Four Ways to Plot an Impact Career Focused on Investing
This post is part of our ongoing impact career advice column. In this edition, impact investing expert R. Paul Herman fields a question from our network.
How to Work in Finance with No Finance Experience
What are a few specific options for a first post-MBA job in investment management for someone with no finance experience that will eventually lead to a career in socially responsibility or impact investing? -Sarah
First of all, taking initiative by researching and writing about social responsibility and impact investing will give you a head-start on other candidates by demonstrating that you know the landscape. While you're taking actions like those, you can pursue several paths within the investment industry:
1. Marketing and media
Building awareness, branding, and communicating clearly are necessary skills for financial firms seeking to distinguish their offerings. You could explore working for socially responsible mutual funds (such as Pax, Parnassus, Portfolio21, which merged with Trillium), for big financial brands expanding into impact investing (JP Morgan, Morgan Stanley, UBS, US Trust/Bank of America, US Bank/Ascent), or for investment advisory firms that focus on impact (CapRock, Abacus, First Affirmative, and others). Longer lists of firms are at SocialFunds.com and USSIF.org.
2. Impact metrics research
Discovering and analyzing the environmental, social, and governance (ESG) issues of companies (as well as governments and nonprofits issuing bonds) can be a fit with your desire for transparency and performance in ecological, human rights, and equality issues. ESG data and ratings firms include MSCI, Sustainalytics, IW Financial, and HIP Investor. SASB.org is pushing for mandatory disclosure of important, material drivers of risk and opportunity by companies in their SEC disclosures.
3. Financial analyst
Yes, you could actually take the plunge and go deep into finance from the start. Some firms may be open to training you with no financial expertise if you demonstrate other skills. For example, some of the best computer scientists have degrees from the biology discipline. If you are open to studying finance, accounting, and statistics, and taking valuation and spreadsheet workshops, you could dive into the ocean of investing. But only if you are serious about learning fast – finance is a technical discipline that works best when focused on the future and addressing all of society’s issues.
You can also bring impact investing and social finance to nonprofits by pushing for their financial portfolio to be invested in a manner consistent with their mission, by using the grant stream to loan or invest via program-related investing (PRIs), and by encouraging fee-for-service and other revenue-generating initiatives for the nonprofit itself, like Kiva.org accomplishes.
I wish you success in your journey to build a better world via impact investing. -Paul of HIP
About R. Paul Herman
An internationally recognized expert in impact investing, Paul invented the “HIP = Human Impact + Profit” ratings system in 2004. HIP Ratings show that portfolios and companies can realize lower risk, enhanced returns, and profit potential -- and build a better world -- by focusing on the root-cause drivers of value creation. Paul’s financial expertise began with his Wharton School finance degree and corporate advising at McKinsey & Co. Paul is an adjunct professor teaching MBAs at Thammasat Business School in Bangkok, Thailand, and a visiting lecturer for MBAs, including the Presidio MBA Graduate School in San Francisco. Read more about him here.
This series is your chance to get answers from experienced impact-career pros. Ask for some advice, and your question may be featured in an upcoming column.