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We tend to treat values-aligned investing as a knowledge problem. As long as you learn the impact investing strategies, the client conversations will follow. However, after working alongside impact investors, wealth advisors, and the families around them, I’ve come to think there’s been a misdiagnosis.
The obstacle looks like unfamiliarity. But it more closely resembles a lack of access to what a person actually believes, rather than what they will say in an hour-long meeting. The tools most advisors have weren’t built to surface that. Moreover, under a tightening regulatory standard, filling that gap is becoming a liability rather than a soft skill. The longer I contemplate the problem, the less certain I am that a tool is the answer.
I took on a different kind of work in this ecosystem because I consistently saw ready-to-move capital stall out. Sometimes it stalled because of advisor hesitation or family tension, but often enough something more innate prevented the decision. The client's conviction was unformed or unspoken; the strategy did not fail the investment policy or risk criteria. Now I work with individuals and families to clarify the convictions beneath their capital before deciding what to do with it.
When Expertise Does Not Lead to Action
I know an advisor who understands impact investing as well as anyone at his firm, helping clients navigate concessionary versus returns-seeking capital, blended finance deals, and impact in public markets investments. When a client wants to align a portfolio with what they believe, the firm sends them to him. But he keeps hitting the same wall.
Clients arrive already knowing he understands impact, but the conversation still doesn’t bridge to action. The expectation that he already understands, oddly, almost makes it harder. In more than one case, a client’s philanthropic vision never entered the plan at all.
Comparing notes, we realized we’d been describing the same experience in different containers — his in the advisory relationship and mine in the values and identity work. Neither of us had found a reliable way to draw a client's convictions into the open.
Fluency and fidelity are not the same thing, and knowing the impact investing landscape cold does not mean you can reliably surface what values a specific client wants to uphold. You cannot build a portfolio around something you were never able to name.
Signal vs. Conviction
Most client discovery happens across a handful of unstructured meetings designed to feel efficient and build rapport. The person says what they are willing to say in that setting, then the advisor records it and moves forward. What gets captured is a declared signal (what someone offers in a room built for agreement) rather than a validated conviction, which is what we have when a decision costs us something. The two are close enough that no one notices the difference until a real choice must be made and the stated preference turns out to be softer than an intake document assumed.
For values and philanthropic priorities, the dissonance is worse, because these are the hardest things for a person to articulate on demand (especially so for someone experiencing a life transition). A person might be able to tell you their risk tolerance and time horizon without hesitation. However, if you ask them what they want their wealth to do after they are gone, many have never been given an occasion to consider this. A conversation that asks them to produce that language cold will almost always fall flat.
So the advisor approximates, triangulating toward something that might be the client's actual vision, might be what the client thought the advisor wanted to hear, or might be a vision that dissolved the first time it met a trade-off. The advisor builds on the approximation, because it is what they have. When the philanthropic commitment fails to materialize, or the client’s children turn out to want something no one anticipated, the discovery process is rarely revisited. The cycle of revision begins, while the inputs are long forgotten.
The Importance of Defining the Client’s Values
None of this is a criticism of advisors. “We meet clients where they are” has become something of a refrain in this work, and the intent behind it is right, but meeting someone where they are requires a way to find out where that is. The tools most of us use were built to gather stated preferences efficiently, and they do that well. What none of them was built to do is help a person uphold something they have not yet been able to name.
This is why the divide is becoming urgent. Under Regulation Best Interest, the standard is shifting from asking to showing. It is no longer enough to claim you understood what a client wanted before you recommended it. Increasingly, you must demonstrate a defensible basis for having understood their objectives, values included. An advisor who reaches that dimension through approximation, or not at all, is exposed in a way that has nothing to do with competence and everything to do with the tools they were handed.
Dig Deeper to Understand Clients
I call this a dilemma deliberately, because the dissonance may not resolve through better intentions or deeper expertise. The reason no reliable structure exists is that the work resists being structured. Every person arrives with a different family, a different history, and a different sense of what their wealth is for.
Conviction cannot be extracted through a better questionnaire, because it is not standardized information. It is surfaced, slowly, through a human process built around trust and the specific person in the room.
That may be the harder truth for an industry that prefers scalable answers. The blank page gets filled by someone willing to sit in the discomfort of not knowing yet, and to help a person arrive at what they actually believe. The regulation is pushing us toward proving we understood the client. The clients, if we listen, have been asking for that from the start.
Matt Esposito is the founder of Birch Road Associates, where he helps individuals and families clarify the convictions beneath their capital before governance and investment decisions are made. His work grew out of more than a decade in impact investing. He is a certified Trauma of Money professional, based in Oakland. [email protected]
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.