Effective Impact Investing

I’m excited to announce a blog post written in collaboration with Gabe Rissman of Stake and the Real Impact Tracker, on the Effective Altruism forum, entitled Effective Impact Investing.

A little background, as this links to a fairly obscure corner of the internet: in the distant past, I was a Philosophy major at Rutgers University where I became involved in the philosophy club and founded the Rutgers Undergraduate Philosophy Journal. Through my studies, I became involved with a group called Giving What We Can, which examined both the impact of our charitable dollars (much of which go to administrative overhead at various charities and is otherwise not put to work as donors expect). Bob and I have since been back to Rutgers to speak with this group. 

While I was studying Philosophy, my partner, Bob Goellner (then my financial advisor) introduced me to Sustainable, Responsible and Impact Investing, and how we can use Environmental, Social and Governance factors in the investment process, and I was struck by how I could align my investments with my values and use the power of money to create change in the world. I became a financial advisor due to my desire to help people plan for their futures and the legacy they leave behind – because future generations depend on the decisions we make today, both in terms of their finances and the impact of our investments on the planet and society.

At the end of last year, a philosopher named Hauke Hillebrandt made an argument that Impact investing is only a good idea in specific circumstances (originally titled: “Donating effectively is usually better than Impact Investing”) which I felt compelled to respond to. I’m proud of our response, and very pleased to work with Gabe, as his training at Yale and mine at Rutgers complemented each other nicely. The work we’ve produced together is written in an academic style and references a number of other academic studies as the forum it’s posted in requires, but it represents how we think about impact in our portfolios, and especially how much we value Shareholder Advocacy, where we use the power of active ownership to engage with the companies our clients own in their portfolios to change corporate behavior.

I invite you to read our entire post, and send us comments! We want to know what you think. The post can be found here: https://forum.effectivealtruism.org/posts/Rkr2W8ADSGwWXfRBF/effective-impact-investing

You can learn more about Gabe and his work here.

More bad news on the student loan front

A new report out from the U.S. Department of Education, Office of the Inspector General (click here to read – it’s a long one) found proof of something we’ve been talking about with clients for a long time- Student Loan servicers, the companies responsible for managing and advising loans issued by the federal government, have been failing to give accurate information to borrowers for years.

A significant amount of the counseling we do on student loans relates to this exact issue. Many borrowers are confused by the options available, and are either looking to decrease their payments, or pay off their loans faster. Every borrower’s goals and ‘constellation’ of loans is different and requires a different approach, which makes the fact that loan servicers aren’t giving complete information that much more difficult to swallow. Even worse, there appear to have been no consequences for providing bad information to borrowers, and the government wasn’t even tracking when servicers received complaints or were out of compliance with the rules.

It still gets worse! The report finds that income driven repayment plans have been mis-calculated, resulting in higher monthly payments than borrowers would have otherwise been responsible for (an especially bad situation when working towards loan forgiveness) AND the servicers weren’t even informing people about loan forgiveness programs that they may be eligible for! A significant amount of the work we do on student loans revolves around loan forgiveness and strategies to get loans forgiven.

Even with all of that, this report still misses out on the single dirtiest trick that student loan servicers use against borrowers (because the trick is completely legal and the report examines compliance with the law, not dirty tricks): Applying excess payments to next month instead of principal. Basically, the fine print of many of the letters we’ve seen from loan servicers says that, unlike a mortgage, if you send them extra money above and beyond what you owe, rather than applying the excess to the principal of your loan (and thereby reducing the amount you owe), instead they’ll apply the excess payment to next month’s payment (which doesn’t change how much you owe – you’re just letting them hold on to your money interest free until they apply it to your loan).

If you’re in this situation, the The Consumer Financial Protection Bureau has a loan servicer letter template you can use to force your servicer to treat you fairly. Just make sure you keep good notes! We can’t know whether this applies to you (as you’re just reading our blog!), so if you have questions about your loans and would like us to review them for you, just click the button in the bottom right corner of the screen to book an appointment.

Vanderbilt Honors Black History Month


The purpose of this blog is to highlight our work and thoughts, but also the work of our partners and friends. Vanderbilt Financial Group, our Broker/Dealer and RIA, has a great blog post up honoring Esther Afua Ocloo, a pioneer in Micro finance. Our shared culture and values are some of the reasons we’ve chosen to affiliate ourselves with Vanderbilt, and this post demonstrates that. Here’s a link to their blog:


(Artwork and Photo Courtesy of Google) 

Safer Internet Day 2019

Safer Internet Day was this week, and we like to use events like this to highlight our commitment to protecting our clients’ accounts and keeping data secure.

