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Renee Farris headshot

Merrill Lynch Says Money is the Root of All Good, Creates Sustainable Impact Portfolios


As conscientious consumers, we vote with our dollars. We buy hybrid cars, organic and local food, unbleached toilet paper, soap without microbeads, and Warby Parker glasses. We wish we could make a bigger impact in the world, but we do what we can.

What if I told you that you’re more powerful than you think, and that you likely have an untapped powerful resource to create social impact?


I tell you, “Merrill Lynch just added sustainable impact portfolios. That means people like us can do impact investing."

Impact what?

"It’s an investment approach that creates financial and social impact returns."

Let’s rewind. In 2013, Americans gave $241 billion to charities and invested $300 billion in retirement accounts. Money donated to charity went to causes you believe in … education, human services or grant-making foundations.

Your investments, however, went to whatever companies make you the most money regardless of their values, because that’s the sole purpose of investing, right?

Meh. Younger generations have a new approach to investing. We know that money without values won’t create the world we want. Thirty-six percent of millennials feel the primary purpose of business is to improve society. And guess what? Baby boomers are going to transfer $41 trillion in assets to the millennial generation. Cha-ching!

Many young heirs say, “I want my portfolio to do something good in the world.” When a financial adviser doesn’t have impact funds to offer, the client says, "I've got a rock in my shoes that I need to dump out," and leaves. Financial institutions are now scrambling to develop social impact portfolios so they can retain young investors.

And what about you? You have a 401(k). You’re responsible and save money for dentures, wheelchairs and retirement. The money slides from your paycheck and into your 401(k) without you even having to think about it. You’ve allotted your money to the appropriate funds for your age, and now you can sit back, relax and let the money flow through the pipelines without having to deal with it.

You take a deep breath and sigh in relief … except, it bothers you that your 401(k) may invest in companies that don’t exactly align with your values. In fact, sometimes they’re in opposition to your values and charitable donations. Your financial portfolio needs fossil fuels like a kid needs scissors.

But now you know that with impact investing you can harness the power, speed and flexibility of the market to support causes you care about. It feels like a super power. Your money will have more purpose. You will have more power to do good. It’ll help you transform the future into what you think it should be.

Andy Sieg, Merrill Lynch’s head of global wealth and retirement, says: “Clients are telling us they want their portfolios to reflect their values and help improve the world they live in. As their enthusiasm grows, we continue to offer new opportunities to meet this need. We have made impact investing a strategic priority and will bring clients innovative solutions that help them promote positive social change.”

This is a big deal. Merrill Lynch Wealth Management is a leading provider of wealth management and investment for people and businesses worldwide. It employs more than 14,000 financial advisors and represents $2 trillion in client balances. It's one of the MVPs in the industry: The company's financial advisors receive reports that compare the impact investing portfolios with traditional we-don’t-care-if-we-kill-the-world portfolios and can advise clients on both.

Merrill Lynch is smart to make the transition. In a blog post for the Harvard Kennedy School Review, freelance journalist Chrissie Long asks: Just how big is the potential market for retail impact investing?

"To date, very little market analysis has been done on this segment," Long wrote. "But, if you take into account that 88 percent of American households (101 million households) donate to charity, according to the National Philanthropic Trust, and that the retail market for investing is made up of 91 million investors (52.7 million households), according to BNY Mellon; the demand for individual impact investing – a hybrid of the two – is likely gigantic.”

Will you get the same rate of return on your social impact investment?

Quite possibly. Like any type of investment category, impact investments vary. Some do better than the market average; some fair the same; and others perform worse. Financial advisors seem to believe that by doing due diligence, your market rate can be the same as non-impact investments.

Is the whole it's-profitable-to-invest-in-social-good thing real or a mirage?

I’ll be honest. It’s not perfect, but the impact investing bull has started running through the streets. And the world’s richest man, Bill Gates, and champion-of-the-poor, Pope Francis, are jumping on and riding it. They’re followed by a host of high net-worth investors.

According to the Case Foundation, impact investing still needs these things like you need morning coffee:

  • A robust pipeline of investable deals

  • Better data on business and fund performance

  • Expanded opportunities for exits and the return of capital

  • Actionable research on impacts and outcomes; and

  • More products and easier “on ramps” for people to get started

  • And, flexibility so people can invest in what they care about

Which financial institutions do impact investing? So far, BlackRock Impact, Prudential, Bain Capital, JPMorgan, Goldman Sachs, Credit Suisse, Morgan Stanley and, now, Merrill Lynch.

What types of companies are receiving investments because of their social impact? Here’s a short sampling:

  • SolarCity: The king of solar power systems for homes, businesses and governments.

  • Tesla Motors: A designer and manufacturer of premium electric vehicles.

  • Happy Family: Provider of affordable organic baby food. It’s one of the fastest-growing private businesses. It was sold to Danone and made early investors up to 30 times return on their money.

  • Etsy: The largest B Corp to go public. The day it debuted on the Nasdaq stock market, its shares closed at almost twice their initial public offering price.

  • Revolution Foods: This B Corp is shaking up the $25 billion dollar school-lunch market. It provides over 1 million healthy meals to K-12 schools every week at prices that compete with traditional unhealthy lunch suppliers.

  • Warby Parker: Seller of vintage-inspired prescription eyeglasses. Listed by Fast Company as the world’s most innovative company. For every pair of glasses purchased, someone in a developing country receives glasses. This increases the person’s productivity by 35 percent and monthly income by 20 percent.

The Social Impact Investment report by the U.K. Presidency of the G8 finds: "The world is on the brink of a revolution in how we solve society’s toughest problems. The force driving this revolution is 'impact investing,' which harnesses entrepreneurship, innovation and capital to power social progress.”

We can do well and do good at the same time. Fist-bump and head-nod to impact investing.

Image credits: 1 & 2) Warby Parker, 3) thinkpanama via Flickr

Renee Farris headshotRenee Farris

Renee is a social impact strategist who works with companies to help them focus on key social and environmental opportunities. She loves connecting with people so feel free to contact her at renee.a.farris@gmail.com.

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