Sonya Dreizler has made a career of helping people and institutions align their investments with their values. The speaker, author, consultant and all-around subject matter expert is the founder of Solutions With Sonya, a company that helps financial services firms to drive successful rollout and adoption of impact investing, SRI, and ESG solutions. Sonya is a regular and sought after speaker at national financial services conferences, and she’s the writer behind Connected Investing, a weekly educational newsletter covering the latest trends in impact and ESG investing.

Prior to launching Solutions With Sonya, Sonya spent 13 years with Protected Investors of America, a boutique broker dealer and SEC registered investment adviser, where she rose up the ranks from executive assistant to COO to CEO.  Sonya’s been honored with Investment News 40 Under 40 award and a 2018 LinkedIn Top Voices Recipient, and she serves on the advisory board for the Investment News Women Adviser Summit.

We sat down with Sonya to not only talk about impact investing, but also to hear more about Sonya’s Do Better series, which highlights women’s stories in a predominantly male-dominated field and offers solutions pushing for systems-level changes across the financial services industry.

CNote: In your opinion, what are some of the challenges advisors face when talking about impact investing with other advisors?

Sonya Dreizler: First, is making sure we’re talking about the same thing when we say “impact investing.” That’s a hurdle that I see for a lot of people. Professionally, we need to have this vocabulary conversation. When you say “impact investing,” are you talking about ESG, and what does that mean? Are you talking about SRI?

I think advisors worry that that vocabulary hurdle will translate to clients, and it doesn’t. Clients put their trust in the advisor, and the advisor can choose the terminology that works best for them and stick with it. But this whole “what are we talking about when we’re talking about impact investing?” That conversation is a hurdle to any initial professional conversation in the space.

Aside from the vocabulary challenge, I often see advisors that are unwilling or not ready to bring up impact investing with clients.

CNote: Where do you think that reluctance comes from?

Sonya Dreizler: It’s different for each advisor, and to be clear, some advisors are adopting and embracing impact investing in tandem with their traditional practices. But, I think some advisors are worried that impact investing is more feelings based and less numbers based, which gives them pause.

Let’s take each of those separately. Regarding the numbers side, advisors can evaluate impact investments in the same way they evaluate traditional investments. The impact investments have the added value of being able to do social or environmental good. And now for the feelings part; I think advisors should embrace talking about feelings and values with their clients.

Clients are like all people—they want to be known, understood, seen and valued for their whole person. So, if you can have a conversation with clients about what’s important to them in addition to their  financial goals, it can deepen the relationship.

Another factor I see that contributes to reluctance to talk about impact investing is that when financial professionals and advisors present something to a client, they want to be the smartest person in the room. They want to know everything and have immediate solutions for what clients are asking for. Impact investing is an evolving area, so that can be a little bit tricky. If a client asks for something like a values tilt on their portfolio and it’s not something that the advisor is prepared to offer, that is a challenge. But as long as advisors are setting appropriate expectations about what values can be reflected in a portfolio, it’s OK to have that discussion.

CNote: What do you have to say to an advisor who says she or he isn’t hearing any interest in impact investing from clients?

Sonya Dreizler: It’s the advisor’s job to educate themselves and to find out what’s best for the client’s financial and personal goals. If advisors are waiting for clients to approach them about the topic to indicate interest, that’s not something that they’d do with any other type of investment. Advisors don’t expect a client to come in and ask for a 10 percent allocation to emerging markets.

Advisors should want to be the first ones telling their clients about impact investing or ESG. They should let their clients know that they’re thinking about impact investing, they’re knowledgeable and they’re ready to have the discussion if the client is interested.

One of the pieces of pushback I hear from advisors is, “well, my clients are not asking for this, so I don’t think that there is the same level of interest as all of those surveys show.” The recent Morgan Stanley survey showed that 85% of people surveyed were interested in sustainable investing. However, the thing with those surveys is that before the surveyor asks questions to the participant, the surveyor explains sustainable investing. They are explaining what it is first before they’re asking if there’s interest.

Advisors can do the same thing as those surveyors. They can even do it before they have impact investment solutions rolled out in their business. If they’re worried about the chicken and egg situation — that they don’t want to talk about it until they have something ready, but they don’t want to do all the work to create a solution until there’s interest — they can have the conversation before they have a solution ready. It might sound something like, “sustainable investing a quickly developing area, and is a topic our firms has been researching. We’re considering adding this if we have interest from our valued clients. Is this something you’d like to discuss?”

CNote: Do you have any ideas as to why people don’t feel empowered around investing?

