. So uh before I talk about the research that we just recently did. There was a study that came out from Fidelity Charitable Research. that just uh that showed that uh firms who offer charitable planning to their clients at six times the medium assets of those who don't, three times organic growth, 1.3 times new money, and higher trust levels.

Um the another one that came out, investing for global good, a power for good in 2022 from Count of Wealth. It basically indicated, the research indicated that older generations, that there's a growing demand for satisfaction and impact investing, which seems to go against what I hear a lot from advisors and stuff. Our research is a bit different from that. Um, we have a uh uh we work with uh millennials gen Zed Women of Wealth, so we have

special committees around that. So we uh asked um uh some people uh consultants to just do a preliminary look at this whole thing. So they interviewed 11 millennials and Gen Z wealth holders and nine professional advisors. Um the conclusion they came to was that the world is changing, and with it the needs and expectations of wealth holders are changing, and that they're increasingly seeking to align their wealth with their uh values.

Um the interesting thing that came out of the study, other than that, which sort of reinforced other studies. was um that the advisory industry is uh falling short of the expectations of the emerging wealth holders. And if you take the uh the um uh candidate uh report that would apply as well. So what they said was that there's six significant obstacles.

uh to uh the professional advisory committee that they're seeing uh supporting uh what they want to do with their money, and that they're starting to disengage, i.e., fire their advisors. So they see that in the firms there's a lack of clear strategy and services. They knowledge and credibility is low, and there's a lack of uh leadership commitment.

And and basically it it looks like if if uh firms want to do this, then they can benefit from client retention, differentiation, talent attraction, and compliance. Um, and so that's sort of a very quick overview of the three studies. Um, so what are your impressions of that in terms of of um of what we're talking about about money for good? Who would like to start?

Yes. Shall I shall I start? Um yeah, absolutely. All those things resonate really, really clearly with me. Um what I would say is that where people are looking to um engage in philanthropy. The first port of call should be their wealth advisors. So every wealth advisor I talk to these days, I say, do you have a philanthropy offering? Because if not, you should have.

Partly because well mainly because, you know, uh they they're the ones who will be able to say to people, look You've got enough wealth already to look after yourself and your family in retirement, your your your spouse in retirement.

Um, so they they would they do that whole exercise of how much money do you actually need to see you through to the end of your life? Therefore, how much money could you afford to give away? Um, that's partly what I do, but of course I don't have necessarily have the whole um financial spectrum of all their money and assets and pensions and so on. But of course, wealth advisors do in that in that sense of the word, the sort of the IFAs of this world.

Um so I think they're missing a massive trick there in terms of um you know helping not helping, I shall we say, their clients um in at least thinking about philanthropy and and many people

in my experience, don't think about it unless it's raised with them. Not because they're mean, but because it's something that hasn't really uh you know, stu stuck home with them. They um They they're sometimes they're only too happy to have suggestions that they've got enough money, if they wanted to give anything to charity, was there somewhere some cause dear dear to their heart?

that they might want to um give to. And so you know that sort of gets the conversation going at least, which is the only way you're ever going to increase giving, particularly from people who haven't started giving already and therefore don't know their way around. Okay, thank you. Jamie, uh, what are the implications of this research from from your perspective, especially when you look at ESG, which seems to be going up like that?

Well, I I mean I like Caris' description because I think once, you know, when you ask what is the money for, what is the money trying to achieve? You get into a conversation with the family that is multi-generational, touches on value. And that that conversation itself. deepens the relationship with the family on a multi-generational basis. All those things are just what the doctor ordered for somebody who's trying to solidify their client base. So if you're a financial advisor,

This is this is a gift. This conversation on values, on philanthropy, and philanthropic intentions is a gift to deepen that relationship and maintain the loyalty. I mean, when you you mentioned the fidelity research, the fidelity research. Uh found that the net promoter score, if anybody uses that, um was sixty seven. I mean it's a very, very high score for advisors who are engaging in this conversation. So I think it there's an important business imperative.

for advisors to be having this conversation because that is the that is the essence of the relationship with the family and that is where you build the loyalty that maintains the stability of the relationship and ultimately the value of the business. But it's just not talking about philanthropy, is it?

No, it's what is the money for? What do you what do you want the money to do? What is it intended to do? And some of that is philanthropic, but some of it is up is the deployment of your investment asset. in ways that I mean you're basically going to people and saying, Do you want to deploy your assets, your investment assets indifferent to the impact that it has, or do you want to

Try to create positive impact while you're getting financial return. So no, it's not just about philanthropy, it's the whole spectrum of uh of deployment of asset. I find it ri intriguing. We we have specialized training around the whole consumer duty and suitability discussions. Um and um I've been in conversations with a number of senior uh uh people within the finance industry at chief executive level. And uh they're so preoccupied.

with uh just getting the basics of consumer duty. Uh there hasn't been hardly any discussion of of philanthropy of sorry, of of training. I was at a conference the other day. It was all around consumer duty, 200 people in the room, 200 people online, and the only person that brought up training was me. And so as an outlier around all that. Are you finding, Jamie, that from a consumer duty perspective, that uh there's a long way to go around this?

Well I think there is, but I think the regular I mean the FCA has said quite explicitly that we don't see how you can assess the suitability of your recommendations to clients without examining what their what their value preferences are. I mean it's just part of maintaining sustainabil uh suitability. So that's a pretty basic requirement that an advisor assess suitability.

