Award-winning SRI-focused advisor on finding his niche early and the problem with ESG going mainstream
The idea that you could make money and do good at the same time has always been a mantra in Ryan Colwell’s life.
When he entered the financial service profession back in 1997 and started aligning himself with socially responsible investing, most advisors thought he was crazy. Now, “ESG” is a buzz word for forward-thinking investing that helps our planet and the people in it.
Colwell has not flinched in his beliefs. His practice, C&C Planning Group, Aligned Capital Partners, is growing and he was recently named Advisor of the Year – Responsible Investments at the 2020 WP Awards. He recalled reading a book on financial planning before his first day in the job, fresh out of school, in order to at least know some background about the what he had let himself in for.
He told WP: “It had a chapter in it on budgeting. It was a shock and was certainly not an ESG book. It was simply a conservative-minded financial planning book all about money. But this particular chapter on cashflow management talked about a lot about things around cashflow management that just had a duality to them.
“To manage your spending, it said to take public transit instead of buying a car or eat vegetarian because it's cheaper than buying meat. You could go to used stores and buy used clothes. Having less is a financial planning strategy, you don't have to spend as much and you don't need as much. If you can reuse something or reduce something, then that's just money in your pocket.
“What I do has definitely morphed from that but that chapter really sums up my philosophy. You can do great things at the same time as either saving or making great financial decisions. They often go hand in hand.”
Being dedicated to ESG before it became hip might have raised some eyebrows but it ensured he had a niche and a differentiator from day one. Today, his Georgetown, Ontario practice is almost exclusively SRI. He asks all clients about their values and helps them build a sound, aligned portfolio that will meet their financial planning goals. That might include avoiding fossil fuels, for example, although Colwell said some people don’t actually have a passion one way or another.
He explained: “However, when you approach it and you discuss it, and explain how they don't have to give up returns, or you don't have to take on more risk to do this, the question becomes, ‘why wouldn't you?’ I use the analogy often that if I could buy Fairtrade organic coffee for the same price as Nabob, I suspect most of us would make that pick.”
Interestingly, the award-winning advisor brushes off any notion that there is a misconception about returns and ESG among clients. The problem, he believes, has lied with advisors who were previously unwilling to go out of their wheelhouse to meet a person’s ESG needs, preferring to pigeonhole clients. Things may have changed, he admitted hopefully, especially given that it’s a hot topic these days and advisors are seeing that can make money via the SRI route.
He is concerned by the number of entrants into the ESG product world and thinks that it's mainstream status means advisors are getting stripped down funds; light green products when what they’re really looking for it is something a little deeper.
With this in mind, Colwell moved to the IIROC platform 18 months ago in order to become a broker of SRI methodologies.
He said: “Most of us don't see the value of being a broker in investments much anymore because a lot of them are different shades of the same colour but there are lots of different methodologies [in ESG]. Invesco just launched a couple of ETFs in the ESG space and you might have an uninformed advisor who'll say, ‘okay, that'll suit the need of my client that doesn't want fossil fuels and is all about the environment’. But if they dug deeper, I don’t know whether it would be satisfying to those people.
“Not that it’s the wrong fund, I'm not criticizing Invesco, I'm just saying there is a huge difference. Right now, we spend a lot of time throwing them all in the same category and I spend a lot of time asking the tough questions.”