Sonya Dreizler: There have been so many advances and tools that make investing easier, more accessible, and more democratic.For example, mutual funds, and being able to buy a basket of stocks instead of trying to buy one share of this and three shares of that and having to manage all the separate investments. Then ETFs allowed people to invest, inexpensively into indexes.  These vehicles have been great in many ways and benefited investors, but they’ve also obscured the process of what investing and many investors are disengaged from what they own. How can you feel empowered if you have no idea what’s going on inside that your portfolio? And then there’s the terminology. It can feel technical and overwhelming.

CNote: If you had a magic wand, what’s one thing you’d change about the industry?

Sonya Dreizler: Pass through shareholder voting rights in mutual funds, ETFs, and SMAs. I would love to see a way that proxy and shareholder engagement proposal voting could be opened up to the actual end shareholder in an easy and democratic way, and then the funds or managers can vote proxies if the end shareholder has chosen not to vote. That would allow the dentist with a $400,000 401k to vote and become more engaged and be more interested in what they’re investing in. They might push for change at a more rapid clip than mutual fund management would. I would love to see that.

Voting would remind a lot of people of what investing is. It’s Investing is owning a share of a company. You give your hard-earned money to that company to run their business in whatever way the management sees fit. As a shareholder, you  get to have a vote on some issues, and that vote can be powerful.

CNote: What has you most excited about impact investing in terms of innovation and future developments?

Sonya Dreizler: Impact investing can generally be broken down into these three categories: the E, the S and the G. As a community, we’ve done a pretty good job on pushing the E and an okay job on the G. We really haven’t pushed as hard on the S, and that’s the part that drives me.

I mean, you can’t really disentangle the E, S and G, right? But I want our investing community to really care about people. So even though we can’t disentangle them, looking at impact investing with a lens of S first and trying to focus on making the companies we invest in and the financial services companies we work in reflective of the communities that we live in, work in and serve is important to me.

CNote: Any ideas of how we can make that happen?

Sonya Dreizler: I don’t think most firms have put this on the front burner for a number of reasons. One of them being that it is hard to talk about gender, race, citizenship, class and personal inequities without feeling like maybe your own position as a fairly well-to-do person working in financial services is under attack.

I think the best thing we can do is be reflective and look in the mirror. We can start at our own companies first and work on creating inclusive workplaces that make financial services a better place to have a professional career for women, people of color and all other underrepresented groups. That means the workforce at all levels: employees, managers, VPs, executives and board members. Once we create diverse and inclusive workplaces in the financial services community, we’ll request and demand that of the companies we invest in. Overall, we’ll do better across the board because we’ll have so many different opinions represented.

CNote: Thinking about getting more underrepresented groups in the financial services industry, what are some of the successes you’ve seen in breaking down barriers?

Sonya Dreizler: It’s tough, and I can’t point to a ton of successes. Diversity programs have benefited women, but mostly white women. Those programs haven’t been representative of real diversity. I think white women need to do better at acknowledging our privilege and then focusing on advancing racial equity.

CNote: Why do you think financial services has remained a primarily male-dominated industry?

Sonya Dreizler: Two reasons come to mind. First, forced arbitration and NDAs keep a lot of sexual harassment and discrimination stories private and hidden, which means that women cannot work together and discuss what happened and identify where there are problems. That same secrecy protects companies that have regular ethical problems, and it protects the harassers. When harassment has to be kept a secret, the harasser can then go on to get a job at another company where nobody will know why they had to leave their last employer, which means they can go and harass somebody at the next company and the next company after that. That’s the pattern.

CNote: That’s a great segue to talk about the Do Better Series you started. Can you tell us about how that got started?

Sonya Dreizler: About a year ago, I was reading articles that had statistics about professional’s perspectives on the prevalence of gender-based harassment and discrimination in financial services. There’s a huge delta between how prevalent women think harassment is and how prevalent men think it is.

So many women who have these stories of harassment and assault and discrimination tell them to each other, but we don’t tell them publicly. The harassers are a minority of men and so most men are not harassing women or hearing about the harassment. So if not that many men know about it or have personally witnessed it, and women are experiencing it, but not talking about it, most men won’t know it’s happening. We women stay silent for our safety, or because we legally have to, or because we’re worried about career repercussions.

So, I thought that I wanted to write an article that explains why we don’t tell our stories and I put a request out on social media asking if any women would share their stories with me to share anonymously on their behalf. I was hoping to get two stories and I got 40 stories in 24 hours. That’s when I realized that this was something much bigger. Once I started to read all the stories, there were patterns and themes that came out over and over. I divided them into a series of articles focusing on the different issues that I saw, like how harassment and even assault run rampant at financial services conferences.

