Our proprietary Advocacy Investing® strategy identifies investable companies that not only meet our exacting financial and governance standards, but also satisfy criteria reflective of each investor's unique social and environmental concerns. The strategy benefits investors who are committed to backing only those companies whose management behavior actively promotes their own values, but who are unwilling to sacrifice investment performance.
Hedy’s portfolio meaningfully reflects her deep commitment to diversity. It also reaps the financial rewards of good business.
A 2015 McKinsey report on 366 public companies concluded that those in the top quartile for ethnic and racial diversity among their management ranks were 35% more likely to have financial returns above their industry norm, and those in the top quartile for gender diversity were 15% more likely to have returns above industry norm. Credit Suisse’s global study of 2,400 companies found that those with a female board member yielded higher returns on equity and higher net income growth than those that didn’t have a woman director.
And a new study by the Peterson Institute for International Economics and EY which analyzed results from 21,980 global, publicly traded companies in 91 countries from various industries and sectors found that having at least 30% of women in leadership positions—including CEOs, board members and members of the C-suite—added 6 percent to their net profit margins.
We’re grateful to Hedy Ratner for her continuing confidence in us—and to all our clients who help drive positive social change by aligning their investment portfolios with their core convictions.
For more information about the ways in which Advocacy Investing can help you, please call Marc Lane, in confidence, at 312-372-5000.
The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems.
A SIB isn't a traditional bond where investors are guaranteed a fixed return but a contract among a government agency that agrees to pay for improved social outcomes, a private financing intermediary and private investors. SIBs shift the risk of experimenting with promising but untested intervention strategies from government to private capital markets, with public funds expended only after targeted social benefits have been achieved.
Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system.
The government decided which goals would be supported, but exactly how those goals would be achieved was left to the private sector. It was the investors, through a bond-issuing organization, who ultimately endorsed the allocation of investment proceeds — how much would be invested in job training, drug rehabilitation and other interventions.
If the Peterborough plan eventually shrinks recidivism rates by 7.5 percent or more, the government will repay the investors' capital and share the taxpayers' savings with them, delivering up to a 13 percent return. If the target isn't hit, the investment will have failed and the government will owe the investors nothing.
Illinois' SIB effort was spearheaded by the state's Task Force on Social Innovation, Entrepreneurship and Enterprise — the governor's think tank on social issues, which I am privileged to chair — with support from Harvard University's John F. Kennedy School of Government, the Rockefeller Foundation and the Aurora-based Dunham Fund. A request for information issued by the Office of Management and Budget on May 13 yielded responses from service providers eager not only to reduce recidivism here but also to create jobs, revitalize communities, improve public health outcomes, curb youth violence, cut high school dropout rates and alleviate poverty.
Now the governor has issued a request for proposals intended to spur better outcomes for Illinois' most at-risk youth — by increasing placement stability and reducing re-arrests for youth in the state's Department of Children and Family Services, and by improving educational achievement and living-wage employment opportunities justice-involved youth most likely to re-offend upon returning to their communities.
Kudos to Mr. Quinn for bringing SIBs to Illinois. May they soon start delivering on their promise.- See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf
My Life As a Client: My Advisor Wants To Help Me Change The World
By Anne Field
What do your clients think about you? We talked to Hedy Ratner, a 75-year-old Chicago resident, about what’s really on her mind.
I’m a long-time activist. I’ve spent a lifetime doing that. 30 years ago, I founded the Women’s Business Development Center, a 501(C)(3) that supports women’s economic activity and I’m still a consultant to the organization. All that is important to understanding what I’m looking for in a financial advisor.
I’d describe my first experiences with investment advisors as pretty typical. A long time ago, I went to Merrill Lynch, the brokerage firm my mother was working with. She, an immigrant from Poland who came here in the 1920s, was very careful about money. Her and I made decisions together so, we stuck with blue ribbon stocks and did ok.
We had a number of brokers over the years, but we never met with them in person—only over the phone. We’d talk about where to invest. We’d call and say, “Let’s buy some AT&T,” or “Let’s buy some Amoco.” There wasn’t really an advisory relationship, we were just calling them up. I didn’t feel much of a connection to them.
After a while, I kept money with the brokerage firm, but I also started doing some investing on my own. I’d only use a broker to make the purchases. I started getting the proxies in the mail and realized, wait a second, the boards are all white men. That’s when I began looking deeper at not just their directors, but other issues, as well—investigating policies about hiring, affirmative action, protection of women and minorities, and issues related to benefits for same-sex couples. I became angrier and angrier about them and wanted to figure out a way to change some of those policies. Plus, my organization had a pension plan, and I decided I wanted our investments to reflect our mission.
Doing all that research was hard. Then, about 20 years ago, I found an article by a financial advisor in a local business publication. He wrote about advocacy investing. When I met with him, he asked me about my values, and I was impressed by his commitment to advocacy investing. No one had ever asked me, “What’s important to you? What are your values?” We came up with guidelines for investing and part of that was looking at policies of the corporations in which I might invest. He said he could do all the research and that he charges an assets under management fee.
I wanted to let corporations know why I was or wasn’t investing in them. So, I began writing to the CEOs and chairmen of the board using the research as a basis for my argument. Occasionally I get replies.
Finally, I took all my investments from Merrill Lynch and gave them to my current advisor. I switched some money to Northern Trust because they also met all our guidelines. Now, I meet with him and his team two or three times a year. He gives me a report, and we see if there are any changes we want to make. We shift things around as I get older—he keeps telling me to pick less risky things, but I’m inclined to take on more risk. However, the philosophy always stays the same.
Every once in a while, I’ll call and say, “What about this company? I like what they’re doing.” He investigates and tells me if it meets my guidelines. I got married about four years ago and now my husband is also investing with him.
He’s not just a financial manager. He wants to help me change the world.
Reprinted from Anne Field's March 2, 2017 editorial which appeared on WealthManagement.com. Copyright © 2017 Penton.
The Law Offices of Marc J. Lane, A Professional Corporation
70 West Madison Street, Suite 2050
Chicago, Illinois 60602-4256
Nationwide: (800) 372-1040
Facsimile (312) 346-1040