Harry Catchpole, Partner at Tribe Impact Capital, explains how – by helping clients invest in well-run businesses that are addressing global challenges – his firm is helping its clients do well and do good.
What, in brief, is Tribe Impact Capital’s story and how does it stand now in terms of its UK presence and client base?
Tribe’s story is the coming together of individuals who wanted to solve a problem: what’s happened to the way that people think about their wealth? Why are so many people making conscientious choices about what and how they live their lives, from consuming, through voting, to parenting; but they don’t do the same with their investing?
David Scott was approaching this as a wealth management leader, Amy Clarke as an impact and sustainability expert, and James Lawson as wealth practitioner and researcher. I joined from JP Morgan, having started my career at HSBC private bank. Our solution was to find a way to create portfolios that delivered the financial returns that clients wanted and, most importantly, in the way that they wanted them.
When we spoke to the regulator they recognised that this was a new way of approaching wealth management, so they incubated Tribe through the FCA’s Innovation Hub. This was a very positive experience and we were authorised as a wealth manager in 2016.
Our clients are all values-led people: this means they have their own belief systems, outlooks or philosophies that shape how they think. Some clients are very clear about these before they meet us; for others, we’ll work with them to uncover and construct these values, through our ImpactDNA process.
Although you will obviously have a diverse client base, who is the “typical” target client of Tribe Impact Capital in the UK? What is their stage of life and what are they trying to achieve with their wealth?
Tribe’s client base is very diverse in terms of demographics, but very similar in terms of outlook. Our clients are all values-led people: this means they have their own belief systems, outlooks or philosophies that shape how they think. Some clients are very clear about these before they meet us; for others, we’ll work with them to uncover and construct these values, through our ImpactDNA process.
However, it’s fair to say that over the past year we’ve found some clusters emerging amongst our clients.
A values-led approach resonates strongly with younger wealth holders: a generation of ‘digital natives’ who have personal causes and hold institutions to account. They feel both empowered and responsible to make change. We also do a lot of work with both younger wealth holders and their parents. Traditional ways of thinking about wealth and succession can be quite divisive in a family, but leading with values makes the dynamic more constructive and positive – families love our impact dashboards.
A second audience that Tribe’s approach works well with are entrepreneurs, especially those in the technology space. These are also individuals who are used to making difference: they are experienced at using their skills to change their world, and driven to do so. Now we can help them do the same with their wealth.
Tribe’s values-led approach allows our clients’ wealth to tell their stories. Partly as a result, we work with a large number of female wealth holders. Women tend to be more collaborative and also comfortable with Tribe’s approach of ‘patient capital’.
Fundamentally, all of Tribe’s clients want to do well and do good.
Our investment philosophy is simple: we’re looking for well-run businesses that are addressing recognised global challenges.
How would you describe Tribe Impact Capital’s investment ethos and risk management approach, in a nutshell?
Our investment philosophy is simple: we’re looking for well-run businesses that are addressing recognised global challenges.
Historically, if people wanted their money to do some good they were offered ‘ethical investments’. This approach is around 250 years old and is based around avoiding the bad. Unfortunately, this type of ‘negative screening’ was often associated with poor financial returns.
Impact wealth management is different. Rather than avoiding the bad, we’re actively seeking a combination of two things. Firstly, we look for well-run businesses: those that are aware of their environmental, social and governance (ESG) risks, and are taking steps to mitigate these. Secondly, in addition to being well-run, we’re looking for investments that are addressing global challenges like education, healthcare, and environmental degradation. These are the types of businesses that we believe are going to be around over the next few years; not those that are buffeted by pollution taxes, consumer activism, environmental regulations, resource scarcity, or political influence. These are future fit businesses.
We believe these make sensible, sustainable investments and academic consensus backs this up. One Oxford University review of 200 studies found that ‘sustainability does pay off for companies and investors’[i]. Similarly, a Deutsche Bank review[ii] of 2,200 studies found ‘the business case for ESG investing is empirically very well founded’.
How does Tribe Impact Capital go about devising investment strategies and building portfolios which suit each individual client’s risk-profile and financial goals?
We’re all different. Whilst we all have different attitudes towards risk, as well as differing capacities for taking risk, we also have a unique set of values. We call this your ImpactDNA. This is an in-depth understanding of what makes our clients ‘tick’ and sits at the heart of our investment process, together with our assessment of our clients’ financial investment objectives. We’ve worked with a team of behavioural financiers to build this out.
We believe that asset allocation is a major driver of returns – so getting the right balance of cash, fixed income, equities and alternatives is really important. But just as important are the ways that you then make these investments.
Tribe are very lucky to be supported by LGT Vestra. LGT Vestra are a well-established wealth management business, advising on over £8bn of private client assets. They provide Tribe with trading and custody, as well as some middle- and back- office support.
How would you describe Tribe Impact Capital’s investment ethos and risk management approach, in a nutshell?
Our investment philosophy is simple: we’re looking for well-run businesses that are addressing recognised global challenges.
Historically, if people wanted their money to do some good they were offered ‘ethical investments’. This approach is around 250 years old and is based around avoiding the bad. Unfortunately, this type of ‘negative screening’ was often associated with poor financial returns.
Impact wealth management is different. Rather than avoiding the bad, we’re actively seeking a combination of two things. Firstly, we look for well-run businesses: those that are aware of their environmental, social and governance (ESG) risks, and are taking steps to mitigate these. Secondly, in addition to being well-run, we’re looking for investments that are addressing global challenges like education, healthcare, and environmental degradation. These are the types of businesses that we believe are going to be around over the next few years; not those that are buffeted by pollution taxes, consumer activism, environmental regulations, resource scarcity, or political influence. These are future fit businesses.
How does Tribe Impact Capital help clients engage more effectively with the management of their wealth? Do you help clients with investment education and research for example?
Our clients’ values are reflected in their portfolios. By showing them how each investment reflects their story, we find our clients are much more engaged in what their wealth is doing and the change it is making.
We support this story-telling in a number of ways. Whether this is our cutting-edge online impact reporting tools, or educational seminars from our ‘Fellows’ network to talk on topics from ‘blue investing’ to ‘gender-lens investing’.
What else is distinctive about Tribe Impact Capital, either in terms of its investment process, corporate ethos or its manner of servicing clients?
Tribe is for people who think in a certain way and is delivered, run and owned by people who think in the same way. This means we have a clear culture.
This is reflected in Tribe’s status as a part of the B Corps movement, for businesses with both profit and purpose, as well as our signatures to important initiatives from the UN’s Principles for Responsible Investment, to the HM Treasury’s Women in Finance Charter.
There’s also a profit lock at Tribe: 20% of the partnership’s profits go to our own incubator of early-stage, high-impact opportunities.
Ultimately, it’s our client’s money and they’re the most important assets and ambassadors of our business. Of course, we’d be delighted to talk further with anyone interested in hearing more about what it’s like being a client of Tribe.
If you would like to start a conversation with Tribe Impact Capital, please get in touch with the findaWEALTHMANAGER.com team HERE.
[i] Oxford University Smith School “From the Stockholder to the Stakeholder” 2015
[ii] Deutsche Bank & University of Hamburg “ESG and Financial Performance” 2016