CNote: What do you hope men working in the financial services industry get from your Do Better campaign?

Sonya Dreizler: I want men to be more aware and to be better allies. That’s one of the goals, to have that sort of bottom up effect. I  want women to feel heard, and I want men to listen and really take in these stories. My other hope is that the series brings more systemic change. Financial services is a male-dominated industry and change will have to come from men. I’ll push for it, but I can’t make the change myself. I have to convince men to help me convince other men to change.

CNote: Pivoting slightly, but whom do you most admire in the financial services industry?

Sonya Dreizler: There’s a number of people really pushing the envelope on impact, particularly on the S part of ESG. Most of my professional experience is in the public equity space, so my heroes are from there. I really admire Geeta Aiyer’s work at Boston Common Asset Management, and Lisa Hayles, also of Boston Common. Rachel Robasciotti and Maya Philipson at Robasciotti & Philipson have an impressive way of thinking about screening, where they’re  gathering insight from the most impacted communities. Of course, CNote’s Cat Berman is someone I admire. And Rianka Dorsainvil for her excellent use of social media to engage clients. She’s a financial advisor, so her business and my business are very different, but I love her approach.

CNote: Last question: What are the top challenges and opportunities for advisors in impact investing?

Sonya Dreizler: Have the conversation if you’re not already having it, even if you don’t have solutions yet. I have tips and scripts on my website because it’s something that comes up often.

The other opportunity I see is with existing clients. When you’re doing SRI or impact investing, you can really deepen that client relationship, which in turn might foster referrals. By understanding the unique values that drive clients and tracking those values in a scalable way (I suggest a CRM field with the top 10 values you hear from clients), then when you see an event or an article or anything of interest pop up in one of those areas, you can send it out to clients who’ve expressed that value, even if you can’t invest precisely along those values.

So for example, if a client is really interested in ocean health and you see an article about ocean health, you can send it to them and say, “I saw this, and it made me think of you. I hope you’re doing well.” It’s showing clients that you’re listening and that you care and that you see them as a person, not just a portfolio. It might feel a little weird to do personal at a scalable level with CRM or email software, but it doesn’t have to be. The way you’re tracking values and sending it out is scalable, but the personal connection you’re fostering with the client is real.

One last thing is to take advantage of social media to the extent that you can under compliance and regulatory guidance. That might mean talking about some of the causes that are important to the advisor and those that are important to clients. Advisors can also share success stories showcasing the impact of an investment company. Those are especially nice pieces that advisors can share with clients so that clients can understand what’s in their portfolio. If advisors can  share those on social media, prospects can understand that deep connection possible between their money and their values.

When Marco Vangelisti, a member of a successful investment management team, peeked under the hood of the investment portfolio the team was managing, he was shocked to learn that some of the best-performing stocks in the portfolio were funding the destruction of hundreds of thousands of acres of orangutan-inhabited rainforest in Southeast Asia. Marco left his job in 2009 and began the process of liquidating his personal Wall Street portfolio. He reinvested in local and sustainable investments, and he started to learn more about the large systems that shape our society and shared what he learned.

Today, Marco is a highly sought after speaker, lecturer, consultant, and coach. He is a founding member of Slow Money and the founder of Essential Knowledge For Transition. As a self-identifying 100% impact investor, Marco is as equally passionate about aligning dollars and values as he is educating individual investors and financial advisors.

We caught up with Marco to talk about his journey, and we got a chance to discuss his thoughts on the future of impact investing, the power of individual investors, and the growing role of millennials.

CNote: How did you first become interested in impact investing?

Marco Vangelisti: I was part of a team that was managing a quantitative fund investing in emerging markets equities. We had developed quantitative models to predict returns and to control risk, and we were using an optimizer to build a very diversified portfolio. We were doing great — we had $20 billion under management, and one year we outperformed the MSCI emerging markets index by more than 10%. Most of our clients were foundations and endowments, including environmental foundations and they were very happy with our performance.

The interesting thing is that because we were managing a very diversified portfolio built in a quantitative way, we were not really focused on the individual stocks in the portfolio. When I looked at the best-performing stocks, I found a Malaysian palm oil company that had just destroyed a large section of the habitat of the orangutan in the Borneo. At that moment I realized there was this big disconnect between my livelihood and my personal values since I have always been a passionate environmentalist. What I realized is that we are trapped in a system that collectively provides us with the incentives to do things that we might not be aware of, and in the long term, might even undermine our long-term survival. It was very hard to connect those dots, even for an insider like me.

