Transcription:
Lynnley Browning: (
Hello, and welcome to financial planning, magazines, best connect connect panel on environmental, social and governance issues. I'm Lilly, Browning wealth editor at financial planning and a Verizon brand and a terrific group here today to discuss ESG our investing's most important trend with us are Marcus Lamer of Credit Suisse, Chady AlAhmar of old national bank Corp, and Dan Ciavarella of Refinitiv. Thank you all for being here and let's dive right in first. Let's have each of you very briefly introduce yourselves and describe your role at your company.
Chady AlAhmar: (
Yeah, thank, thank you. This is, uh, Chady AlAhmar, CEO of wealth at old national bank. We are, uh, uh, mainly Midwestern, uh, bank and, uh, our group, uh, leads all facets of, uh, of wealth management, including private banking, trust, uh, brokerage, uh, and financial planning. Thank you.
Dan Ciavarella: (
Hi Lynn. I'll go next. My name is Dan Ciella. I'm head of business development at the London stock exchange group for our wealth business in the Americas. Uh, as a quick introduction, we have the largest provider of financial news data and analytics globally. We are 40,000 customers as well as the needs of nearly eight, hun a hun. And excuse me, nearly 180,000 financial advisors, uh, in the north American market. Um, part of our content set includes ESG. So I'm excited to be here today, uh, and we provide both transparency and auditability across the entire sustainable finance spectrum, um, including over 450 specific data points. Uh, and we have 150 analysts just to give some context for our size and scale. Thanks lone
Markus Lammer: (
Markus Lammer. I am the chief operating officer for the ultra high network business of credit fees in the us in New York, in New York. We are part of the investment bank, whereas globally, we have a big network of wealth management, private banking and retail banking as well. In terms of our segment, we are very focused think families at the very upper end of the AR network spectrum think a billion plus in assets, entrepreneur, no interests very often, for example, are privately held or controlled family company. And also given our us nexus here, uh, families who need investment banking advice, and so on, we work clearly closely with our worldwide C Swiss network where we are one of the leading wealth managers you came with very strong experience.
Lynnley Browning: (
Fantastic. So let's start right with the whole concept of ESG as meaning different things to different people, a Walter of different things, to a lot of different people. So a millennial and Silicon valley might not think about it in the same way that a multi-generational family office in Philly does, uh, which might not think about it in the same way that a private business owner in Chicago does. I'm wondering how each of you from your perspectives sees ESG as playing out within specific demographics. Uh, Marcus, let's go with you first.
Markus Lammer: (
Yeah, I think you, you mentioned it, Lynn ESG is a very, a wide concept and can mean different things to different people. Now, is it the E? Is that, is it this S is it the G very different? And what we see is very often, especially with large families, but you mentioned an intergenerational aspect. So if you take a case study, now, one of our larger clients came to us recently, three generations, one generation's very focused on the E, especially the energy transition. What can they do? Can they go there? How do you measure that the next generation more focused on the S what we call impact investing? How can we contribute to make people lives better? How can I do that? Can I focus on certain countries, certain segments? And then very often you have the first generation, the patriarch, so to speak. Who's often not adverse to it, but much more, uh, less focused on one aspect than just once a coherent system. And I think that's very often, we are pronounced with AR families, and maybe we have sometimes more time to exploit it with them as bankers, but I'm sure it's the same conflict or discussions about directions that many investors will have at all ends of the spectrum of investing assets.
Lynnley Browning: (
And let's, we can maybe bracket come back to the question of how individual generations within a specific family who have a single portfolio negotiate out, you know, are we going to focus on the E are we focused on the G what, what are we doing? What, what does our family stand for? Um, but let's bracket that for now. Um, Dan, I'd like to hear from you about how you see, uh, emerging affluent investors engaging with ESG.
Dan Ciavarella: (
Yeah. I think certainly what we've seen throughout the pandemic and into this year, it, it, it's definitely been marked by uncertainty, but also conviction. I think any investors today are really looking to align their portfolios based on their principles and based on critical themes. Um, what we're seeing is a real demand for a lot of self-directed platforms, given sort of the rise in popularity of these platforms with sort of the meme stocks, uh, to, to really embrace differentiated experiences and content, and really render experiences that speak to these principles, uh, and these ESG focused themes. So I, I think whether or not, uh, an investor is looking to invest in clean energy or whether employee working conditions are important to them or gender or race or pollution, whatever it may be. I, I think the first step is really embracing that many different types of investors, specifically, maybe the millennial and emerging, um, uh, affluent are looking to help find their portfolios around those concepts.
