By Na’im Temlock
I sat down for an interview with Eve Ellis. Ms. Ellis, vice president, is a wealth advisor and founder of The Matterhorn Group with William Blair’s Private Wealth Management. Read the whole thing or feel free to just choose questions that interest you.
Matterhorn works to preserve and grow clients’ capital and to support clients’ values. To this end, Eve oversees complete client-values-oriented portfolios focused on advancing social justice, including gender, diversity, and racial equity. Matterhorn also manages two proprietary strategies for investors seeking both financial and social returns: Gender Parity Strategy and the Matterhorn/Refinitiv Diversity & Inclusion Strategy, which analyzes 24 metrics related to diversity issues.
Eve is a member of the Forum for Sustainable and Responsible Investment (US SIF) and served on the board of the Ms. Foundation for Women for eight years. In 2018, she was the recipient of The Women’s Bond Club of New York’s Betty Cook Award, which recognizes exceptional dedication to the advancement of women. In 2022 she was named to Forbes America’s Top Women Wealth Advisors Best-in-State list and in 2020 to Crain’s New York Notable Women in Financial Advice inaugural list.
Na’im Temlock: So, to start off I was wondering if you could talk about how you got into finance, what is your background, were you a business major, what you do now, and how you transitioned into that role.
Eve Ellis: Ok so I grew up outside of Philadelphia and I played competitive tennis. I played tennis at Yale University and then played on the Satellite Pro tour for two years. Then I had a tennis business and coached tennis on the NCAA division 1 level at Columbia University and Barnard College. After my tennis coaching career, I had a web consulting company, not that I was the techie, but I was proficient at translating what a client, or a potential client, wanted to our techies and I came up with solutions for them. That was in the 90’s. Then 9/11 happened and I decided that this was not a passion of mine and at that time I saw an ad in the Wall Street Journal that, as I remember it, said “educators, attorneys, accountants, and entrepreneurs come learn about being a financial advisor” and at the time it was for Meryl Lynch at their 5th avenue office in New York city. I felt as though that was what I wanted to do and the reason I knew that was because I thought this was about educating people in a very important area in their lives. I was used to coaching and I thought this was a shift in who I was coaching.
So, I started at Meryl [Lynch] and no I majored in American Studies with an area of concentration in Women’s studies and I thought I needed to make up for some lost time. I studied for and got my CFP (certified financial planner) designation as soon as possible. What I mean is that there are six courses that you study then you sit for a two-day exam. I thought it was difficult. It was all multiple choice. I took courses in college where I could write essays. I did not even really like exams, but this was very different to be sitting for these exams. I got my CFP even before I was able to use the designation because you have to be in the business for three years to use it. But it really provided me with a foundation that was critical for this business. I gravitated towards the estate planning course of it, and I think that was because many of the solutions for wise estate planning are philanthropic solutions. I was sitting on some non-profit boards and really was interested in the philanthropy plans of potential clients and clients and how they fit into the overall financial picture. I then also at the same time had a young client who I had coached when he was in high school. He was always interested in doing good for the environment and after he was out of college, he had inherited some money and he came to me, and he said that he wanted to invest in what was then called Socially Responsible Investments. I said, ok Glenn but just know you will need to sacrifice financial returns for socially responsible investments. He said that’s ok and so we went forward with it. At the time there weren’t many choices of different funds but there were some and when we started to do our portfolio reviews, I realized he was doing better than those invested in traditional investments. That was a lightbulb moment and I decided to look more into this for others. And so, we started doing what has morphed from SRI (socially responsible investing) to ESG, investments that focus on environmental, social, and governance issues. It is currently called ESG or also some people call it sustainable investing or impact investing (though impact investing often does not look for financial returns). For all of this I am looking first and foremost for strong financial returns but at the same time we all want to have a social impact. Whether that is improving corporate behavior, or doing good for the environment, or considering the water shortage issue around the world. There are so many different funds and individual investments that someone can make to reward companies doing the right thing, or in the old days it was about screening out wrong companies, now its more of a combination and more of having a say directly to corporations that you own equity in. It has now morphed into not just about ESG as a whole but really a subcategory of focusing on gender and diversity and social and racial justice. It’s morphed because there are more choices and there is more of an apparent need to set companies on a better path for all of us. And I really do think investors can have a difference by having a say. The say can be an investment, or their vote within companies, or it could be going in front of congress. And we do invest in some fund managers who do present to congress.
