Knowledge of responsible investing and impact investing is fast becoming table stakes for wealth managers and financial planners. Polling commissioned by the Responsible Investment Association in 2019 found that 79% of individual investors want their advisor to proactively present them with environmentally and socially conscious investment options, and at CoPower, we regularly encounter clients looking for an advisor who will do just that.
For this series we spoke with three financial advisors and planners about how private impact bonds—private debt investment products that create a measurable social or environmental impact—are helping them meet client needs and build relationships that last.
In this first post, we learn from Kelly Gauthier, Managing Director and Partner at Rally Assets, an independent, full-service, impact investment management and advisory firm based in Toronto.
CoPower: Advisors are increasingly being asked by the clients about their impact options. In Rally’s experience, how has impact investing helped you build more meaningful relationships with clients?
Kelly: Impact investing is all we do, and all we’ve ever done.
Our deep commitment to impact, and our deep understanding of how to measure and manage it, sets us apart. Our clients trust us to provide innovative solutions to help them create impact. Our clients have varying levels of knowledge about impact investing, different financial goals and different investment timelines.
Simply, we start with ‘where they are at’ to move them along the impact investing journey and fully align their investments with their vision and values.
"We start with ‘where [clients] are at’ to move them along the impact investing journey and fully align their investments with their vision and values"
CoPower: Can you tell us a bit more about the range of impact investment products you offer to your clients?
We offer a few different services. Since our start in 2010 as Purpose Capital, we have been providing advisory services to help clients understand impact investing and then supporting them to find suitable investments that align with their values and their impact and financial goals. We work with clients to create and manage customized impact portfolios, targeting impact areas that matter to them. And now just this summer we’ve been able to offer something new: impact funds – one a portfolio of public equities, the other a mix of public and private investments, including bonds.
CoPower: How have Rally’s clients responded to the option of including private impact investment products like CoPower Green Bonds in their portfolios?
Kelly: Our clients come to us because of their desire to create more impact with their portfolio. Many of our clients (institutions and accredited individuals) invest in private impact assets to achieve deeper, more direct impact than they can in the public markets. Their capital is “additional” – it directly contributes to whether the positive impact is realized. Once clients have a familiarity with how private assets work, they are very excited about the structures and opportunities open to them to achieve impact!
In many cases, private debt products like CoPower’s bonds are part of their first foray into the impact world and serve as a balance to the possibly more risky private equity impact investments in their portfolio.
"Many of our clients invest in private impact assets to achieve deeper, more direct impact than they can in the public markets."
CoPower: Private impact bonds are some of the more common options in this space, but are they suitable for everyone? When might Rally recommend a product like CoPower Green Bonds to a client or not?
Kelly: Suitability is determined for each proposed client investment and guided by our understanding of the client’s impact and investment goals, including how the investment fits in with the rest of the portfolio, both impact and non-impact.
Green bonds can provide a great source of environmental impact and steady return. They tend to have a shorter term than some other private impact options and can be a good option for investors who seek income from their portfolio but don't have short-term liquidity needs.
Because the minimum investment requirement for CoPower Green Bonds is lower than many other private market impact investment products, they are accessible to clients of nearly all portfolio sizes.
"In many cases, private debt products like CoPower’s bonds are part of their first foray into the impact world and serve as a balance to the possibly more risky private equity impact investments in their portfolio."
CoPower: Similarly, where do CoPower Green Bonds fit, or what role do they play in the portfolios Rally manages for clients?
Kelly: Green bonds fit within the private debt allocation, which is a common asset class in our clients’ impact portfolios, whether a private carve-out or a 100% impact portfolio. The bonds diversify the impact portfolio in terms of both risk and impact area.
The path from dollar to impact is more straightforward with debt products because there is a clear understanding of the use of proceeds at the time of investment. In addition, environmental impact products have science-based metrics, which supports the measuring and managing of impact.
The information provided herein is intended for informational purposes only and is not intended to constitute a public offer, or investment advice or financial, legal, accounting, tax or other advice and should not be relied upon for such purpose. Always consult a professional regarding your specific needs and circumstances. For information specific to your situation you should consult a professional. Securities offered by affiliates of CoPower Inc. and sold by CoPower Inc. are available only to those investors resident in the Permitted Jurisdictions who meet certain legal requirements. Please carefully read the applicable offering documents and ensure that your questions are thoroughly answered by a dealing representative before investing. Green Bonds purchased through CoPower Inc., are not eligible for protection by the Canada Deposit Insurance Corporation or any other government insurer or by VCIB.