Capital Series: Will Tickle, Ballentine Partners
This episode is part of our new Capital Series hosted by MCJ partner, Jason Jacobs. This series will explore a diverse range of capital sources and the individuals who drive them. From family offices and institutional LPs to private equity, government funding, and more, we'll take a deep dive into the world of capital and its critical role in driving innovation and progress.
Will Tickle is a partner, senior investment advisor, and director of impact investing for Ballentine Partners.
Ballentine Partners is a wealth management firm that prioritizes the needs of its clients while maintaining integrity and independence. The firm offers customized investment solutions and planning expertise to a wide range of clients, from individual professionals and entrepreneurs with liquid assets of $3.5 million to multi-generational families with assets worth over a billion dollars.
In this episode, Jason and Will discuss his process for defining impact and which areas are important for his client’s portfolios. They also cover the balance of impact between the firm's contributions and those from the clients directly. Will shares how his clients' impact investments have evolved since the firm's first involvement in 2005. Lastly, they explore where climate and climate tech fit into all of this. Enjoy the show!
Get connected:
Jason Jacobs
Will Tickle / Ballentine Partners
MCJ Podcast / Collective
*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on April 4, 2023.
In this episode, we cover:
[2:49] An overview of Ballentine Partners
[4:25] How the firm's clients inspired its approach to climate investing
[7:09] Will's background and focus on impact
[9:27] The firm's ethos to serving clients
[11:58] How Ballentine Partners applies an impact lens to its existing portfolio of assets
[14:10] What Ballentine is hearing from clients
[17:01] Challenges of assessing impact across an entire portfolio
[19:23] How Ballentine balances impact with returns
[23:55] Capitalism and its role in the future of the clean energy transition ahead
[29:24] Changes to inspire widespread adoption of impact investing
[32:40] The role of shareholder activism
[34:17] Ballentine's impact reports
[37:35] Who Ballentine wants to work with
-
Jason Jacobs (00:00):
Today on the My Climate Journey Capital series, our guest is Will Tickle, partner, senior investment advisor, and director of impact investing for Ballentine Partners. Ballentine Partners is a client-centric investment and wealth management firm dedicated to integrity and independence. They serve a broad range of clients from individual professionals and entrepreneurs with three and a half million in liquid assets to multi-generational families with over a billion in assets, and they build customized investment solutions integrated with deep planning expertise.
(00:35):
I was excited for this one because, as director of impact investing, Will is thinking a lot about how to define impact, what areas of impact are important, how much of that comes from the firm versus from clients directly, what he's seeing from clients, how that has evolved since they first started investing in impact in 2005, and of course, where climate and climate tech fits into all this. But before we start...
Cody Simms (01:06):
I'm Cody Sims.
Yin Lu (01:07):
I'm Yin Lu.
Jason Jacobs (01:08):
And I'm Jason Jacobs, and welcome to My Climate Journey.
Yin Lu (01:15):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (01:20):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (01:33):
Will Tickle, welcome to the show.
Will Tickle (01:38):
Thanks so much, Jason. Happy to be here.
Jason Jacobs (01:39):
Well, thanks for coming. As we talked a little bit before hitting the record button, we've been out raising this fund. And in doing so, our meetings are one-to-one, and we've been learning so much, and it felt weird that we weren't sharing, especially since as more and more capital flows into climate tech, I think there's a lot of people trying to figure out how it's flowing, and who's doing what, and things like that. And your firm is doing really interesting work, and I'm so grateful that you are taking the opportunity to speak with me about it and also to share it with the broader MCJ community. I think people are going to get a lot out of this discussion.
Will Tickle (02:13):
Well, that's great. Let's hope so. And yeah, we've been at this for a while. We've stubbed our toe a few times. We've had a few things that have been moderately successful and greatly successful, and hope that those learnings can be shared and leveraged by others.
Jason Jacobs (02:26):
Just selfishly, I'm so curious about the backstory to what you're up to as well, because you guys really are kind of an odd duck in a good way in the industry from what I've seen. So just the origin story of what struck your firm by lightning to get you down this path in the first place, I think would be fascinating. But without further ado, maybe just give an overview of Ballentine Partners and what you do as a firm.
