Where does the word wealth originate from?
What does it mean to be wealthy?
For many wealth is a symbol of financial status, a term defined by an individual’s monetary worth. In fact, the word ‘wealth’ comes from the old English ‘weal’ which means ‘wealth, welfare, and wellbeing'. Weal is in turn related to the older word ‘wel’ meaning ‘in a state of good fortune, welfare or happiness’. At some point in the last few hundred years, most of the world has forgotten that wealth once meant well-being and happiness.
Tribe Impact Capital is a pioneering wealth management firm bringing the ‘well-being’ back to wealth. Tribe does this by focusing their service on providing clients both financial return and impact. They are, an ‘Impact Wealth Manager’.
To learn more about Tribe’s approach as Impact Wealth Managers, we interviewed one of its four co-founders: Harry Catchpole.
Prior to becoming one of the founding four team members of Tribe, Harry worked at both HSBC and JP Morgan Private Bank. Harry shares with the Nossa Capital team how Tribe started, lessons learned and how Tribe aims to effectively direct clients’ wealth to investments they care about.
The Founding Story
In 2016, Tribe was founded by four people, all with different backgrounds but with a common passion and mission: To truly engage people with their wealth.
“We thought, how can wealth be something people want to engage with? I saw within private banking that for many clients, wealth felt like a burden to them. I saw that the 1% of client funds that was directed towards philanthropy would often take up 99% of a client’s attention. 99% of attention for 1% of their wealth. Philanthropy succeeds because it engages your heart and your head. Historically, traditional wealth management has not created such emotions, but it could…”
The question for Tribe then became how can wealth create the same emotions as philanthropy? How can you make the lines in your portfolio reflect what you truly care about? If you are asked directly: “What are your values or what impact do you want your wealth to create?” This can be an extremely difficult question to answer. Most people would probably have no idea where to start in defining their values. It is very personal. They may be thinking “where do my values begin and end” or “will I be judged for my values?”
For Tribe, determining how they could gain an understanding of client values became key. In the first year, the Tribe team focused on creating a process that was engaging, fun and interesting for the client, whilst also providing them with information that was useful to build the client’s portfolio.
This process became known as the Impact DNA™.
Tribe developed the Impact DNA™ process by working together with behavioural economist, Greg Davies. Davies was Head of Behavioural Finance at Barclays for nearly 10 years, and has a PhD in Decision Theory from Cambridge. Working together, the Impact DNA™ model allows Tribe to help clients articulate what is important to them, their values, and acts as a framework which enables Tribe to construct a portfolio that embodies those values. To date, the Impact DNA™ process has been completed with over 130 clients and prospects.
Wealth management is about interacting with human beings
Within financial services, wealth management is where you have the most interaction with human beings.
“People have always been the central motivator for me. A value that is the essence of Tribe.”
While all wealth managers say the client is at the center of everything they do, how well does a wealth manager truly know their clients? Maybe a wealth manager knows some facts, such as their client’s children’s names, mortgage fees or traditional school fees - but is that really knowing a person? As Tribe’s aim is to connect people back to their wealth and move back to the root word ‘weal’, Tribe aims to allow clients to think about wealth in regards to their personal well-being and not purely their financial status.
“[Losing the well-being in wealth] is unfortunate because, as we all know, money doesn’t equal happiness. Wealth doesn’t necessarily make you happy. It’s essential to understand what drives you and what makes you happy."
This mentality is how Tribe puts the client at the center of everything they do. By putting clients through a the Impact DNA™ process at the beginning of the relationship, Tribe is able to identify what clients really want to achieve via their wealth.
Tribe focuses on achieving social and environmental impact whilst generating financial returns – investment that does well and does good.
Like all wealth managers, Tribe looks at the financial return clients want and require. However, alongside that analysis, Tribe also considers client values. What impact does someone want to have in the world? Everything is done in parallel between investment analysis and impact analysis.
“We have two due diligence teams. One is focused purely on financial return and the other is focused on impact. In order for an investment to end up in a Tribe portfolio, it must pass the firm’s screening process both in terms of impact and in terms of financial return. We want to demonstrate that you can manage wealth in a different way. A way that benefits the client, people and the planet.”
The underlying belief is that businesses which are more sustainable will outperform those that are less sustainable over the long term. Portfolios can be impactful and perform in line with the market, if not better. You do not have to sacrifice financial return to do good.
“Why wouldn’t you do this? Why wouldn’t you want to invest in a manner which is more aligned with your values and has a positive impact.”
Harry’s primary role at Tribe is working with clients. A role Harry describes as very gratifying as Tribe draws a much broader set of clients than a traditional wealth management firm. Some are very sophisticated investment bankers and financial services professionals, while others are new to investment and their first ever investment has been made with Tribe. Half of the clients are female and half are under the age of 45.
“We are very proud to serve people from a wide variety of backgrounds.”
Harry explained that one of Tribe’s first clients came to them simply because they liked their investment philosophy: Investing in high quality, sustainable businesses that are solving global challenges.
Tribe states on their website that following this investment philosophy comes with three key advantages:
- Sustainable businesses tend to be more efficiently run as they are more aware of their resources.
- Sustainable businesses are less likely to be affected by adverse regulation (for example oil) or customer apathy (for example cigarettes).
- Everyone needs greener energy and better healthcare so it is likely that businesses that address these issues will outperform over the long term, buoyed by policy changes and changing global appetites.
Alongside this, within Tribe’s investment philosophy, the team uses the United Nations Sustainable Development Goals to help guide their investments and identify the impact of their investments.
“These are 17 goals which all global governments have agreed to try and achieve by 2030. If your goal as an investment manager is to predict the future, these goals provide a roadmap showing where governments have agreed to direct trillions of dollars. It makes sense to include these goals in the process.”
As more and more investors around the world aim to direct their wealth to the causes they care about, Tribe is an excellent example of how an Impact Wealth Manager can be run. As the world moves into the next decade, only time will tell if organizations like Tribe are able to help us collectively bring the ‘well-being’ back to wealth.