The season of giving is upon us. It’s the time of year when many of your clients make their most significant charitable contributions. This is the time to dig deeper to find out what your clients care about and then see if there’s an opportunity to align their gifts and their investments with the change they’d like to see in the world — there probably is.
Do you have clients who volunteer their time and give money to nonprofit organizations? Do you have clients who are passionate advocates for certain causes? If you answered “yes” to either of these questions (and I imagine you answered “yes” to both), it’s time to start thinking — and talking — about one of the fastest growing segments of the market — impact investing. And it’s the perfect time of year to start the conversation.
Here are some questions to get it rolling:
Finding out more about your clients’ philanthropic motivations will help you make thoughtful investment recommendations.
You might suggest a family meeting to discuss family giving and share with other generations the idea of impact investing. Did you know that more than 83 percent of millennials say they want to align their investments with their values?1 Be the advisor who shows them how to do it — and bridge the generation gap at the same time.
One of the most common gifting vehicles is the donor advised fund, which lets your clients make a gift, receive a tax deduction and then invest the assets that are not immediately granted out. A benefit of donor advised funds is that individuals can invest the funds however they’d like and increase their impact by investing the dollars waiting to be gifted into impact or ESG products. This is a growing trend in the donor advised funds world, and now, when you know your clients have philanthropy on their minds, is a good time to talk about it.
People give for many reasons — tax benefits, gratitude, tradition — but most do it to express their values and create social change. More than 75 percent of individuals want to invest with impact,1 and you can help your clients move the needle on the issues they care about most while setting themselves up for potential gains, as well. A client who cares about women’s equality might be interested in the Pax Ellevate Global Women’s Leadership Fund, which invests in companies that value the role of women in leadership and, through shareholder advocacy, presses companies to close gender wage gaps and increase board diversity. A client who is concerned about the environment may get excited about aligning some of their charitable dollars in the Pax Global Environmental Markets Fund, which invests in the companies that are leading the transition to a more sustainable economy.
Many investors might not realize impact investing is an option available to them, but they’ll certainly appreciate knowing about it. During this season, you can give your clients the gift of knowledge by sharing with them ways they can augment their impact.
Changing Times, Changing Sentiments
Recognition of global challenges is leading to big changes in sentiment toward sustainability. Article
Risks: Equity investments are subject to market fluctuations, the fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Emerging market and international investments involve risk of capital loss from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, economic or political instability in other nations or increased volatility and lower trading volume. The Pax Global Women’s Leadership Fund does not take defensive positions in declining markets. The Fund’s performance would likely be adversely affected by a decline in the Index. Investments in emerging markets and non-U.S. securities are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation, intervention and political developments. There is no guarantee that the objective will be met and diversification does not eliminate risk.
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Jenifer Cannon is a registered representative of ALPS Distributors, Inc.
Impax Asset Management LLC, formerly Pax World Management LLC, is investment adviser to Pax World Funds.
Pax World Funds are distributed by ALPS Distributors, Inc. ALPS Distributors is not affiliated with Impax Asset Management LLC.