Will Tickle (02:49):
Ballentine Partners is a boutique wealth management firm based in the Boston area. We serve about 240 families and oversee around $10 billion in assets. I, along with two of my colleagues, lead our impact investing initiative, something we've been at since 2005, 2006, and that represents about 25% by client count, but about 15% of our overall AUM in terms of deployed capital. Not all of it is in climate tech. It runs a gambit of impact themes, from racial justice, to gender lens, to climate, to multi-theme initiatives.
(03:23):
And how we got started, I would love to say we had some brilliant view around the corner, but it was actually our clients that said, "I want to be doing more with my capital." And we are a firm that is grounded in a history of service to clients, and we said, "All right. Well, we're going to help you do this." We did it for a couple trailblazing clients, and then we realized, "Hey, this is successful on the investment side. It's really rewarding. It builds amazing relationships both with clients in the investees that we're identifying, and this is a win-win-win." So we invested more in it and have grown the practice considerably.
Jason Jacobs (03:58):
And please anonymize or generalize as much as you need to. I'm not trying to betray any confidentiality. But when you say, in air quotes, "Did this," what did you do? What is that case study, to the extent that you can talk about it? There's probably a lot of high net worth people out there, in fact, I know there are, that want to do more with their money but don't necessarily know where to start. So hearing where someone like a real live family started, I think would be really helpful to the extent you can share.
Will Tickle (04:25):
Some of the first clients that came to us with an interest in this, one had an intense love for the natural world. I would say that's something that I share deeply. Growing up in New Hampshire, my days were spent outside every day, thinking about the beauty, balance, and abundance of the natural world. And so this client came to us and said, "I don't want to invest in anything that's going to harm Mother Earth." And that left us with a pretty short list, as you might imagine, based on the traditional investments that were available in the '05-'06 time period.
(04:54):
And our process was to think through what would investing in a regenerative portfolio look like across asset classes. That means in the public companies you need to be identifying the companies who are focusing on the practices that drive sustainability, specifically with respect to the environment. It means within your private equity and venture capital portfolio to be thinking about what is the pioneering technology that's going to transition the way we operate to a new world. It means within your real assets in your built environment piece, the real estate, the infrastructure, it means all of those have to be looked at with a green lens or with a sustainability lens.
(05:32):
We went through what was available. There was, as I said, a pretty short list, and we started there. Even within fixed income, pretty tricky. We didn't want to buy treasury bonds, so we ended up buying Swedish bonds back in the '05-'06 time period to satisfy that environmental focus. And as time has moved on, what we do is much less focused on a one-on-one discussion with an individual client's very narrow definition of what is environmental sustainability.
(06:00):
In that case, anything that was building and constructing was actually taking away natural lands. That was bad. Now we're thinking about, "All right, what about building things that have a much smaller footprint from a carbon perspective, a much smaller footprint from an environmental perspective, water perspective, et cetera?" And that has broadened our aperture for the opportunities available.
(06:20):
And it's also meant that we can put together more successful portfolios from a risk and return perspective across asset classes, and that means there's more client interest. What I'm trying to describe is this spectrum of the perfect investment that checks every environmental box for a single individual's vision versus a much better and a really good investment from an impact perspective, an environmental perspective, that many more people are interested in behind.
Jason Jacobs (06:50):
And Will, it looks like Ballentine is the only place you've ever worked after college. Is that true?
Will Tickle (06:55):
That is true.
Jason Jacobs (06:57):
First of all, that's amazing. Not something you see a lot of these days. You're lucky that you stepped into the equivalent of product market fit, but with your career on your first go around. Were you always the impact guy within the firm? Or how did that come about?
Will Tickle (07:09):
I joined with no real knowledge of impact investing even as a concept. I graduated from undergrad at Brandeis with an economics major. And the economics vision way of thinking is something that always existed within me, even before I went to undergrad and before I knew what economics was as a field. And the idea of impact investing has a lot to do with economics when you broaden the definition beyond finance. It's this allocation of scarce resources. How can you maximize use of public goods for everyone's benefit? There's a reason why the tragedy of the commons is a story or an example used in every Econ 101 class.
