Increasingly, wealth managers, private bankers and investment consultants are being asked to incorporate impact into their clients’ investment preferences, but what’s the best way to do that? How can an adviser identify what their clients want and report back to them on the impact that they are having? This module provides some of the answers in this developing discipline.

How to use these resources

The module covers the retail demand for impact investment, how to communicate with investors about impact, how to construct impact portfolios and how to undertake impact due diligence. It also touches on the regulatory framework for retail investment in impact and the UK’s tax regime for impact investing.

Resources

Incorporating impact in addition to ESG in clients' portfolios

FT Focus - Retail Impact Investing Uncovered (opens new window)

Financial Times

Reading time: 40 minutes

A detailed survey that delivers high-quality insights around retail impact investing, aimed as an informative read for financial advisors.

What the reviewer found helpful: “Well-researched survey with accessible conclusions. A useful read for anyone that wishes to advise retail clients on impact investing.” Chris Cullen

intermediate
Investing for Global Impact: A Power for Good 2020 (opens new window)

Campden Wealth, Global Impact Solutions Today, Barclays

Reading time: 30-45 minutes

The study provides insight into the attitudes and actions of a sample of the world’s wealthiest individual investors, families, family offices, and their foundations when it comes to generating a positive impact with their capital. The study also comments on the impact of Covid-19 in driving interest in sustainable investing and estimates that the average portfolio allocation to impact investing amongst wealthy investors is expected to increase from 20 per cent in 2019 to 35 per cent by 2025.

What the reviewer found helpful: "The evolving perception of impact investing amongst the wealthy investors and investment trends/interests across the sectors" Kate Munuka

introductory
Construction of an Impact Portfolio (opens new window)

Impact Assets

Reading time: 25 minutes

A comprehensive review of considerations for setting up a successful impact investment portfolio. Includes a discussion of practices e.g. establishing goals and objectives and writing an investment policy statement, as well as giving many examples of how impact can be achieved through different asset classes. It also discusses risk, return and impact and how to measure these.

What the reviewer found helpful: “This is a comprehensive report and includes helpful examples of where impact investments can be found across different asset classes, with examples of investors doing this well.”  Mhairi Littlewood

advanced
How Investors Manage Impact (opens new window)

Impact Management Project

Reading time: 15 minutes

Answers the questions: why, how and using what data do investors manage their impact? Followed by some thoughts on classifying an impact portfolio into three (ABC) groups

What the reviewer found helpful: “Lovely clarity, brief and with useful tables. Best in class summary and a must-read.” Chris Cullen

introductory RECOMMENDED READ
Insights from Impact Advisors and Consultants (opens new window)

TONIIC

Reading time: 6-8 hours

The report provides insight on the growing number impact intermediaries emerging worldwide in an effort to demystify and activate private asset owners and investment intermediaries as they consider and develop their own impact practice Key findings of the surveys informing the report include the following: indication of evolution in the intermediary industry, with increasing product and service offerings to suit more and more impact investors’ needs, irrespective of their geographic location, portfolio size, asset class or impact focus; and clients expect their impact to be managed, measured and reported and many advisors have adopted qualitative metrics, while the sector strives to achieve a robust methodology for managing, measuring and reporting purposes.

What the reviewer found helpful: "Perspective of intermediates on various aspects of working with impact investors and growing practices in the impact space" Kate Munuka

introductory

Client communication 

Impact Investment Advisor Tool (opens new window)

Department for Digital, Culture, Media and Sport

Reading time: 60 minutes

Survey outcomes and views from financial advisors looking to advise on impact investment. Some example documents to use when discussing impact investing with retail investors or High-Net-Worth clients.

What the reviewer found helpful: “Some guidelines for client discussions, useful for independent financial advisors.” Chris Cullen

introductory
A Practical Guide to Social Impact Investing (opens new window)

Personal Finance Society

Reading time: 60 minutes

Explains the social impact investing approach and shares insight on how it differs from other investment approaches Provides insight on the government and regulatory positions on social impact investment in the United Kingdom as well as industry-led initiatives.

introductory
People-powered Investing: tools for individuals to invest for impact (opens new window)

Impact Investing Institute

Reading time: 1 hour (webinar)

The coronavirus pandemic has seen record sums of institutional cash flow into sustainable investment funds, and awe-inspiring acts of philanthropy both locally and nationally. But is there a middle ground for individuals that wish to invest directly in expanding business models that do good in a sustainable way? Is investing outside of banks and stock markets really just for the professionals, or can individuals find ways to invest their savings in social and community enterprises to scale their impact? In this panel discussion, our Lead Expert Jamie Broderick spoke to Daniel Brewer, Chief executive at Resonance, Lyn Tomlinson, Head of impact and philanthropy at Cazenove Capital and Vidhya Alakeson, Chief executive at Power to Change.

introductory

Regulation - regulatory requirements relating to impact and other sustainable investments 

New ESG disclosure regulation (SFDR) - what private banks, wealth managers and advisers need to know (opens new window)

Allen & Overy

Reading time: 30 minutes

As a further development in the rollout of its green agenda, a new disclosure regulation will shortly come into force in the EU – referred to as the Disclosure Regulation or Sustainable Finance Disclosure Regulation (SFDR). This will require certain firms, including private banks, wealth managers and advisers, to comply with new rules on disclosure as regards sustainable investments and sustainability risks. This briefing gives further detail on the new requirements and when they will come into effect.

What the reviewer found helpful: “Legal primer for private banks and wealth managers.” Chris Cullen

advanced

Tax regimes applicable to impact investing  

Making Use of UK Tax Breaks for Impact Investing (opens new window)

McDermott, Will & Emery

Reading time: 5 minutes

This article covers various tax incentives for impact investing including EIS (Enterprise Investment Scheme) and the SEIS (Seed Enterprise Investment Scheme). It outlines how you qualify for these incentives, as well as the potential for these to attract more funding to the early-stage social investment market. It briefly talks about the government’s plan to reform this and the impact this will have on charities and social enterprises.

What the reviewer found helpful: “Technical and detailed short review of social investment tax incentives.”  Mhairi Littlewood

intermediate

Selection of impact funds that meet client preferences 

Building Impact Portfolios (opens new window)

Philanthropy Impact

Reading time: 60 minutes

Looks to apply Modern Portfolio Theory to Impact Investing, and discusses how investors may choose to maximise social and financial return against an efficiency frontier.

What the reviewer found helpful: “Illustrates a specific optimisation approach to investment selection that may feel pleasantly familiar to investors with an economics background.” Chris Cullen

intermediate