What Does Sustainability and Impact Mean for Advisors


Recorded at the BNY Mellon | Pershing INSITE 2022.  Media Center Powered by:

Advisorpedia interviewed Jason Barsema, the Co-Founder and President of Halo Investing at BNY Mellon | Pershing INSITE in June, 2022.

Related: How Advisors Can Thrive as the Industry Evolves

Resources: Integrated Partners | Flyer Financial Technologies | Halo Investing



Matt Ackermann, Jason Barsema

Matt Ackermann  00:06

Sustainability and impact are top of mind right now for advisors and their clients. But what does impact really mean? Joined today by Jason Barsema, from Halo to discuss just that. Hey, Jason, welcome.

Jason Barsema  00:18

Hey, Matt. Thanks for having me. . .

Matt Ackermann  00:19

Jason, let's talk a little bit about sustainability and impact. When you think about these topics, these words, what do they mean to you?

Jason Barsema  00:27

And it's a great question, actually, we're just presenting at the World Economic Forum. And we talked a lot about impact and sustainability. And one of my key messages is we talked about climate change and food shortages, which are very important, but we don't talk enough about the savings crisis and the importance of sufficient savings. And so at Halo, our whole tagline is impact before profits. And we were really started to help address and solve the savings crisis that we have in the United States, by bringing Investors and Financial Advisors at the end of the day, more efficient and efficient savings products.

Matt Ackermann  01:00

So as you think about when you create more savings, talk to me about how that ultimately helps to create more impact.

Jason Barsema  01:06

Well, so it's a lot of people don't understand is the leading cause of stress, death, divorce, and now suicide, unfortunately, United States is financial related. And and I think, obviously, that's, that's a major problem that we're all dealing with. And to be able to help with some of these issues is that we need products that we can more derive a better yield off of have more certainty around the outcome of the product and ultimately protect us against downward declines in the market as we're dealing with right now. Right. And so with that, if you can bring more financial security and more financial comfort, you hope to be able to save a life, you hope to be able to solve some of these really big problems and the other knock on effects are, even if you're just trying to save for retirement, which these these products are important for. Right. But if you're trying to save beyond retirement, so what is your legacy after your life on on this earth, right? And we need to have money to be able to pay forward to all these great causes and great initiatives for climate change and food security. So it's really this multiplier effect that really starts with the right savings plan and the right savings tool, which Halo helps address

Matt Ackermann  02:07

Because we saw so many of these great impact ESG sustainable products do so well as markets climbed? Are people going to pull back as markets declined? As does impact become less important, when low impact for profits is a great tagline — does impact become less important when we're entering a recession for a lot of people?

Jason Barsema  02:28

Well, I think the way that we look at it, it's it's about our morals and our values, we wrote impact before profit before we even wrote our business plan. And that's in the day, there is a difference between impact and ESG. In my very humble opinion. Impact is something that fundamentally changes the world. Now it can have an ESG tilt to it. But it's something that changes the world, right? Like autonomous vehicles, what three that that creates an impact in our lives, right? And then ESG, obviously has that more green tilt to it. What we try to do is that we want to change the way the world invests through more efficient and sufficient savings products through structured notes. But we also want to have that social tilt to it by solving a really critical problem in this country, which again, is the savings crisis. Getting to your question, Matt, is yes, you are seeing some of the pullback in the ESG market over the last few months. But I also have a problem with the way ESG is even counted, right. There's a lot of greenwashing out there. And there's an interesting article in Bloomberg yesterday about this, and in my humble opinion is that we have to be true to our morals and our values. Halo is not about impact. Because it's buzzy, we're about impact because it's the right thing to do. And no one should take their life because they're under Financial duress. And if we can just do anything to save that one life and doesn't make that life worth living just just by doing that.

Matt Ackermann  03:42

Yeah, but making an impact. I think sometimes small steps are the most important steps. The first steps, if you're an advisor, you're giving advice to investors, and they want to make that impact. What's that first baby step they can make. So they start to move in a good and right direction.

Jason Barsema  03:56

Well, and that's what's interesting about structure notes in Halo is that we really democratize the access to these products. So structured notes give investors a level of downside investment protection against market declines, which is good if you're, you know, in the markets today and able to protect against some of those declines. But I also like these products for markets like these, because it allows us the confidence to get into the markets. So if I have cash on the sidelines, I might say, Well, geez, I don't want to put fresh cash to work. And now the markets down to 300 basis points as it is at this very moment. I want to be able to buy a product because I think this may be a good buying opportunity, but I want to buy it with that comfort of a cushion, if you will, with that downside investment protection. For example, a couple of weeks ago, I bought a product from my own portfolio that gives me exposure to the s&p 500. I have 40% downside protection, which is a lot of protection, probably too much protection, right. And I get 120% uncapped of the upside of the s&p 500. Now the opportunity cost is that I don't get a dividend with this product, but I'm willing to sacrifice that dividend for the protection that I have and The upside by doing that getting back to your impact questions that gives us the confidence to get invested, as I just talked about allows us to put cash to work. But it also gives us the confidence to stay invested. And that staying invested is always the hard part. Because we always talk about, you know, the markets up eight and a half percent year over year. But during crises like these are the financial crisis as you and I remember in 2008, and 2009, it's hairy for all of us. And so if we have the products allow us to stay invested that gives us better outcomes long term in regards to retirement planning. Get invested, stay invested.

Matt Ackermann  05:32

Thank you so much, Jason. You guys are making a great impact. I appreciate the conversation.

Jason Barsema  05:37

I thank you for having me, Matt. Awesome.

Matt Ackermann  05:40

For Advisorpedia. I'm Matt Ackerman.