(07:51):
And how I became the impact guy is when I started, environment was the main impact theme that was on everyone's mind. In this '05-'06 timeframe, remember, we were talking about peak oil and oil prices were pushing $140 a barrel. That was where we were thinking about the resource scarcity. And I'm sitting here like, "This is an economics problem, and it's an economics problem that is driving destruction of what matters so much to me, which is the beauty within the natural world and economic sustainability." And so it was kind of a perfect fit.
(08:23):
It helped that my lived experience as a child from the '80s actually brought optimism to it, because at that point in time, everyone was like, "Peak oil. We're screwed. Everything is going to go down in flames, and climate change is going to catch us." And I'm like, "Well, I learned about the ozone layer destruction, and then the Montreal Protocol address that. I heard all about the destruction of acid rain in the Northeast that was happening all throughout the White Mountains in New Hampshire when I was a kid, and then the Clean Air Act in 1990 actually kind of solved some of that."
(08:52):
Now, don't translate that to say I'm optimistic that current administration of legislative climate is necessarily going to address the climate change catastrophe today, but I am an optimist that these challenges that we face around climate are not insurmountable. And private capital is, I believe, the only way to solve it.
Jason Jacobs (09:10):
When these clients that you were referencing first came to you to start this dialogue and journey, was there debate or controversy within the firm? And if so, what aspects were the ones that you wrestled with the most at the time?
Will Tickle (09:27):
There was not a lot of debate, initially, mostly because, as I was saying, we are a firm that is grounded in an ethos of service to clients, and we are here to help a client do whatever they want to do and help them make an educated decision around that. I think where there was some debate was how broadly or how much should this be the only way we invest as a firm. And that's frankly a discussion that's still going on today.
(09:58):
As you can probably glean from some of the numbers I gave in my intro, is that we are not a firm that only does impact investments. We have some clients that invest on a more traditional basis. There are environmental, social, and governance considerations taken into account when reviewing those. But there are others who invest very intentionally for impact, and they make that decision, they opt in. I think that gives us a lot of latitude and a lot of flexibility to go deeper.
(10:26):
If you're bringing a climate investment to all of your clients, there has to be a lot of what we'll call institutional boxes checked. They have to be on their fifth fund, they have to have worked together for 10 years. They have to be at least a $500 million fund, whatever. Where a client can say, "Look, I'm thinking 5, 6, 7, 8 generations down the road."
(10:48):
This is something that requires a little bit of extra risk or requires a different innovative structure. We can invest in a first fund that's $25 million that's addressing something completely new, like recycling technology. Or we can invest in a group that is using recoverable grants and program related investments to fund very early stage climate technology companies that are otherwise uninvestible because of a lack of product market fit, or too much capital intensity, lack of successful betas.
Jason Jacobs (11:20):
And when you say invest, are you making recommendations on a client-by-client basis, or do you actually have pools of discretionary capital as well that you're investing on their behalf?
Will Tickle (11:30):
For public investments, where they are listed public companies or fixed income, we manage some of that in a discretionary way. We typically identify other underlying fund managers that would be selected on the private side. We are not taking any discretion, but are making recommendations for each client to choose funds that we think work together well in a portfolio and service both financial and impact objectives.
Jason Jacobs (11:58):
And I guess it depends on a client-by-client basis, but do you take an impact lens, and then apply that across the portfolio of assets for a client that cares about impact? Or do you compartmentalize and say, "Over here, it will be strictly returns-focused, and risk mitigation, and that kind of thing. But then over here, this 10%, or 20%, or whatever the number is, that's going to be in the impact bucket, where even if it's investing, we're going to look at it with maybe more of a philanthropic or double bottom line lens."
Will Tickle (12:31):
It's both. For the most part, we try not to get too compartmentalized, but we think about our clients' resources as in service of their financial and impact objectives. In some cases, there may be certain impact objectives that you just can't address through an investment. You want to conserve some land in a part of the country where you grew up or have a strong personal connection. You want to facilitate more art to be taught in public K-12. Those are not necessarily things that we can say, "All right, we're going to do this through an investment."