So, I actually left the industry and started looking at the large systems: how money and banking and economics and finance work. My belief is that we need to democratize the understanding of the functioning of those large systems because they act as the operating system of our society. I think everybody should understand enough about the design of those systems to be able to critique them and to feel empowered to demand changes.

CNote: How does that translate into your day-to-day work now?

Marco Vangelisti: In the last couple of years, I’ve been focusing on investor education and trying to convey to people that investments are not just generating returns, they’re shaping the world we live in. I developed a website that has a lot of free content for people to understand how those large systems work, and I also have a fee-based webinar series called Align Your Investments With Your Values, where I’m sharing my understanding of the financial system with individual investors looking to move towards non-extractive investments.

I’m also collaborating with a nonprofit called Money Quotient up in Portland, Oregon. They’ve been around for 20 years and are helping financial advisors become life financial planners, which is basically a blend between a life coach and a financial adviser. The idea is to work with clients to help them envision their best life, and then see how they can use their financial resources to bring it about. Together, we launched an online, self-paced course called Towards Aware and Values-Centered Investing.

CNote: How long did it take you to rebuild your portfolio to better align with your values?

Marco Vangelisti: It took me three years from the time I left the finance industry to actually get around to liquidate my positions and rebuild a portfolio that does no harm. That was my goal, but it’s not an easy task. Still, it’s something I embarked on, and it’s something I encourage others to do as well. In order to say I’m doing no harm, I need to know who is using my capital. Therefore, I’m not in the stock market and I’m not in mutual funds since it is very hard to assess the worldwide operations of publicly traded companies. This requires more work than simply hiring a financial advisor and putting your money in the usual mutual funds everybody knows about, although the financial advisers that took my course have embarked in the process of moving towards no-harm investing.

CNote: How would you frame the current status quo of our financial services industry?

Marco Vangelisti: I believe that if we avoid destroying the planet and go extinct as a species, we will look back at this time as we look back at slavery now. If you think about 200, 300 years ago, many of the wealthy people in society, many of the US presidents and those funding the Ivy League colleges were slave owners. People had a sense that it wasn’t ideal, but that’s how business was done, especially in the South, and slavery generated nice returns for plantation owners and their clients.

I think the same thing will happen when we look back at 2000, 2010, 2020, and ask how it was possible that capital was used to extract from and destroy the natural environment and communities around the world for the purpose of enriching the people that already had a lot. I think eventually if we learn to live in balance with nature and we change the course of society, we’ll get to that realization.

CNote: What are the trends you’re seeing in impact investing or changes you’ve seen over the last year or two that stand out to you?

Marco Vangelisti: The socially responsible fund was the first wave. Now I think we’re ready for the second wave. Maybe that’s community funds or more local funds and investments. I see a lot of potential thanks to the transfer of wealth to millennials. This young generation is very idealistic, and a number of millennials want to do the right thing. They’re not interested in finding a corporate job. They’re interested in starting a social enterprise to solve societal challenges through businesses, which is great. A number of them recognize that investing in large multinational corporations is something that they wouldn’t want to do, and so a lot of them are holding most of their money in cash.

Whatever money they save, they don’t know what to do with it. They don’t trust Wall Street. They don’t want to put it in the usual mutual funds or with the large multinational corporations and are asking for better options. I see a lot of hope because millennials who are either earning money or receiving inheritances tend to be conscious about what their investments are doing out there in the world. I think that there’s a growing pool of potential clients for financial advisors to tap into, especially if they develop some expertise in this area of no-harm and impact investing.

CNote: Do you think impact investing is a means to address inequality?

Marco Vangelisti: Traditional impact investing where people say they want their 8% return or that they want a market-rate return while doing good, will clearly not address the problem of inequality. If the economy is growing at 3% and the financial capital demands to grow at 5%, 6%, 7%, or 8%, what you’re seeing is more and more of the economic value being produced in society being sucked up by the owners of capital, regardless of whether you call that a mutual fund or you call that an impact fund. An impact fund that generates an 8% return is aggravating inequality because the people that have the money to invest in that are going to get, percentage-wise, more than the economy is growing. That means a larger share of the economy goes into the hands of those that have the capital. Actually, investing through the Kiva platform is a way to address inequality since those are zero-interest loans to people at the bottom of the pyramid internationally or to mostly minority or women entrepreneurs in the US.

CNote: How would you describe people’s awareness of the socially responsible investing movement?

