Many of the general components of pre-launch for impact products mirror conventional products and do not need to be reiterated here. Further, issues related to retail impact investing tend to be product specific, so they cannot be generalized. For this reason, in this section, we provide guidance based on the cases and interviews conducted in our research.
- Coordinating Internal Processes
- Developing a Marketing Strategy
- Developing a Sales Strategy
Key Staff: Wealth Advisors, Finance/Treasury, Marketing/Communications, External Partners
Successful strategies for internal coordination have included at least two major components:
- Securing executive-level buy-in: Where staff recognize that this product is a priority for their leadership team, there will be greater momentum during the process, and capacity to overcome any challenges. This was illustrated at MSCU, which was successfully launched the OikoCredit GIC in a relatively short time period largely due to executive-level support for the initiative.
- Identifying champions: The product development team should engage a lead in each department to streamline activities and to ensure accountability. At the same time, an executive-level champion should retain high interest and visibility during this process, and identify opportunities for organizational innovation.
Configuring Internal Systems
To the extent possible, retail impact investment products should be integrated into existing technical processes and systems. For example, launching a GIC product would be a relatively straightforward process; whereas constructing a product with new templates may require custom systems and tools. One area where additional work may be required regardless would be around impact performance and reporting. However, like any other product, if staff are required to perform extra responsibilities to administer the product, it is less likely that they will be motivated to offer the product to clients.
A marketing strategy encompasses many different elements, so for the purpose of this section, we will keep a tight focus and look only at communication messages and approaches for marketing the retail impact investment product. Examples of potential strategies and actions around a marketing strategy have included the following:
- Clearly identify the value proposition and differentiator: A primary selling point of a retail impact investment product is the opportunity that it provides to members to align their values and beliefs with their investments. While this value proposition may be implicit for credit union members, it is important to make it explicit, and to distinguish how this specific product is different from a comparable product. It is also important to extend the value proposition beyond value alignment into other messages, such as the opportunity for portfolio diversification.
- Clarify positioning of product within broader product suite: Credit unions will offer a range of products that align with member preferences and values, and the retail impact product should be situated within the broader suite. For example, many credit unions offer socially responsible mutual funds, and members should be aware that they can hold both kinds of products (i.e. they are seen to be complements, not substitutes). In some cases, however, products that are ‘new’ to members – such as a community bond – will require additional education on the product structure embedded within marketing materials. For other products – such as an impact-focused GIC – there will likely not be a need to educate the member on the product structure, but rather the differences (if any) around risk and return from conventional products.
- Identify potential segments of target members: Retail investors are diverse. Some investors care more about risk mitigation than they do about track record of success or strong financial returns. Others will be concerned more about addressing causes that they care about. Understanding the motivations of retail investor is key to developing the marketing strategy. Segmentation of the investors will help to target the market. However, it is also important to recognize that the credit union cannot target too many segments at the same time, as there is a risk of sending conflicting or confusing messages about the product.
- Distinguish between marketing strategies for existing and prospective members: Marketing teams should leverage social media portals and community events that attract the types of investor segments identified as most likely to buy the retail impact product. Credit unions may be able to expose their existing members to retail impact products more easily, as they are already bought into the organization’s mission and existing product(s). In this case, there is an opportunity to strengthen member retention and uptake, and marketing teams may appeal to these existing impact preferences (since they are known), or choose to reassure members around risk considerations. On the other hand, prospective members may require more information in order to both assure them of the impact considerations (as a potential differentiator), and placate any concerns around product structure (such as the risk/return profile, or fit in a portfolio).
- Creation of marketing collateral: Creation of the brochures, website and online content, and other materials, such as posters and brochures are critical to gaining investor commitment. For most impact products, marketing will be “narrative-led” rather than investment-led. This means that investors will be looking for the stories that validate their initial impression that this is a high impact investment. One effective way of communicating impact is the use of visual images of the end-beneficiaries of the impact investment, along with short narrative captions. Videos should also be considered, especially for the credit union’s website or social media campaigns. In addition to narratives, comprehensive statistics on broad social and environmental impact can also be effective in communicating that the impact investment has achieved scale in the changes it has made.