Dan Ciavarella: (
I think we're at a place now in the industry where we have data that allows us to do so much more than we've ever done. It used to be a system where it was in many ways, negative screening. So it was, I want to opt out of these things that I feel very passionate about, that I don't want in my portfolio to now out where we have the opportunity to really do more positive screening, to select and filter amongst those things that are those companies that are maybe best in class, on specific environmental, social, or governance metrics, um, compared maybe to their peers, there's different ways to screen there's different, uh, factors that we can isolate in on that really help drive what it is that's important to the investor, and then reflect that more prevalently in their portfolio. It's really a, um, a, a, a, a new world order, if you will, around what we can do with data and how we collect it. Um, so I think there's still some real questions, and maybe we'll get into this a little bit later around global definitions and taxonomy. How, how do we benchmark, how do we score? How do we create some substantive base lining in order to, I, I think give investors a, a better insight into what it is that they're exactly investing in, but, but I think there's a big trend right now to drive more focus in this particular area in those ways.
Lynnley Browning: (
Agreed, uh, shotty, tell me what you're seeing in particular with, uh, business clients, maybe a family that's a small business owner and has, uh, a substantial and, and successful business.
Chady AlAhmar: (
Yeah, thank you. And we have many clients who fit that, uh, that, uh, uh, profile of clients, right? Whether you're a business owner or an executive, I, I call them high net worth, uh, individuals whose, uh, whose net worth in the business is very intertwined with their personal, uh, net worth. Uh, and it could be also corporate executives, uh, people who are still worried about retirement, right. That segment typically is looking to invest, uh, to either defend, uh, their position, uh, make sure that we preserve their wealth or to make sure that they do not miss out. Right. So the issue just like Marcus and Dan, uh, highlighted the issue is that there, there are no universal guidelines or definitions of ESG. So our clients come to us. There there's a lot of energy, no pun intended around ESG. Uh, most clients ask about ESG, uh, but the execution remains a little bit on the lower side, right?
Chady AlAhmar: (
So they, they want to understand what ESG is. They want to understand what they are investing in, but at the end of the day, they're looking for preservation of wealth and for return. That's why they hire us, right. And sometimes the goals and the returns of, uh, ESG vehicles or investment vehicles may not perfectly align with their investment goals. And that's where the challenge is. So, uh, we might be limited in options when we put ESG in front of suitability or fiduciary. So we have, uh, on the trust side, we have a fiduciary obligation to help the client preserve or grow their wealth. And if that does not align with their definition of ESG, then that's the give and take or back and forth with the client. Um, I can give you like an extreme example. If a client, uh, comes in and says, I want to put all my, uh, my wealth in, uh, wind, for example, because I believe in that future, it is our duty to, uh, advise the client, uh, about the risks and how help them better, uh, build a portfolio that is mixed to help them achieve their financial goals.
Chady AlAhmar: (
Now, if they care a lot about ESG, more, or about wind, they can also vote their proxies or be a part of that investment, uh, strategy. Uh, but this is the balance that we have to do today to, and what the client means by ESG. And then does it align with their financial goals?
Lynnley Browning: (
Absolutely. And that's also something I hope we come back to the fiduciary and suitability, uh, situation and how you find a meeting of the minds between, you know, a, client's say how for wind energy and, and suitability, uh, for their holistic financial plan. Let's talk about benchmarks, indices, uh, ratings, all the stuff that literally seems to have S sprouted up all over the place and more is always coming. How do we know what we're, how does an investor know what she's looking at? And how is an a financial advisor supposed to make sense of the weld of indices and benchmarks out there? And I know Dan, this is something you deal with basically 24 7. So why, why don't you start?