This year, we wanted to highlight a few of the tools we employ to help protect ourselves in the wilderness that is the internet. This post won’t cover antivirus software, but we’ll be looking at the free tools we use to help prevent tracking and reduce (not eliminate) your vulnerability online.

  • The first line of defense is an adblocker. These tools are designed to prevent you from seeing advertising online. We HIGHLY recommend that all of our clients and friends install one and keep it up to date. Our preferred adblocker is Ublock origin, which is available for Chrome here, and Firefox here.

  • After this, we like to look at a pair of tools from the Electronic Frontier Foundation. This group is one of the strongest advocates for privacy and an open internet, and we support their work whenever possible. The first tool we recommend, especially for laptops or other computers that you travel with, is called HTTPS Everywhere (you can install it from that page). This tool helps force your connection to a website over a more secure connection, which can help protect your data and especially any login credentials that you use. It’s not perfect, but it’s better than nothing.

  • The second tool by the EFF is called Privacy Badger. This tool blocks invisible trackers, including the ones that the big tech companies use to track you across the internet. Privacy comes at a price however, as you’ll quickly learn just how much the web relies on these tools – this one WILL break certain websites.
  • Finally, we recommend a VPN, especially when travelling, and ESPECIALLY when travelling internationally. A VPN (or Virtual Private Network) is a tool that allows you to create a secure connection to another server before going out on the wider internet. We recommend using a tool like this whenever you’re connected to a WiFi network you don’t control, as they will prevent the owner of the WiFi network from snooping on your connection. Of course, this merely shifts who you trust from the person running your local WiFi hotspot to the VPN provider you’ve chosen to work with. We recommend doing due diligence on any VPN provider you choose to work with. We’re not going to disclose the firm we’ve chosen for security reasons, but we will be more than happy to recommend a few if you contact us.

2018 Trends in Responsible Investing

Our trade organization, USSIF, the US Social Investment Forum, puts out a biannual trends report, which examines the state of the Responsible Investing movement.

The highlight of the report is this image, which shows the exponential growth of Sustainable and Responsible investing in the US:

At the time of publication, almost $12 Trillion dollars is invested in responsible investing strategies in the US, which represents an 18-fold increase since 1995, and 38% growth since 2016, the last time this report was published.  In fact, 26% of all assets under professional management in the US are now incorporating Environmental, Social and Governance data into their investment process in one way or another.

It’s important to break that data down further.  This chart is a snapshot of 2018, which examines who is investing in these strategies, and whether those investors are merely using ESG data in their investment process, or whether they are engaging with the companies they own in their portfolios to try to change corporate behavior:We are THRILLED to see such huge numbers on this chart. In fact, the data has changed so much since the last report that it’s really worth digging deeper into the orange slices at the right to see what change is being created in the world.  By examining shareholder resolutions, one tool investors use to make companies to change their behavior, we can see some of the priorities that the industry and institutional investors have set over the last few years:

This chart looks at Money Manager activity, which matters a great deal to us, as this is the category we fall into.  In fact, as a firm, we contributed to this report through our continued membership in the United Nations Principles for Responsible Investment  (you can view our data here), which was one of the primary sources for this report.

Interestingly, Institutional Investors, had much different priorities:

Clearly, both groups take similar sets of issues seriously, but institutional investors place a greater priority on Governance issues than money managers.  In our view, institutional investors are well suited to working on governance issues, as they tend to be long term issues that require longer term engagement.

Breaking this work down into more detail also yields insights: battles over Proxy Access have slowed down after strong investor support.  The share of S&P 500 companies with proxy access policies grew from 1% to 65% from 2013 to 2017, so activity on this front has slowed as a result of having fewer targets to engage.  This is a win!

In many ways, while what has been accomplished is important, why investors are pushing for change is more interesting. 82% of managers report client demand as a factor, while three quarters cite risk and return separately.  This means that your voice as a client can make a difference!  By joining with the larger community of actively engaged investors, you can become a part of a community that is creating grassroots change within the financial services industry at large.

When it comes to Risk and Return, we agree that long term investors should be considering Environmental, Social and Governance data in their process, as our investing thesis is based on the premise that using this data can expose risks to the long term prospects of companies we own in our portfolios.  All investing involves risk, and our job is to manage that risk.  We believe that ESG can be one more tool in the risk manager’s toolkit to help understand and manage risk, and we’re glad to see that this opinion is shared more broadly.