(13:05):
But in thinking about their entire portfolio, you want to know, "All right, you have this much capacity for philanthropic granting. You have this much capacity for recoverable grants. You have this much capacity for maybe concessionary impact investments. You have this much capital for illiquidity. And how can we optimize that across both the financial and impact objectives?" So it may be that your private real assets is all in renewable energy infrastructure, because that is the best use of your capital.
(13:35):
There's a finance term called the efficient frontier, but it's where you're putting together different asset classes to maximize risk and return. We think about that not only on the financial axis, but also on the impact considerations. Most clients will have one big portfolio. There will be slices carved out for, "All right, this much is going to go to concessionary loans that develop this impact objective. This much is going to go to high impact venture capital. This much is going to go to solar and renewables development. This much is going to go into public equity, et cetera." I'm not sure if I answered your question there.
Jason Jacobs (14:10):
I think so. I mean, look, this stuff is complicated. It's like, "Well, what kind of family are you talking about?" And not just the numbers, but also their intent, and their hot buttons, and their allergies, and their tolerance for risk, and their time horizons, and stuff like that. Maybe I'll try to come at it a different way. Since you are so client-driven, what are you hearing from clients, and how has that evolved since you first started focusing on impact back in 2005?
Will Tickle (14:36):
I think that what we hear from clients can move in waves based on the coverage and prescience of certain impact themes. There was a time when microfinance was on top of everyone's mind. There was a time when Clean Energy 1.0 was front and center. We've seen a lot more focus around gender lens and racial justice over the last five years, and I think what we're hearing is an increased focus on, "Yes, and," as opposed to, "I'm an impact investor, I care about the environment. To me, the environment means this, so this is what I want to do. Or I'm interested in gender lens investing, and so I want to make sure that I'm investing in companies that are run by women and are supporting women founders, et cetera."
(15:24):
I think we're finding out that there are a lot of opportunities to lean in in different areas. So climate tech, renewable energy infrastructure, these are not particularly diverse industries, categorically speaking. Finance is not one either. Don't want to be the pot here, but the reality is that, oftentimes, a gender lens investor or a racial equity investor is thinking about the implications on LMI communities here in the US of climate change, and their resiliency, and their preparedness.
(15:54):
And all of these issues are intertwined in a lot of ways, and so we're hearing more interest from our clients on, "All right, how can we lean in? We want to support renewable energy infrastructure, we want to support clean tech, but we also want to talk with these managers and ask them about what are they thinking about diversity. If it's a renewable energy developer, how are they thinking about the contractors that they're using? How are they thinking about their own teams?" And so there's been a blending of a lot of impact themes and impact ideas that's been really exciting to see and that our clients are really enthusiastic about.
Jason Jacobs (16:26):
Given that each asset class that makes up a portfolio, figuring out impact, I would imagine, I mean, you tell me because you're closer to it than I am, but that it's a different skillset to assess impact with a public equities portfolio, versus with fixed income or with private equity, versus early stage venture and technology, versus whatever. So how do you think about the expertise that comprises the impact team, and what does that dynamic look like with the impact team and then the subject matter experts in the firm of each different asset class?
Will Tickle (17:01):
Really hard to assess impacts across an entire portfolio. Because as you point out, every asset class is a different skill set. There are different KPIs, there are different things that are material for each. There are some resources out there. They are all pretty new or not very consistent in terms of how they will rank a different company or a different project. We rely a lot on good old-fashioned discussions with the managers and with the portfolio companies to assess intentionality. We still think that is the North Star of impact, and our impact team, I think, reflects that.
(17:40):
While I've been at Ballentine my entire life, been in finance my entire life, our other dedicated team members both have more humanities and nonprofit backgrounds, so they're, I think, very keen to bring perspective around the different lenses and perspectives, different challenges, being able to suss out intentionality of managers in terms of, "All right, do they really care about this, or is this a greenwashing situation?" If you go to meet with a manager that is running an environmentally focused equity portfolio and you ask for a water, do they bring it to you in a plastic bottle or do they bring it to you in a glass? Little things like that, you can't get from an ESG scorecard that you print out from a system.
