Investment Strategies

INTERVIEW: Threshold Group's CIO On Impact Investing Trends In Wealth Management

Eliane Chavagnon, Editor - Family Wealth Report, January 29, 2016


Family Wealth Report spoke to the chief investment officer at Threshold Group about the firm's latest thoughts on impact investing.

The field of impact investing is mushrooming as companies and individuals the world over intensify their focus on global sustainability and the environment generally.

The total amount of US-domiciled assets under management using SRI strategies expanded by 76 per cent from $3.74 trillion at the start of 2012 to $6.57 trillion at the start of 2014, according to US SIF's latest report, US Sustainable, Responsible and Impact Investing Trends. These assets now represent over one in every six dollars under professional management in the US, the report said.

Wealthy families in particular are increasingly seeking to invest their capital in a way that allows them to “do well while doing good” and the discipline has, arguably, become a crucial aspect of a family office's investment value proposition.

"US SIF has seen evidence, both anecdotal and not, that a growing number of high net worth individuals and families are exploring ways to invest for impact," Lisa Woll, chief executive at US SIF, told this publication. "This is particularly true for Millennials and women, two subsets of HNW individuals that are increasingly inheriting wealth and playing a bigger role in family finances."

Single family offices allocate 30 per cent of their asset allocation, and multi-family offices 19 per cent, to impact investing, according to The Financial Times' Investing for Global Impact 2015 report. The spread is however considerable, it said; while for a substantial number it constitutes no more than 1 per cent of AuM, there are exceptions where much higher proportions are allocated – exceptionally, up to 100 per cent.

“The stand-out statistic is not particularly surprising – that 75 per cent of foundations active in impact investing have become so in the last five years,” the FT's report said. “The equivalent figure for family offices is 53 per cent, with another 24 per cent who started impact investing in the 2006-9 period.”

The impact investing sector is dynamic and changing rapidly. One prominent wealth management player is Threshold Group, which traces its roots back to when George Russell sold Russell Investments to Northwestern Mutual and launched a single family office with the proceeds of the sale. A multi-family office since 1999, Threshold's mission to help wealthy clients “ignite the full potential of their assets” reflects George Russell and the Russell family's two passions: philanthropy and investing, said Ron Albahary, chief investment officer at the firm since 2011.

“Impact investing in our view is the convergence of those two passions,” Albahary told Family Wealth Report. “We have been quietly but methodically building out our impacting investing capabilities, the catalyst having been the Russell family foundation asking us to look at how they could create more mission-aligned portfolios.”

Threshold Group today has around $3 billion in assets under management, of which about $1 billion belongs to clients who have “at least declared” that they want to move closer towards mission-investing alignment, Albahary said, speaking about some of the trends he is seeing in the impact investing space. The wealth management firm and multi-family office has branches in Seattle, WA, and Philadelphia, PA.

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