Actually, we had a big win recently that I am so excited about. It just happened, it’s about a week off the press. One of our managers had a campaign last year to stop the practice of companies having NDAs when employees would complain of sexual harassment. An NDA means that when someone comes into work at an organization, they sign a non-disclosure agreement and so they are then bound by that NDA so lets say there is a settlement at the company based on the sexual harassment that transpired, they cannot tell anyone about it. Up until recently, NDAs were prevalent and there were huge settlements at companies and the victims could not disclose what happened. They could not disclose that there was a settlement or other certain things based on the agreement. The manager that we use was going in front of congress on this issue to end the practice of NDAs for sexual harassment complaints and settlements. So anyway, they won, and it is just awaiting President Biden’s signature making NDAs a thing of the past when the issue is sexual harassment and next we’ll be on racial harassment
NT: Wow that is a great example of how you can have a voice with something that some people might think is so trivial like investing in a company or buying a product from a company but clearly there is an impact there as well.
EE: There really is. And some of these things really take a long time. While we do comprehensive wealth management for our clients, we also provide two specific portfolios, one our gender parity strategy and the other our diversity and inclusion strategy which is in partnership with Refinitiv because it is based on the Refinitiv diversity and inclusion index. So both are geared towards “how do we change corporate behavior, how do we reward companies doing the right thing” and again we want investments to be aligned with our clients’ values because we do think the match makes sense and if you think about a private foundation investing their own money to do good for the environment and then all of their other investments are in large oil companies, there is a real mismatch there. They are paying attention to the 5% they need to grant out but the other 95% might be given out in a manner that is contra to their values. Another thing is that it makes sense financially because it is a big risk to invest in companies that are not doing the right thing. And as we said, some companies may have a lawsuit where they have to pay out $60 million and that hurts a company.
NT: And it seems like going forward too, especially in regard to the environment, companies are going to be rewarded and have an easier transitioning into whatever our future is going to be because we are going to have to learn how to live with the environment and take care of it better. These companies will have to spend less money to transition making them more profitable.
EE: I agree, and companies have to be forward thinking. We want the land to be here for you.
NT: Going back a little bit you had mentioned when you were first approached by the for young man you had coached, when he said he wanted to get into sustainable investing there were some misconceptions regarding trade offs between returns and impact. So, I am wondering in your time in finance what has the transition been like regarding moving towards ESG. Are more people trying to incorporate it into what they do? Did you see a lot of pushback from firms you were working with and for at the time while now they are more willing to embrace it? How have you seen the growth so far?
EE: It has grown exponentially. Last year it was 1/3 of all managed assets in ESG investing and, my sense is, the real questions is when will it be 100%. I used to say the questions was when will it be 50% but I think it is moving rapidly. And anecdotally, clients sometimes come to us specifically for ESG or gender lens investing. We started it [our gender parity strategy] because research showed that companies that had more women on their boards and senior leadership had stronger financials, so we created the gender parity strategy of companies that meet our financial criteria and every company had to have a minimum of three women on its board because that was the magic number in the research where there was a real advantage. If you think about it, there has been a lot more research since then, but diverse teams can outperform. Diversity of thought, background, gender, race, ethnicity, disability, LGBTQ etc. Initially, when we would tell people about our gender parity strategy, investors didn’t doubt the research they just thought it sounded new. This was at the end of 2012. And then within a few years, we started to bring it to clients that were not necessarily interested in ESG, but I said it might make sense to add this to your portfolio because there are strong financial returns so far and we are also having a say in the movement to get more women on board in the corporate world. I remember one client saying, why wouldn’t I invest in it, and I though well I don’t know. I think that conversation was in 2014 and I just think most asset management firms at least do some sort of ESG overlay to what they are already doing in terms of stock selection. And as you said, you want to invest in companies that are focused on these issues and that are moving forward. There is not that much time on some of these issues
NT: It’s great to hear that people are coming to you increasingly looking to invest in companies that are doing the right thing. I hope it increases going forward
EE: I think it will. I can’t see it going backwards.