Marco Vangelisti: In general I think people have a sense that the socially responsible investing movement started with people who were against the war, and who didn’t want to invest in weapons manufacturers. So a number of funds were created at the time, which was a good first step. Later funds were created to cater to investors concerned about the environment and those who did not want to invest in fossil fuels.  I think the demand for socially responsible funds has created some transparency and some reporting on the part of companies and maybe slightly better corporate behavior. But I think we need to go way beyond that.

The challenge is that most socially responsible funds (or ESG funds) hold stocks of publicly traded companies that need to deliver growing profits to support their stock price. There’s this imperative to continue growing profits; it is not sufficient to just be profitable. So, of course, this imperative leads to squeezing out or externalizing costs and eventually to cut corners.

Taking full responsibility for our agency in the world expressed through our investment is not easy, yet the time has come for us to do so. And I understand that that’s hard, given the level of opacity and intermediation in the finance industry – just finding out all the companies we are invested in through a single ESG fund might be quite a task. But the reality is that, if you look outside at the state of the world and where the environment or our society are going, it is clear that things are still deteriorating. That’s because we haven’t done enough to move the capital away from destructive activities.

CNote: Given how difficult it is to successfully “move capital away from destructive activities,” as you said, what’s some advice you have for financial advisors and investors who want to do better with their investing?

Marco Vangelisti: First of all, we have to recognize that we live in a system that makes it really easy for us to do the wrong thing. It’s almost impossible to be pure and not do any harm. What we’re trying to do is challenging and it is very had to be perfect. That’s why I like CNote because I know and approve what  CNote is investing in – CDFIs providing funding to people that have difficulty obtaining funding from the regular channels, such as minority and women entrepreneurs.

One thing you have to think about are the trade-offs. How strictly do you want to implement what you really believe in? In my case, I took an extreme position. I said I’m going to invest only when I know I’m doing no harm and it’s generally aligned with my values. It’s been a long process and it has not been easy. I’ve been at it for the last seven years. But, I can say now that 100% of my portfolio is aligned with my values and it’s doing no harm out there.

Moving to aware and no-harm investing is challenging for financial advisors to do that because it requires some new learning and possibly a rethink of their business model. Currently, they have a platform like Schwab or Fidelity, and they have access to all the funds and individual stocks through that platform which integrates their clients’ assets, generates reports and allows them to collect their management fees.  The investing options I’m talking about like RSF Social Finance and CNote aren’t seamlessly integrated into those platforms. Even though it’s not difficult, it’s still something new for advisors to have to familiarize themselves with. Yet  I see financial advisors as the agents of change in the finance industry. Through the demands of their clients, I think they can go to the next level and start demanding products and investments that are non-extractive and transparent.

CNote: Do you think that consumers really have to drive real, sustainable, prolonged change, or do you think advisors or asset managers can lead in this space? 

Marco Vangelisti: The type of changes that are required are very hard to implement for financial advisors and wealth managers alone. Financial advisors and wealth managers are not going to be the ones that initiate the change – the demand for no-harm investing has to come from the owners of capital, whether individual investors or institutions, saying, “I want to be mindful of what this capital is doing out there in the world, and I want to make sure that it does no harm.” But they have a key role in facilitating that aspiration of their clients.

For the last three years, I focused on educating individual investors, because they were the ones that really needed to know. The learning curve can be steep for someone who isn’t experienced in finance, and taking responsibility for one’s investments is something that only a few people are willing to do. But, by educating both the investors and the financial advisors that get it, I think that’s the ticket.

CNote: When you talk to younger folks or people that are maybe just starting to think about investing, what sort of advice do you give them?

Marco Vangelisti: Usually, what I suggest is to invest a small amount of money in CNote and in RSF Social Finance, and most importantly, to read the communications put out by those two funds. This is really to get their juices flowing and to say that there is a way to invest money that is positive for the world, and to encourage them to do more of that. Another reason why I send them to those two places is because I think the probability of losing principal in those two investments is very low. But not all impact investments are like that.

CNote: What’s your vision for socially responsible investing, and where do you think we’re heading long term?

Marco Vangelisti: My hope is that we are going to move toward more local and aware investing. In the next decade, I think we’re going to see a massive realignment of financial values. I do believe that financial markets are completely manipulated at this time and that there is way too much in actual capital out there. A lot of people are not aware, but basically a lot of it is fictitious capital that is going to go away, and I think that will awaken people to the fact that maybe they need to invest in things they really understand. That means investments that are closer to home or through trusted intermediaries like RSF Social Finance and CNote, not Wall Street and large corporations. And I think there will be a lot more innovation to bring about more opportunities to invest in a way that is transparent and is more local and does no harm.