Yin Lu (18:22):
Hey everyone, I'm Yin, a partner at MCJ Collective. Here to take a quick minute to tell you about our MCJ membership community, which is born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change.
(18:49):
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming, like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Jason Jacobs (19:23):
When it comes to returns expectations, I have to imagine that, with clients, there maybe is a tendency to feel something different than they say they're going to feel. So for example, "I want true impact, I don't want fluffy impact," and then the true impact might deliver worse financial returns than the fluffy impact. Then it's like, "Wait a minute, this didn't perform as well financially as this other vehicle over there." And it's like, "Well, you said you wanted true impact." So how do you balance impact with returns? And is there a tension there?
Will Tickle (19:55):
There can be. There is no shortage of what we term concessionary or impact investments that we don't think would perform as well as traditional investments. For clients that are interested in pursuing those, we have a very clear... We call it a high impact carve out, but it is very intentional about what our returns expectations are. Is this something that we think will perform in line with another investment, but is just higher risk because it's a smaller fund or a newer team? Or is this something that actually has characteristics that are going to return less than another comparable investment in the same asset class?
(20:32):
Relatively few of our clients are actively involved in that sphere. Of the 50 or so who are in impact portfolios, there's maybe five or six that are... Probably a couple more than that, but it's a relatively modest amount that are really saying we want to be active in pursuing deep risk or concessionary return investments. And our stance is you can approach this work without an expectation to concede return, which is still the dominating narrative of the investment industry, and I think the dominating narrative of people's perceptions coming to it.
(21:11):
Let me give you an example. If I were to say, "Here. I've got a car that's got 50% fewer things that could break and is likely to be 60% more reliable," does that sound a little bit like buying a Japanese automaker stock in the '80s or '90s? You'd probably say, "Oh yeah, that's probably a good investment." Toyota's going to then go on to be the largest automaker in the world. So if you approach some of these macro tailwinds with just an investment perspective, I think that it makes a compelling investment case on its own merits.
(21:44):
It's when I say, "Do you want to invest in EVs?" Then all of a sudden, the perception changes because you're bringing in these trigger words that have people's perceptions around renewable energy. If we talk about renewable energy, you've got half the room interested and half the room shut down. But if I say energy independence and resilience, then everybody's excited. So I think part of it is the way we think about climate investing in particular is to focus in areas where there are thematic and investment tailwinds in addition to a huge impact.
Jason Jacobs (22:16):
When you think about the percentage of the clients and the assets that have this impact lens within the firm, is the goal to strictly adapt to the evolving needs of clients? Or do you view part of your role to help enlighten clients to get more capital flowing into these areas that can bring impact beyond just financial returns?
Will Tickle (22:45):
We view our role as a firm to leverage all of the investment assets we manage in service of some of these objectives. When we are talking with an investment manager, whether they are an impact manager or a traditional manager, we want to understand, do they have a recycling policy at their firm? Do they review carbon and water intensity of the portfolio companies that they're purchasing? Do they have gender pay equity analyses? Things like that.
(23:12):
So we're able to, I don't like the word using a platform, but we're able to flex our muscle based on the aggregate investment assets of our firm in service of a lot of these goals, whether the clients decide to invest that way or not. We are actively letting clients know about the experience that we offer in this impact investment portfolio and impact investing approach that now has a track record dating back to '06 that has been through ups and downs in markets and has, I think, proven out that there is no trade off in performance. And it's getting a lot of people's ears perked up, because if you, to your point, are not sacrificing returns in service of impact, why wouldn't you?
Jason Jacobs (23:55):
This is a bigger picker question, but when you think about the Industrial Revolution and capitalism for that matter, how do you think about capitalism and the future? Are we reaching a point where something needs to change at the systems level? Or do you think that we can continue with the system as it has been and just swap things out under the hood that can be cleaner, and more efficient, and stuff like that?