Dan Ciavarella: (
Yeah, I'm happy to, I, this is, this is an incredibly topical issue. Uh, you know, I, I think what we're looking for is this global search for standard definitions, um, standardization around corporate purporting standards metrics, all that's gathered pace. And I think more jurisdictions globally are starting to really embrace that, uh, and join the debate. Um, you know, will we reach a set of standardized definitions, um, and certainly around reporting standards and metrics. I think we're, there there's enough political and social momentum now, especially on the side of policy makers to reach an agreement on standards, but until we get to that place, and until we fully converge that journey to a single set of global standards, it's going to be challenging to assess and understand exactly how things are being defined and what data is there to support, uh, and ESG investment strategy. Um, I, I think, you know, as you, as you look down, it, it, we have to start, uh, with the facts.
Dan Ciavarella: (
And the reality is today that we have non-standard formatting and we're aggregating the mosaic of information. It's, it's no surprise that we're looking at 450 data points. We are looking, we have 150 analysts that are aggregating and analyzing all of this data. It's hard to do because of a lack of standardizations. And as you take that information and you distill it down into scoring and benchmarking, you you're really building out black box models for how you're rendering opinion as to whether or not a company or a benchmark or an index is in fact, meeting an ESG threshold or standard that you would expect as part of your philosophy. And I, and I think what's critical here is to have access to the underlying constituents. You really need transparency of the data for now, at least to better stand what the scoring methodology is, uh, and to understand where there are transparency into the data.
Dan Ciavarella: (
I mean, the problem we've got now is the way apple will report or the way IBM will report or the way, um, Google will report. They're all different standards and they're defining clean differently than others. So scrubbing through all of that data data, and, and trying to make sense of it, to really say, am I investing in alignment with my values and my philosophy based on the, this data? It, it, it's hard to do so I think the very first and most important place before we get to standardization globally is really to assess and understand the data, get access to that data and make sure that it's an audible use universe of data that you can use. Um, we spend a lot of time curating and deploying all of that data to make sure that we're giving an accurate representation or be most accurate as possible, uh, as to what an investor is, is investing in. So I, I think the bottom line Linley is it's gonna take time for us to get to a place of standardization, but in the absence of that standard, we have to align on definitions. We have to align on an understanding of the underlying constituent elements, um, that all go into how we curate and build scores.
Lynnley Browning: (
I'm wondering if you can quickly address what happens when existing data meets future regulations. So if we get, uh, future regulations from the SCC, how is that going to mesh in with the data that you and anybody else have already called and put together?
Dan Ciavarella: (
Yeah, it's a, it's an excellent question. I think that that standardization is gonna help on the collection in front and on the distribution front. So as we look together and collect data through, uh, a company lens, so what we know apple is putting out and what apple is saying about their business and where they're looking to maybe go green, as it relates to clean energy, let's say as an example, right? Are they espousing those views? And are they doing it in a, a way that's in aligned with that, um, that, that standardization for now, you need to rely on data aggregators, uh, like us who have 150 analysts that are going through all of that publicly available information, all of the earnings reports, all of the conference calls, anything that they've put out in their marketing collateral. There's so many points of data that gets collected and gets filtered down. So I think as we reach standardization, those firms that have built out an infrastructure of data collection, it's gonna get easier for us to better compare across the board because we know what we're getting from companies as standardized.
Lynnley Browning: (
Sure. Marcus, I'm wondering if you can talk about how the issue of, uh, a lack of homogeneity in, in, but in everything that investors, uh, want to know when comes and, and the SG investment is dealt with by ultra high net worth clients, how do ultra out clients make sense of the we of benchmarks? How do you make sense of it for them?
Markus Lammer: (
Yeah, no, very good question. And we see from the other side, what the interest said, it's a lot of data out there and unless you really deeply in the know, uh, it can be very confusing. So when become the typical process we see with our families is it all starts with the members of the family know very often for very long term, you think about their legacy, the legacy of the family, they see their family as stewards of a certain community of a certain business. Now for certain cost that they've been championing then comes ESG. Now they start thinking, what does it mean? And the first question we get as, as bankers, interestingly enough is very high level. And they usually come to us and say, listen, we have had a discussion about ESG in our family. Formal informal depends how their structured. Sometimes their family offices help the, this first research or some data points.
Markus Lammer: (
And then they come to us as their trusted bankers usually and say, listen, I'm really confused. I'm uncertain. I don't know what to do. We have in our family, very clear, good intentions. There may be different generation by generation. Um, but we know we want to do something. Now, one generation more Eve, I mentioned it, that's say energy transition, one generation to S impact investing, helping better people's lives directly. And maybe you have for patriarch who looks at that and likes it, but doesn't know what to do. And then they really come to us and say, listen, help us make sense of this. All, help us understand what's out there. What do others do? What does it mean? What's realistic in today's world and second step. And then that's where we play a special role sometimes, but just, it's more pronounced. We be families. Can you help us also come to a consensus within our family?