It is often said that, “investment products are sold, not bought”. This perspective explains why the sales strategy is a critical part of the product development process. While there are many elements of a sales strategy, in this section we will focus specifically on the importance of educating and engaging financial advisors, investment advisors and financial planners, as well as any frontline staff that may engage with members (hereby referred to as the “sales team”). Examples of potential strategies and actions around a sales strategy have included the following:
- Familiarize financial advisors with concept and product: The product development team should educate the sales team on impact investing, as well as the product design features. As with the marketing material, narratives and comprehensive statistics will be crucial for making sales staff effective ambassadors of the product. If the sales team has not had significant prior experience, the team may require a general overview of socially responsible and impact investment, building on the content presented in earlier chapters. The sales team will also require education about conventional product-specific information (risk, return, term, liquidity, etc.), and the impact dimensions associated with the product. For certain retail products that have a sector focus, such as microfinance or solar energy, sales staff will need a fundamental understanding of the sector (such as describing the business models driving the return for investors, and how impact is created within the sector), which can be obtained through in-house research, or by bringing in external expertise. Sales staff will also want to know about compensation arrangements and how to communicate fee structures to members.
- Examine where product could fit in a customer portfolio: As impact investing can occur across asset classes, it is not always clear where an individual product fits in a portfolio. For example, a product that provides fixed-term loans to social enterprises may be allocated in the ‘alternatives’ category rather than fixed income, as the underlying assets are non-conventional. Another example is that many retail investors have conservative or balanced profiles, which would limit the allocation that investors would make to private equity investments. The role of impact investments within portfolios is an emerging area of study, but each investor will have different approaches that suit their individual needs. For example, some members may want to ‘carve out’ their impact investment allocation (e.g. a target number such as 5% or 10%). Others will be interested in allocating part or all of their investments within a specific asset class to impact (e.g. private equity to social enterprise investments, or real estate to affordable housing funds).
- Discuss how to situate the impact product within client interactions: The Know Your Client (KYC) process in financial institutions do not typically examine impact preferences, but some credit unions have adapted their practices to capture preferences for local or thematic investments. While each institution has a different approach, it may be useful to draw on research conducted in the UK on how a discovery process template and questions can assess whether clients could be considered for impact investments (see box 5.11). Beyond the KYC process, when sales staff have members recommend products, they will have to assess the suitability requirements for the specific client situation. Beyond conventional practices, they will have to consider the unique member preferences around impact considerations, in terms of how this is assessed, how it is achieved, and how it correlates with risk considerations.
BOX 5.11: An example of a client discovery process
As part of research commissioned by NESTA in the UK, a discovery process template was constructed along with a set of questions to be able to assess whether clients could be considered for social investments. We include the template and associated questions below as a guide for credit unions, the sector, or regulators to consider adapting and using.
- Question 1 is based on research published by Nesta that identified key indicators of an interest in social investment. There are three sub–questions, and if any of them is answered positively it would indicate a potential interest in social investment. These were viewed by financial planners as permission questions to indicate whether it was worth asking more about specific areas of interest. Some financial planners thought that all clients would ‘want their money to do some good as well as provide me with a return’; others thought that a relatively low proportion of clients would answer this question positively.
- Question 2 is aimed at finding people that have acted on their ethical values within existing investment decisions.
- Question 3 makes use of the finding that people who have allocated some of their time to community activities are more likely to be sympathetic to the notion of allocating some of their wealth to social investment.
- Questions 2, 3 and 4 enable the client to indicate areas of social need and geographic regions in which they have some empathy. Many financial planners recognized that clients who have an interest could have reasons for interest in causes and places that they would not previously have known from discussions.
- Question 5 is a key question because at a high level it is identifying whether the client would like to be presented with investments that may involve a sacrifice of income or capital in order to achieve the social objective.
 Brandstetter, L., & Lehner, O. M. (2015). Opening the Market for Impact Investments: The Need for Adapted Portfolio Tools. Entrepreneurship Research Journal, 5(2), 87-107. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2519671.
 Elliot, A. et al., (2012) Financial Planners as Catalysts for Social Investment. NESTA and Worthstone. Retrieved from: http://www.nesta.org.uk/publications/financial-planners-catalysts-social-investment
 ibid. (2012)