Will Tickle (24:26):
That's a great question, one that we wrestle with a lot on the energy transition. What is the role that nuclear plays? What are the roles that biomass play? What about renewable natural gas? How do these things that are under the hood swaps, but use leverage a lot of the existing infrastructure? Is that an important component? I think we tend to think, yes, throw everything at the problem. If you look out 100 years, our existing water infrastructure and grid infrastructure does not work, so distributed generation is something that we need to get to sooner rather than later. There's lots of amazing investment opportunities around that. Storage as well.
(25:01):
So I think it's a bit of both. The next few years are, I think, a lot of still adapting the existing infrastructure. If you look through the longer term history, it's that we know the top companies in the S&P 500 turn over meaningfully every 10, 15, 20 years, but they don't go quickly or quietly, and there's a lot of entrenched capital in energy majors, entwined interest that is going to make an overnight change quick. And we tend to want to make the conversation more inclusive, bring everyone to the table to find solutions, as opposed to focus on just the next big thing that will revolutionize air travel, or autonomous vehicles, or energy grid, et cetera.
(25:46):
And frankly, when you get too focused on the real next big idea, you bring in this concept of impact risk and emphasize it. None of us are smart enough to know what's going to happen. And lots of the technological revolutions, from Teflon and Gore-Tex, to pesticides, to even the compact fluorescent light bulb. 10 years ago, we were running around replacing all of our incandescence with these new CFLs that only used 12 watts instead of 60 or 120 watts.
(26:14):
And then 10 years ago, we're like, "Gosh, why did we do all these CFL bulbs?" Because the LEDs are using three watts, and they're brighter, and they last much longer and they don't have mercury, and aren't difficult to dispose of. So there's a slow moving component to this that needs to be tempered with the innovation and the ways that we can really have a transformative impact on carbon emissions, and carbon storage, and the areas of climate change that are most important.
Jason Jacobs (26:41):
I don't know if this question is too generic, but let's say I was a client with a million in assets, versus 10 million in assets, versus 25, versus 1000, and I said the same thing to you, which is, "Will, I'm freaked out about climate change. I want to help. I'm trying to figure out what to do professionally to align my work with climate, but I feel weird not doing anything about my financial assets of my family. What should I do?" Do you have a stock answer or a template from which to start tuning at each of those levels? Or is it not that simple?
Will Tickle (27:15):
It's never that simple, but I can try to make it simple. Depending on the level of investment assets versus the level of, let's say, human capital assets, the biggest thing anyone can do and what everyone should be doing is thinking about their consumption. The other piece, I guess, your previous question about history, human consumption habits have put capitalism into the position it is today. We buy disposable goods because they're cheaper and that's what our brains want. We buy TVs, we buy these things.
(27:42):
That is what drove offshore production. It's what led us to more extractive industries. It's what led us to not focusing on the environmental externalities, because we could push them over to countries where they're not as front of mind and cost accordingly. I promise I'll get to the answer to your question. I think that our own consumption habits and thinking about their impacts on the environment is a great place where everyone starts. And then, as you grow the amount of investment assets in addition to the human capital assets you have, you can think about ways to align your investment portfolio with your thinking.
(28:17):
When folks have investments that are primarily centered in a 401k, until recently, it's been challenging to have environmentally themed or ESG investments due to some legislative guidance that prohibited them. That is hopefully loosened now. So asking your employer, "Hey, are there any sustainable options on the 401k platform?" Within public markets, public stocks, public bonds, there are a number of quality aligned environmentally themed funds that are a great place to start and that don't have super high risk or crazy concentration, just in solar industries like that.
(28:54):
As you grow larger in portfolio size, you can begin to make private companies or private equity venture capital fund investments, direct private company investments. You could get involved in angel circles and other climate centered initiatives. And essentially, as the portfolio grows, you're just able to do more across fixed income, real estate, renewable energy infrastructure, and private equity, and venture capital. But there's no portfolio too small to begin thinking about aligning it with your values.
Jason Jacobs (29:24):
When you look at the broader population of high net worth individuals and families, what do you think is holding back more families from investing in ways that align with their values? And what changes could be made, if any, that would help foster more widespread adoption of... I'm hesitant to use the word impact investing, because people hear that and they hear philanthropy. But investing that can do good without compromising returns.