Markus Lammer: (
Can you help us broker compromise? I mean, it plays a bit back to the fiduciary duty just before you go to external decisions where we try to position ourselves as the trusted broker, the confident of all the members, where we collect, um, the different Ingo assumptions, we try to make sense of it and very important. We should try to fill it up this data and information bit, going back to what then said, and said, so we, um, invest a lot of time. Those are big clients now. And we have done occasionally what we call a green carpet day. So we say, listen, that's a big topic. You're really serious. Um, you need clarity on what does the financial landscape look like? What's realistic. What are the data? What are the investment opportunities? But also you need a family consensus that merits taking, let's say a day out of your, your lives.
Markus Lammer: (
Let's get you all for example, into our offices, or we can organize something at their offices and let's do a day, um, that we really just focus on that topic. It's big enough. Many people are happy to invest. That needs good preparation. And what we usually do with three things, we, one set of sessions with experts post from in the bank, from without the bank, from outside the bank, we really talk about what's out there in the market. Now how to make sense of the confusing array of benchmarks out there. How to understand what is possible today. Can you make negative exclusions? What can you do say differently? And also what do companies really offer? How, how realistic, how pure are companies that you can actually approach and invest? The second thing is then we try to help the family have a discussion about what everyone wants.
Markus Lammer: (
And that's a very interesting process. You have to family members very often. Not always everyone is different, but very often Lilly, as you said, split by generations. Sometimes those are cross generations. Dynamic can be very different. Very interesting. Yeah. Sometimes touches other things like the outstanding succession dynamics. So you need to have a good hand for those discussions. Um, then you try to, again, as a banker, your only position can be to be the honest broker, the fiduciary, try to broker compromise, make sure everyone is heard, um, and try to help them come to an agreement, about what family wants to do. And usually you come to a good compromise where everyone gets a little bit of what they want, but not everything. So we, we, we usually find it in the end, you get a certain portfolio of ESG ideas that they want to do, where you weigh them.
Markus Lammer: (
And then in the third step, that's about the most important one, you need to embed it in the overall strategy for the family. You know, you want to go touch a hundred percent of your, um, assets or a hundred percent of what you have, or you just want to do the investing side. What do you do with the companies you own? How do you finance? So a lot of fine tuning again, but in the, it should be a structured holistic strategy that all makes sense. It fits and we'll have a time component. Usually in those days, clients love it. Usually, it's a lot of help, a lot of insights, but it's a journey. Yeah. And when you end the day, you will have probably a good outcome. You'll have a consensus for the family. You know what you wanna do, you know, how it fits in your strategy, but mostly people go away saying, it's a journey. That's what I want to do today. Let's do such a day again in a year or so when it's changing and let's just adjust.
Lynnley Browning: (
I'm wondering how you handle the issue of ratings and, and benchmarks and indices with potential existing and potential clients. I mean, everybody wants to know what they're getting into. So they may look at say a Morningstar ESG rating, or, you know, some other benchmark or some other index and say, okay, that looks good. Or no, I think I'll pass on that one. It's kind of all over the map right now. So how do you work with that all over the map with your clients?
Chady AlAhmar: (
Oh, absolutely. We embed actually, uh, ESG, uh, metrics within how we actually build our portfolio. So it is part, uh, it's an integral part of how we look at things, right? So this is important. Uh, I love this panel because we, we are representing different facets of this business. When you think of what Dan was covering, mostly the, the mass affluent emerging, if you want, uh, you, you have a, a limited amount of money that you try to invest. You're looking for that one score because you're trying to pick one thing versus the other, right? But then you go into the ultra high net worth and it becomes less that specific score and like anything else, it becomes more about the family dynamics. Like, do we like each other? Do we agree with each other? Do, are we communicating well with each other? And, and suddenly that crazy uncle becomes even crazier because they have some idea about what ESG is, and what's not.