The data still has some problems, however.  Looking at the types of assets that are incorporating ESG, by far the largest segment is “uncategorized money manager assets”, which is a term that’s exactly as vague as it sounds.  While Mutual Funds, ETFs, Closed End Funds, Alternatives, and Community Investment Institutions all issue a Prospectus which discloses how they use this data (and we spend a LOT of time reading these documents to verify that our partners have policies in place that our clients want to see), the Uncategorized segment is largely self-reported, through a box on the Principles for Responsible Investing reports that says the managers are looking at the data, but not how they use it.  You can view our PRI Transparency report here.  We welcome your feedback!

All in all, this trends report marks a HUGE step forward for the industry, but a lot of work remains to be done. Additional highlights of the report include:

  • Higher support for Environmental and Social proposals:  The proportion of shareholder proposals on social and environmental proposals that receive high levels of support has been trending upward.
  • Equal pay:  Several companies have agreed to report on—and correct—gender pay differentials in response to shareholder resolutions.
  • Engagement:  Behind the scenes, engagement is increasing:  88 money managers, with $9.1 trillion in AUM, reported that they engage in dialogue with companies, up from 61 money managers, with $6.1 trillion in AUM, in 2016.

Additional information on this report can be obtained by contacting us, or  US | SIF: The Forum for Sustainable & Responsible Investment at info@ussif.org or (202) 872-5361. The trends report website is www.ussif.org/trends and they can be found on twitter: @US_SIF   |   #USSIFtrends2018

ESG Investing Basics: What are we trying do to?

We talk a lot about ESG: Environmental, Social and Governance. Our investment thesis is based on the idea that this “extra-financial” data (meaning this is information that doesn’t necessarily show up on a company’s balance sheet or profit and loss statement) can have a material impact on the long term health and performance of a company.

A great way to think about why we believe this is to look at this chart, which shows how the value of the companies in the S&P 500 index have changed over time, from the 70’s, when the vast majority of a company’s value was tangible, based on things, which can be measured. Over the past 4 decades, this has flipped, to the point where the vast majority of a company’s value is now based on intangible assets: things like good will, brand strength, and customer loyalty.

Tangible vs Intangible Assets as share of S&P 500 Market Value

Source: https://www.oceantomo.com/clients-board-of-directors/

As investors concerned with managing risk, we need data tools that look beyond the single bottom line of profits and financial data to understand how a company manages its’ Triple Bottom LinePeople, the Planet and Profit. Taken together, these factors give us a more holistic look at companies, which helps us make better decisions. For example: a 2012 study by the Center for American Progress found that the cost to replace an employee is between 16% and 21% of that employee’s salary, and that quit rates are often due to workplace policies.

There are many ways to use this data, and we work with our clients to figure out which approach best matches their goals, both from a risk & return standpoint, and also thinking about the impact they want to have on the world. There are a number of different ways to use the data, and we’ve put together this handy chart to demonstrate the different approaches:

Negative ScreeningESG IntegrationThematic InvestingImpact Investing
ObjectiveAvoid companies or industries that you find objectionable: a “Clean” portfolioUse ESG ratings as part of the investment process: Try to own the “Best in class”Focus on specific issues that matter to youFocus on non-financial outcomes in addition to financial outcomes
ChallengesDefining your screens & building a diversified portfolio that excludes the ‘right’ companies for you – how deep do you want to go?Where is the ESG data coming from? How is it being used in the process? How will different ESG methodologies result in different portfolios?Tend to be specific, narrowly focused investments. Only appropriate for a percentage of an overall portfolioReport on progress & outcomes. How do we know our investments are doing what they say they are?
ExamplesAvoiding investments in Fossil Fuels, Addictive products, or the manufacture of Weapons of WarIndex funds that track ESG indices, active funds that exclude low ESG scored companies from their “investable universe”Investments in Water, Gender Diversity, Clean Energy, or Low CarbonSpecific bonds such as Green Bonds, Community Investment Bonds, investments in private companies that have a social or environmental mission.


We offer investment portfolios or individual investments tailored to each approach. Get in touch to learn more!


Impact: A Documentary

We talk a lot about the impact of our investments, but it can be difficult to see impact from a financial statement. That’s why our Broker/Dealer, Vanderbilt Financial Group, produced this video to show the impact our investments can have.