NT: Its great especially if the returns are there as well. I have always thought that ESG and being sustainable is great and there are a lot of people who want to do it for the sake of being but ultimately it will come down to, can this be a profitable thing. And unfortunately, or fortunately, that is how our economy and society are and so once it becomes profitable and a financial benefit, we will see a large-scale transition.
This is going to be in a newsletter for an ESG Club that I am in. Most of the people reading=ng it I would assume will be people like me. People who are university student who are interested in environmental and impact investing. We may be doing some research, staying up to date on the news, doing research on companies, or investing in some stocks or funds here and there. Most of us won’t have advisors investing our money for us at this point. Given that, what advice would you give to an individual investor like me or my peers for when we are looking at a company. How can we determine if this is a sustainable or socially positive company?
EE: You have to dig a bit. I would start with USSIF (ussif.org). USSIF has a good primer on ESG investing. There are great primers there. As you sow (asyousow.org) is also a good place to look and invest because then you have others helping you with the determination on companies as opposed to doing all the research yourself. In terms of research yourself, it takes time. It takes getting research reports from analysts. For us, it takes looking at board composition and those kinds of things which you can get from Morningstar. As part of research, you can look at what controversies companies have had in the past and what they have done in response to some negatives. For example, we are invested in a gold mining company. You might say mining that is horrible for the earth. We listened to investor calls and what the company does about safety and what they are doing to enable to bring on jobs in places in the world where there are people who would have no livelihood at all, and we decided that the good does really outweigh the bad. We also know one of the people on the board is the head of sustainability at the Kennedy School so there are other pieces to dig for.
Another thing is that what might be sustainable to one investor is not necessarily the same to another investor. Once you invest in public companies that is just the way it is. I know a lot of people are worried about greenwashing. That is an issue, but I also think perfection won’t happen. I have said to some people who want there to be certain metrics for everything about sustainability. There are ways to measure different companies like MSCI, Refinitiv, Sustainalytics all put out ratings, but there are different ratings companies. Some people say there needs to be one place and that’s it that everyone knows this company is or isn’t and what its number is. Just the way we know from financial returns we know what twelve means, but we don’t necessarily know about sustainability. That is an ideal, and it is a great ideal, but if we wait for that we’ll just never get there. We need to be pragmatic about it and get going. We can see the results and we need to move. We belong to something called the 30percent coalition (30percentcoalition.org). It was started over ten years ago which was right about when we started the parity portfolio. At that time, 16.9% of board members of the S&P 500 were women. We joined the movement and I thought what if that number goes back instead of forwards. I thought that would feel like a hit, just like if your portfolio lost financial returns. So now the number is over 25%, we are approaching 30% which is big but not huge. It should be 50%, which is why we started the parity portfolio. Parity means 50. But if nothing had been done, and there are major institutional investors part of the coalition pressuring companies to get more women and now people of color, and we had just waited for one hub, I don’t think that number would have moved.
NT: Touching on something you had mentioned, impact means different things to different people, do you think it will not work to have just one score? Because for some people, a score of 50, for example, may be good, whereas for others it may not and so there is no way to standardize it.
EE: I think some things you can standardize and some things you can’t. It’s just different. But I do think measuring is important. Transparency is important. If you aren’t transparent, you can’t improve anything. The more tools to measure the better. If you can’t measure it, or don’t measure it, nothing will change. We are using software to measure things like, how many companies in our portfolio have NDAs compared to the benchmark. Waiting for the perfect tool is just… And I don’t mean to be a pessimist, I am optimistic that we need to just get going and things can change.
NT: That makes sense. And I think it is important to be optimistic but also realistic. What can we get, how far can we go, and let’s aim for the golden goose but let’s not know for sure we are going to get there?
So really that was all I had prepared, I appreciate you taking the time. If you have any last thoughts, any last thoughts for people who are getting involved in this are. Some people may be reading this newsletter but are not that deep in ESG investing and don’t know where to start. Any advice you may have going forward.
EE: If you provide that link from USSIF I think that will be really helpful for people. That is really it. To me, that is the hub, that is the trade association for us practicing it, and I think the more we can support the trade association, the more we can learn and the better jobs we can do.
NT: Well, that’s great. Thank you so much for taking the time to speak with me.