Chady AlAhmar: (
So that's what Marcus, uh, tried to do. And we do that with ultra net worth families. But also when you come, uh, to deal with the high net worth segment, this is where we're looking at scoring. But as part of how we build a portfolio, because this is the client, uh, the client segment that is looking at how can I invest in a, in a responsible manner where I'm not putting everything in one E or S or G basket. I have less issues with family dynamics and all that stuff, but help me build the right portfolio. So our professionals, what they try to do is this is not like let's sell you something off the shelf that is, uh, an ESG fund, which some actually do that in the industry. And I've heard even on the other extreme, some people say, well, ESG is a, is a marketing gimmick.
Chady AlAhmar: (
The reality, our stand is that there are a lot of key metrics that we have to look at for every kind of investment. And really incorporate that into how we build our portfolio, ideally, and I hope Dan and others, uh, sometimes in the system would come with a scoring, uh, methodology that could be used across the board. Uh, today we have to be, uh, more sort of like, uh, more creative if you want, for lack of better terms so that every institution has to create our own, uh, models. And we put those into our models. The reason why it makes sense to us, I believe is when you think of ESG, it is the right thing to do because a lot of things, a lot of these investments on the long run, we believe that the future is gonna go that way, right? We believe, for example, that from a governor's perspective, if a company is doing the right things, socially and governance, they're gonna get sued less, or maybe not sued as much. So when you look at it from that angle, then you put it into how you build your portfolio, the construction of the portfolio and you take all these elements of ESG and make them part of your decision making. So that's what we're doing today until we have some kind of universal scoring system that we can rely on.
Lynnley Browning: (
Let's talk about the G word: greenwashing. Is it a thing, if not, or if so, what is it and how does one know it? When one sees it, whether one is the advisor, the wealth manager or the client. Chady, you go first.
Chady AlAhmar: (
Um, so, so how do you identify this is . I, I wish there was an easy answer, right? When I, when I look at the, the best analogy I have is your own personal lives, right? A lot of people in the audience today, look at, for example, let me pick on the environmental, uh, topic. We all probably would want solar panels on our house because it makes sense if it's cheaper, better for the environment, anybody would go that route. Why don't we have solar panels in our house? The reason is it's probably very expensive to install right now, right? The upfront cost might be high. There are still some question mark around, well, is this really environmentally friendly? Do we know how those solar panels have been built? What about recycling in the future? What kind of material is being used? So we are not sure.
Chady AlAhmar: (
So this is where it becomes this debate about, uh, is it true? Uh, is it truly an environmentally friendly technology today, you think of batteries and electric cars, you think in Bitcoin, I heard it's part of social responsibility and all that, but it costs a lot and it takes a lot of energy to mine Bitcoins. So this is why this topic that we're talking about is not straightforward. So at the end of the day, take it at a personal level and ask yourself, why aren't you driving an electric car yet, maybe, or why don't you have a solar panel? Why don't you have, you know, uh, wind in your backyard, wind energy in your backyard? Uh, why aren't you already in, uh, in some cryptocurrency? And if the answer is because I'm not sure yet, or I don't have enough information and the, the information is conflicting, that's what most investors and most advisors are also conflicted with. And that's why we have to be fairly careful how we advise our clients on the long term to make sure that, uh, from a, from a suitability and fiduciary perspective, again, it's the same topic because we have that responsibility to make sure that we look after the best interest for our clients.
Lynnley Browning: (
Dan, how do you tackle the greenwashing issue or do you, in fact, not see it as an issue?
Dan Ciavarella: (
I think greenwashing is a big issue and it will persist until we reach some standardization in, uh, the regulatory agencies and, and how they're sort of controlling the flow of information. I mean, greenwashing right now is a big problem. Everybody wants to be perceived as green it's in vogue. And the way in which marketing partners are often designed is to take stats and build them in a way that makes you look at though you are clean and green. And I think the challenge is, is most people don't have access to data that can substantiate those claims. Um, for example, around biodegradability or to use the example that Chady used about, um, solar panels, right? Without reliable information, you can't assess whether or not what they're saying is right or wrong. And the challenge we've got in the industry right now is that's going to continue to have negative brand implications for those firms that don't, um, watch themselves as it relates to greenwashing.