Will Tickle (30:04):
Frankly, I think intermediaries, investment advisors, like not Ballentine Partners, but folks sitting in a similar seat, have been reluctant to embrace impact ESG aligned investing, however you want to term it. There is definitely a perception of risk that I think many financial advisors have perpetuated, and that has held back adoption. I think the finance industry in general, it's not just... My wife's in the medical profession. In some ways they're very different, but in some ways they're similar. And I think both of them are areas where it's difficult to be an enlightened consumer.
(30:36):
If I go into a store to buy toothpaste, I can identify what's in them, I can decide which toothpaste I like, and I can make a quick decision, and next time I'll go in and I'll buy that one that I tried and I liked. The switching costs and the ability to, I guess, test or second guess what a doctor tells you or what a financial advisor tells you, it's not quite as easy as switching toothpaste.
(31:00):
If I'm told I need to have this treatment, I don't know the jargon, I don't know the industry lingo in order to be able to push back on that. And I think people feel the same way when they're sitting across the table from a financial advisor a lot of the time. Someone comes in and talks about, "This portfolio is designed to maximize the sharp ratio and minimize downside deviation, and it's got asset classes and low expense ratio, low turnover," and people are just like, "I don't know what that means, but I don't want to ask a question because I'll sound dumb, and so I'll just go along with it."
(31:32):
Not to paint my industry in a bad light, but I do think that's been a limiting factor to the adoption of impact investing. And I think that until the last, let's say, five or six years, the lack of quality investment options... You've used the term product, for lack of a better term, but there's really been an explosion over the last five years in terms of the number of fund investments that are available at low minimums and at low fees. And that, I think, has the potential to really open the doors for a lot more people to invest in this fashion.
Jason Jacobs (32:05):
Any examples come to mind, either of specific vehicles or just types of vehicles that you are particularly excited about that maybe have come into the field more recently?
Will Tickle (32:15):
Yeah. I don't know that we're prepared to name any specific vehicles. I would say that there are some firms that have done great work with thematic investing ideas, so firms that have a particular niche and long experience in something like gender lens investing or a firm that has specific experience and a long term track record around environmental markets investing.
(32:40):
There's also some really interesting funds that exist around, and ETFs in particular, that are focused on shareholder activism or engagement. So funds that are thinking about how to use a diversified portfolio of equities, some good companies, some bad companies, and using that as a platform to file these things called shareholder resolutions and actually enact change at some large companies in terms of either board members, or how they think about disclosure, how they think about planning for climate change, and things like that.
Jason Jacobs (33:15):
So almost the opposite of divesting. It's like, "Don't run away. Actually get in there, but engage once you're there."
Will Tickle (33:20):
Exactly. The old Trojan horse, I guess. You'd be amazed at the difference in the conversation in a boardroom when somebody is saying, "Hey, we need to invest all of our free cash flow into renewables," and they're speaking as an owner of the company, which is what an owner of a share stock is, as opposed to somebody who is showing up as an activist and saying, "You need to do this." And I'm fully in support of traditional activism as well, but shareholder activism definitely has more teeth to it, and there's a real important role that it plays in the future of climate investing.
Jason Jacobs (33:56):
You talked about how the impact approach really came from clients first, although it's not strictly catering to clients, because I see that, for example, you publish an impact report every year as a firm. Can you talk a little bit about when that started, what's in there, and that journey, and how you use that report, and how the report and its role in the firm has evolved over time?
Will Tickle (34:17):
We just published our fourth impact report at the start of the week, actually. We're very proud of that. I think the impact report serves two purposes. One, it lets people know how we think about ourselves as corporate citizens, if you will. And two, it lets people know what we're planning to do, which serves as a really good accountability mechanism.
(34:39):
If you put in your impact report, "We are going to do this from a diversity perspective," or, "We are going to do this from an environmental footprint perspective," you have to do it. And not that you wouldn't do it otherwise, but I think it's really good to set measurable, quantifiable, and published targets. So we've done that around some of the focus around diversifying our own employee base. We did that around our CO2 footprint as a firm. Both of those initiatives have been successful or are on track to be successful.
