Seeking the Socially Responsible Investing Gold Standard

My path to become the High Impact Portfolio manager at Benchmark Asset Managers may seem circuitous. The golden thread is my personal relation to money, from blaming it for all the ills of the world to seeing it as a tool for the good. I have learned that investing, lending, and purchasing all may become acts of good will. I want to make that real for as many as possible.

My path to become the High Impact Portfolio manager at Benchmark Asset Managers may seem circuitous. The golden thread is my personal relation to money, from blaming it for all the ills of the world to seeing it as a tool for the good. I have learned that investing, lending, and purchasing all may become acts of good will. I want to make that real for as many as possible.

Had I finished Yale and invested an inheritance in my twenties I could be set now, an empty nester floating mindlessly from exotic shore to shore. Instead, in the 70's I dropped out, started a family, and invested in farm equipment, wells, roofs and a non-profit I helped found which thrives now as a Camphill community after almost thirty years. I worked for over a decade as a volunteer, feeling great about my aversion to money, my greedless existence. When the well was dry, I worked in Waldorf Schools so our five children could get the best that I knew in their formative years and I learned the art of sales to supplement our income.

Slowly my lack of love for money transformed into a preoccupation with "getting by." The simple life, which included children embarrassed by slightly shoddy clothes and haircuts, and masses of time digging in the dirt to eat fabulously well, all seemed to be losing its romance. I realized at 43 that no more than I wanted a job with a pension (and it was already too late to amass much in a 401K anyway), no more did I imagine toughing it out on the land like Scott and Helen Nearing in my old age. I did the math and realized that starting my own business was the ticket.

My first ill-conceived venture was to write a book, supplemented by delivering newspapers in the middle of the night and home schooling two slightly neglected kids whose parents were separated and who got attention by eating their tutors alive. Publishers complimented my writing. This was not working. So when I got the chance to be a finder for social ventures I was ready to put on a suit. My successful brother, an early Investors' Circle member, smuggled me the IC directory and a new world opened, the world of SRI, where money was not spurned but was seen as a noble tool for good works. I attended the second Business for Social Responsibility conference in Boston, meeting personalities like Anita Roddick and Wayne Silby and was on board with a passion.

IN the next seven years I learned that early stage ventures are full of surprises, even and sometimes mostly to the surprise of insiders. What is envisioned may be full of extraordinary promise sometimes real and sometimes only hoped for. Besides a terrific idea that is unique and powerful, I learned that without good management and money the three-legged stool falls down. So I understand there is a need for some caution. However, it seemed in these years that SRI investors had a terrible aversion to risk, as though we were afraid of looking "bad" in trying to change the world, that we made up for it by copying "good" investors with the same old quasi professionalism that has killed great ideas for centuries. This is still with us to some degree today.

In 1999 the latest company I had taken charge of as CEO decided to go to sleep while patents were being developed. I took a year off to think about my life at the verge of 50 and a new millennium. I spent time in Peru learning about the importance of place and the value of ritual for healing. I spent time in Germany learning about esoteric Christianity and the need for spiritual renewal without political power or context. I thought about money, as my meter went dry once again, but my passion for doing good gained strength.

When I returned home I went to a job fair back in a suit, with the idea of seeing if there was any gravitational pull from any of the businesses represented. I had decided that my mission was the redemption of money and that I would be alert to openings. Legg Mason people stood out in the crowd and I was in the door studying for financial exams within the week. Financial Advisors, almost universally are good people, friendly, affable and naturally helpful. Unfortunately there is often a disconnect between their niceness and what they prescribe. From the beginning I was given great support in mastering financial skills, but virtually no support in the realm of SRI. As I began to acquire clients it became obvious that the SRI choices available through Legg Mason (and even worse at Smith Barney when they rolled us together) was not going to meet the needs of my discrete clients, who came to me out of a desire to do well while doing good.

So I studied and talked with my friend Sam Folin (now my partner at Benchmark) and began developing portfolios of companies that were undervalued and that were not just harmless but were change makers, and solution finders. These were companies whose "net impact" as Paul Hawken has put it, was beneficial. Having started and run companies, I had no illusion that I knew all there was to know about these companies. Every portfolio manager, unless they use pure quantitative measures, uses a tad or more of intuition. Charts, historical rhythms, and hearsay combined with massive financial bantering on TV, radio and print all combine to influence to the point that the emotion of the market seems to have begun driving the economies of the world rather than the other way round. I stepped away from the banter and invested in good companies, whose simple financial numbers told me they were undervalued by the market. By purchasing them I was helping them find their real value, so that they could grow and thrive with a healthy sense of sufficiency. When the market caught on and these companies got puffed up and overvalued I cut them back, or if they changed their direction, I would sell. My clients prospered from this simple approach.

At the big financial firms you are still very limited in terms of real asset allocation. Only some mutual funds and some portfolio managers have selling agreements with the firms, and fees, charges and interest rates are not often in the clients' best interests compared to independent shops. I knew that Sam Folin had developed his own SRI index at Benchmark and that he had for 25 years successfully managed risk through intelligent asset allocation. I knew from joint clients he had referred to me that he was extremely cost conscious and fair in his dealings; so when Citigroup joined the trend of other big firms and began reducing interest rates in cash accounts purely for their own benefit and with no warning to me or to my clients, I gave Sam a call. Three months later, John Campagna, my friend and colleague from Legg Mason days, and I bailed out of the corporate financial world to join Benchmark Asset Managers, LLC.

For the first time, I am able to think and act independently in putting together holistic investment strategies for SRI investors, who want to do more than register complaints in proxy votes. We are currently managing about $130M with a strong base in screened indices of our own customized making, and sound hedging strategies to protect the downside. We use sophisticated financial software to find undervalued companies and, with the help of research assistants and our clients, uncover the diamonds in the rough that are not yet well known by the market, but that are change makers and solution finders for the massive problems we face in this world today. In time such investments will be available as stand alone funds in 401Ks and through public offerings, so that it is not only the rich who can do well by doing good.

A couple of years ago patents began issuing from my old company and now I spend after-hours supporting the launch of Anthurium Solutions Inc., a portal for matching workers with work globally. This is to fulfill an old adage that struck me as a worthy goal years ago that one should measure one's wealth not by the amount of money one amasses, but rather by the number of people who find meaningful employment through one's initiative and leadership. In this way too, Benchmark will be leading in the initiative and raising the funds to create a "Green Village" in Philadelphia, where mixed use development will bring together owners, workers and customers of sustainable businesses and non-profits in a beautiful and inclusive model of ecological community building within an urban setting.

My hope in telling this story is to inspire others in the financial world to break away from the corporate stranglehold, collaborate with other like minded SRI investors, think bigger and believe that the public markets are in the process of transforming over time into what they should in fact be in a healthy world: a world where long term values include prosperity, but also community, both locally and globally.

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