Dan Ciavarella: (
And frankly, it'll continue to negatively impact the environment as we say one thing and do another. So I go back to the comment that I made earlier around making sure that we start with the facts. You can you, you can take claims, and screen them if you have the data. And if you go in and you screen for biodegradability, you'll be able to get a series of information or data points that substantiate whether in fact, the company is, or isn't based on what we're seeing with the facts. And I think that's where we all have to land because, um, I think deception from a marketing perspective in the industry with greenwash is gonna continue to persist until we have more punitive damages in place that penalize companies for doing that.
Lynnley Browning: (
What about data that's self-reported though? I mean, there's a difference between data that's covered by regulations and data that's that's merely self reported. How do you deal with the latter?
Dan Ciavarella: (
Yeah, it's, it's, it's a difficult concept for sure. I mean, you, you're taking, you're taking data that you don't have transparency against necessarily, and you're trying to find truth amidst it. And I think from our perspective, anyways, it's assuring that you have, have the right number of people evaluating and aggregating data to support those claims that, that, that companies are making, even though we might not have absolute transparency. Um, so it's complicated. There's no easy answer, but I think if you've got firms like ours, who are aggregating the data and trying to do their best to present the truth, you can rely on that truth as a means of filtering what you're hearing in the industry and from the companies themselves.
Lynnley Browning: (
Gotcha. Marcus, how do you think about the greenwashing concept and does it come up in your discussions with your clients?
Markus Lammer: (
It has come up, but it's a bit from a different perspective, I would say, you know, so in that segment where we are, it's usually not the off the shelf product that ends up in a portfolio. It's much more customized. So it's less really the marketing department. Um, but it is a very important concept at two levels. Now in you think about this Al stage, uh, wealthy family defines their target has key attention. Once operationally, I slice it. I think the first questions they ask themselves is how green do we want to be? How honest are we with ourselves? Not to forget, this could be families who own a family business has been in family for years. That's one of the aspects that will go into that discussion apart from what they do with the money that I have to invest or to do something else or what to do with my own company.
Markus Lammer: (
How radical, how, how consequent do we want to be there? It's not now greenwashing in that sense that someone sells something to you, but it's this, how, how ambitious do I want to be? What's realistic in today's market. And that's also sometimes very painful discussions. Now, when you think about what you do yourself for, to expect from other companies, how does that match? Do you need to change a lot with yourself? So the second aspect is then clearly when you want to do something and you want to invest, build a portfolio, then you are close to the problems everyone has. Now, how much can you believe what someone tells you? And even though you maybe a big investor, you may have direct access to management, you can ask them the questions directly. How do you verify self reported data at the end of the day, um, links back to where we stand with the markets, what then says there's a plethora of indices out there, uh, certifications or, or not, but at the end you need to also find a pragmatic approach, um, in today's market, what's realistic. What can you expect? What is out there with, what can you work and where do you just need to use your judgment and maybe take a, hopefully not to leap or fail.
Lynnley Browning: (
Want to go back to something Chady mentioned previously, which was the fiduciary issue. An advisor may have a client who is all in on, I don't know, saving the oceans. Okay. Uh, but it wouldn't make prudent financial sense for that client to put, say, 90% of his or her portfolio into funds that purport to do just that. How do those conversations play out? I'd love to hear anything anecdotal from all three of you on how you have to deal with the fiduciary aspect of, of ESG, the, um, Chady please.
Chady AlAhmar: (
Oh, well, uh, didn't mean to take them the mic from Marcus, but, uh, when I think about the fiduciary part, we have to ask ourselves, why is our client doing business with us? Right? Uh, in the past, it used to be, it is because that's the only way you can trade stocks. For example, you have to go through like a wire house or something like that. In today's world there's a democratization of how you can invest. Anybody can invest as shown with Robinhood applications or Etrade, like anything online. You have access to the same data as most people, and you can trade like most people. So if you want to do that, if you choose to do that, that's your own choice. But if you choose to come to a bank at fiduciary, that is, uh, is monitoring the, the, the money management for not only you, but maybe your family, or maybe your extended family, that's a different situation.