(35:07):
So we think of our impact report as, how do we treat all of our stakeholders, our clients, our vendors, our employees, our communities, and Planet Earth? And we want to put concrete examples of what we're doing to walk the walk and not just say to someone, "Oh, yeah. We care about the environment." Well, how do you do that? Do you have composting in each of your offices? Do you offset your travel? How do you think about your office renovation environmental footprint? What percentage of your furniture is reused, et cetera?
Jason Jacobs (35:37):
Maybe there's a prospective client and they have enough that they need some oversight, but their money needs to work for them. They don't have so much that they can just support all the things they think are important and cool, because they need to make sure that their money is actually working for them to keep up with their lifestyles, and their kids' education, and things like that. And they say, "Well, it's great that you're thinking about all these things .and when you add a zero or two to my assets, I'd love to work with a firm like you. But in the meantime, I need returns." What would you say to that person or that family?
Will Tickle (36:09):
I don't think they're mutually exclusive. Like we come across in many investment contexts, some of the best investment opportunities and ideas are founded in people who are true specialists and visionaries in their unique field. And I don't know when a carbon tax may or may not be in place, but I do know we're seeing real impacts on businesses across the world from climate change, from water scarcity, from reliance on extractive metals, and other environmentally pollutive supply chain considerations. And those are things that are just plain old good investing to be thinking about. You're adding one more dimension of risk and perspective to your investment decisions, and that should not be off-putting.
(36:55):
If anything, we probably have more clients that come to us and say, "This sounds like a really good investment opportunity. Yeah, it's great that we're going to maybe save the world, but talk to me about all of the support that we've got from maybe philanthropic organizations that are helping de-risk investments, or tax incentives that maybe come through the IRA, or just general tailwinds that you've got from things like supply chain efficiency, resilience, et cetera." So maybe I flip the question on its head and say in order to grow that asset base, you really want to take more of an offensive perspective. I hate looking at the environmental catastrophic track that we're on as an opportunity, but I think it really is.
Jason Jacobs (37:35):
In terms of your client base, what type of profile makes a good client for Ballentine Partners? And for anyone listening, who do you want to hear from, if anyone?
Will Tickle (37:46):
We love working with families. Most of our clients are families, although we do serve foundations and endowments as well. A typical Ballentine Partners client has anywhere from 3 million in investible assets to north of a billion. So that's obviously a pretty wide range, but we have dedicated teams depending upon the size of the client. And we serve a lot of people in the financial profession, we serve a lot of people in real estate, we serve a lot of other founders and entrepreneurs.
(38:15):
And I think the best clients are ones who, in many cases, have done this before themselves or could do it themselves, but they really want or they recognize that executive mindset like, "I can do this myself, but it's not the highest and best use of my time, so I want a firm that is going to involve me in the decision making process of every step along the way, but is going to handle all of the implementation and the details, and really empower me to focus on the things that are important to me without taking complete ownership and control and exerting too much of their own vision values on my financial plan or my investment strategy." We view ourselves as being able to extend a family's vision and values through their investment portfolio and all of the other financial facets of their life, as opposed to telling them what they need to do.
Jason Jacobs (39:06):
Great. And is there anything I didn't ask that I should have, or any parting words for listeners?
Will Tickle (39:13):
I would say there is a climate and impact component to every decision you make every day. And the thing I would ask everyone to do is think about what those are, to be on the lookout for them, and to just think about what the implication of every decision is on climate.
Jason Jacobs (39:35):
Well, Will, this was a great discussion, and I thank you for making the time to educate me and educate listeners. And thanks also for the work that you do. It's important work. And wishing you and the whole team at Ballentine Partners every success.
Will Tickle (39:47):
Thanks so much, Jason. Right back at you. Enjoyed my climate journey for years and years, and the work that you do both navigating the community, building the flywheel, and just raising awareness is imperative.
Jason Jacobs (40:00):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (40:05):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (40:14):
If you'd like to learn more about MCJ Collective, visit us at mcjcollective.com. And if you have a guest suggestion, let us know that via Twitter, @MCJPod.
Yin Lu (40:27):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ venture funds, be sure to subscribe to our newsletter on our website.
Cody Simms (40:36):
Thanks, and see you next episode.