And if and if probing on values is part of that, then it actually ends up being uh a regulatory requirement that you have something a conversation along Yeah, that's a that's the message we're trying to get across. Uh but it's it's quite fascinating um how um Our specialty is teaching how to have those conversations and not in the product. And it's fascinating having these discussions with senior people and how they're where their focus is.

Sean, what what are you uh seeing in this whole area in terms of this? I I saw there was a question as well about Silicon Valley Bank and kind of the overfocus on on ESG. Um i if I may, uh I I think there's a component um of of

looking through ESG and working with it, which can be performative. Um and I think the danger of that is If if we're producing glossy reports which kind of speak to credentials for ESG, but if you don't kind of live and breathe an ethical or uh a good philosophy for for a business or for for for advisors working with families.

I I think there's um there's there's an issue that becomes tick box as opposed as opposed to um uh real or essential. Um and I think uh what one of the things that we're we're seeing is Uh, particularly in in our industry, which is more I would say in the technological space.

people are expecting to have fun and expecting to have a human connection. Um and and charity is one of those things that breaks through because uh e even for someone that thinks thinks like a a techie, um Uh if you have uh a component of an interpersonal relationship which could span generations or just uh f first generation wealth. the the day to day um approach that most other firms would would bring to them, which is purely

Uh and unfortunately when you enter into a technical world, almost the law of averages where um everyone's looking to systematize relationships and what we're trying to do and what we th think people respond to is when there is something that is touching them. Um Uh so even in our world of of crypto, uh I think um th these themes uh do cut through um and and help people to to see the wood from the trees and not just have uh necessarily a performative um approach to to to doing the right thing.

So philanthropy and impact investing can be fun as well. So it's just crypto. Would you not agree with that, J I totally agree? Um okay. Um Yeah, uh there's a whole bunch of other questions I like to ask about how SDGs fit into all this. Um, but I guess I'll end uh we've got four minutes, so um If we look at look at um Um

uh the uh trends and look at uh the giving for example. I mean uh giving is really uh low um compared to what it uh could be so uh recent research from HMRC uh self-assessment data showed that the average monthly donation was 48 pounds. And I know earlier research was showing that medium gifts were anywhere from 500 to a couple thousand. Um, that means half the wealthiest people in the country are giving considerably less than uh than that medium.

Um, so um what we have three minutes, so what's the solution to giving getting more giving in in uh these areas, getting more impact investing and and uh uh making crypto like the best and good. So well I let me start off by saying um keep keep the conversations going and uh you know really engage the uh successive generations as well. Don't just talk to the uh you know the the sort of the the older generation but bring in the next gen uh because I think they ha they are

In my experience they are a lot more uh philanthropically minded. Certainly They want impact and that's that's the key. So the the overlap here, philanthropy versus impact, that is very, very close in their minds. So I think that's where uh we will be moving over gradually to the impact investing scene rather than pure philanthropy.

Nami, how do we grow more impact investing? I think Keris has just said it, which is to say that both with respect to impact investing and with respect to philanthropy, I think. uh clients want to know where their money is actually going. So it's not just a question of writing a check to a to a charity. I want to see where my money goes. I want to see what it actually achieves. I want to be involved in the things that it ends up funding.

I think the less set the increasing the engagement with where the money is going, both on the impact investing side and on the philanthropy side, would make a big difference. It makes it much more interesting, much more compelling. when you know where the where the money is going. And I think that's where blockchain has something to contribute.

Come on, R2. Um I I think in our space, I mean ac actually there's an outsized contribution to philanthropy from people that have made money in in crypto, I think,'cause it's new new money and they're they're they're keen to uh to give back. Um I think there's two groups. One are the the entrepreneurs and the other are the the next gen in and typically families that have found this as a as an interesting um uh industry.

Uh there's various ways to use the technology. The likes of uh the Giving Block, which is an app that people can then connect with charities and crypto donations, is one way to just get exposure to a new a new group of potential donors. Um but I I think uh to Jamie's point, the technology can help open up ways of tracing things, but also make it hopefully a little bit more fun.

Um, if if you can share uh uh personal stories in a gamified space and hear the metaverse, I think John, you and I have discussed once or twice. might be a way to do it. I mean this is super early days, but um w when when you can uh just tickle people a little bit to to have that sense of joy when they do something good, uh it can only be a good thing. Interesting because one of the groups of banks that we train NetBank has has already established a location on the metaverse.

Um, so I think that's coming whatever the whatever it is. Okay, so we only have a few seconds left, final words of wisdom. Um uh Jamie. You know, just from a straight business standpoint, regardless of how motivated you are by values, I think from a straight business standpoint, the things we're talking about are going to improve a wealth management or financial advisory business because it improves the

the uh loyalty with the client and and the persistency of the client relationship. So I just think if you are you're a business person running a wealth business, you need to be thinking a lot harder about this. Great, thank you. Sean. Uh i if people are interested more on the crypto side of this, we have a little LinkedIn group we set up called Crypto Philanthropy. I'll put the link uh in the box if anyone would like to join. That's something that our two organizations have set up.

After the breakfast. Yeah. Uh cares. All I would say is don't be afraid of uh talking to your clients about this this area, both impact investing and philanthropy, because um the more you the more we do, the more people are going to relate to it and, you know, hopefully take it on board and do something. Great, thank you all, that was really fabulous. Thank you very much. That 30 minutes went too quickly.