Chady AlAhmar: (
So yes, you might like to invest in, uh, products that save the ocean, which is very noble. Don't get me wrong. We, we should all, you know, cheer for that. But also it is our duty to figure out is this, the best investment strategy for the entire relationship, long term short term, uh, from a risk perspective. Um, some analogies I have for you is, uh, 20 years ago, some of you probably don't remember that, but a lot of people were bullish on internet companies, whether it's Yahoo or MySpace or Amazon. Right. So if a client came in and says, I care a lot about Myspace, because I believe that's the future, right. It was our duty to say, yeah, that's great, but you cannot put all your investment there because we don't know. Um, same thing here. There are elements that we don't know the sustainability yet.
Chady AlAhmar: (
We are not sure about some of this, uh, this technology. So we, when we seek, uh, cases like this, we encourage our clients to be part of that journey, saving the oceans and vote their proxy to change the behavior of the company, but not necessarily be very heavy on one specific industry, if it creates, um, uh, uh, uh, an out of sync between their passion and their investment strategies. Another, an analogy for you that I have is the travel agency. Everybody can book a flight to Chicago within, uh, you know, their app on the phone. Great. But if I want to book a family trip to Europe with a lot of hotels, and if I'm inviting my in-laws and I'm inviting my cousins, and we're trying to decide what's best for everybody, not just what what's best for me, what I enjoy, what kind of concert I enjoy.
Chady AlAhmar: (
Now, you have to have this third party that is looking for the best interest of everybody and deciding which concerts we should see, which places we should visit and what flights are best for us. So we see most of our clients coming to us sometimes to better navigate those differences in mindset, in opinion, in objective. And in a way you can blame a third party if things don't go well. Uh, but our job as advisors is to really do what's in the best interest of the client long term. And in many cases, we've seen it again and again, whether it was the internet bubble, whether it was, you know, during the great recession or during COVID, our biggest job was not to find you the best stock out there. Our biggest job was to prevent you from making some knee-jerk moves or getting out of one, uh, one industry or heavy into another industry, and make sure that you are there for the long term, and we're looking after you. So we become your trusted advisor when probably your own opinion is, uh, is not matching with your investment strategy.
Lynnley Browning: (
Excellent. We've got, uh, just about two minutes left. I'm wondering if I could ask each of you to basically briefly almost bullet point style, give your top three tips for wealth managers and financial advisors out there when dealing with ESG issues for clients, um, Marcus,
Markus Lammer: (
Um, let me start. So the first one is I would say, really listen to your clients. What do they want to achieve? Maybe the anecdote you we're looking for. Now, if everyone wants to put everything into O preservation, I think in many large families, wealthy families, you get these sometimes not half joking, sometimes emotional discussions. Is it still an investible cause? Or is it a charitable cause? So that's listen to your clients. What do they want to do? Is it investable? Second in our case, make sure that there is not one client, but a client has many voices, make sure you're the honest broker who brings it together. And thirdly, make sure at the end you get concrete action steps. Now what is really feasible in today's world, make sure that's agreed with the family and make sure you revisit. It's still a journey,
Lynnley Browning: (
Very, very, uh, insightful, uh, Dan. This might not be something that you deal with sort of on a granular level every day. But if you had to think about three things you would tell emerging affluent investors to think about when it comes to ESG, what would they be?
Dan Ciavarella: (
I'd say the first is really focus in on what you are passionate about and what your philosophy is as it relates to investing thematically amongst ESG factors, uh, ask those difficult questions, right? To get to some level of granularity. If it's clean energy, then what specifically about clean energy is important to you. I think that's important first is to really crystallize is that view about what's important and how important it is. I think the second thing, and it's been fairly consistent with what I've mentioned here today is start with the facts. We, we understand that, um, as you look to simplify, you're gonna be looking towards aggregated scores or sort of these black box methodologies. I would say, make sure you spend the time to understand how those methodologies are conceived and built so that you understand whether or not those screening tools or, or those algorithms best reflect and represent, um, your philosophy. And then I, I would say finally, it's just continue to make sure that you have the tools and resources vis a vis your financial advisor to continuously assess and adapt your portfolio through that lens of, of what's important to you and what you care about.
Lynnley Browning: (
That's fantastic. We are several minutes over time right now, so I could keep this panel going for at least another couple of hours, because this is really interesting. We have something of a, a brain trust with all three of you here. Um, thank you so much for being here. Thank you to our audience. Uh, I certainly learned a lot. I hope everyone else did as well. I would think you would. Um, this has been fantastic. Thank you. And we appreciate your insights.
Dan Ciavarella: (
Thank you.