Social-impact Investing Pairs Profit with Purpose

As a child, Anthony Alves of Millstone, New Jersey, remembers collecting coins in a cardboard box to fight hunger. Now his own kids can instantly support an array of causes worldwide with a few taps on their wireless devices.

“My children have so much more of a global view than I did when I was a kid,” says Alves, a father of four, ages 8 to 13.

When he recently sold his food manufacturing business, Alves wanted to create a financial plan to manage and transfer his new wealth to his children. As an investor, he also wanted to align his personal values with his investment portfolio.

Alves and his family are among the clients who are benefiting from Social Impact Investing, a part of Wells Fargo Private Bank that works with individuals and families, foundations and endowments, and religious institutions to ensure that investment portfolios align with their personal values.

Global phenomenon

The effort broadens Wells Fargo’s offerings as demand for those services rises globally. (The United Nations Principles of Responsible Investment has nearly 1,500 signatories from more than 50 countries and collectively oversees $60 trillion in assets.)

Lloyd Kurtz, head of Social Impact Investing at Wells Fargo, says that interest in socially responsible investment is surging. Socially responsible investment assets grew more than 76 percent from 2012 to 2014, according to a November 2014 report from US SIF: The Forum for Sustainable and Responsible Investment.

“Up until about a decade ago, socially responsible investing largely meant that people avoided certain stocks, such as those of alcohol or tobacco companies,” Kurtz says. “But as the industry has grown, we’ve seen tremendous change. Many clients want to be able to customize portfolios to their beliefs — whether they are religious, political or environmental — and we will be able to offer this personal touch to even more clients.”

Kurtz attributes the growth to several factors: increased access to information (including performance data), the growing diversity among investors, and the rise of a millennial generation championing purpose over profit.

Social impact investors now account for about $1 out of every $6 under professional management in the U.S., he says. 

A socially conscious ‘core offering’

Wells Fargo Private Bank currently offers 18 internally managed Separately Managed Accounts in Social Impact Investing, including an investment portfolio focused on supporting companies engaged in the humane treatment of animals. Minimum investments range from $100,000 to $1 million.

Erik Davidson, chief investment officer for Wells Fargo Private Bank, considers Social Impact Investing a “core offering” that produces deeper relationships because of the way it connects personal goals and world views with investment decisions.

“People who are engaged socially with their investments are more likely to not let emotions take over when times get tough or buy too much when things are going up,” Davidson says.

Michelle Harvey, a client in Florida, is glad Wells Fargo has Social Impact Investing so her money can promote clean air, land, and water. “I want to invest in a future I want to live in — one that preserves the natural environment,” she says. “Even in down times, I know the money is working to a future that I want.”

Alves is using Social Impact Investing to allow his 13-year-old daughter to invest in organizations offering therapeutic horseback riding for children with disabilities, programs for neglected animals, and other animal welfare causes she’s passionate about.

“Social Impact Investing gives us the opportunity to go well beyond the funds we need to maintain our quality of life and lifestyle,” he says. “Now we can use our money for more than pure monetary value but positive overall value, too. We’re preparing our children for the day when they will be directing the management of these assets. The conversations we’ve been having already are a great way to get them to understand how they can have a positive impact through investing. Our children are learning how to direct the money from our trust toward investments that produce a return and do good."

INVESTMENT PRODUCTS: NOT FDIC INSURED/NO BANK GUARANTEE/MAY LOSE VALUE

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