January 2020

Mike Tiedemann talks about impact cash solution in the Financial Times

Financial Times: Moral Money: Fed pivots on green banking; tackling climate’s passive problem | January 31, 2020

By Billy Nauman

‘Cashing in’ on impact investment demand

With a growing number of people wanting more than financial returns from their portfolios, the wealth management industry is frantically trying to keep up with demand for impact investing beyond the traditional avenues such as green bonds and cleantech venture capital.

One example of this came this month from Tiedemann Advisors, a $20bn investment management company, which joined forces with a fintech company called StoneCastle to offer a new impact-oriented cash management product. Through the platform, investors can divvy up their savings among a group of 800 community banks, community development financial institutions (CDFIs) and credit unions, which allows them to direct their money to areas where they are trying to make a difference.

“If you’re an impact investor that wants to lend to under-represented communities you can do that,” said chief executive Mike Tiedemann. “Or you can use credit unions that lend to environmental charities, and so on.”

While banking with smaller banks may seem riskier than using a “too-big-to-fail” institution, the StoneCastle platform opens multiple accounts with different banks and keeps the balance at each below $250,000, meaning the money is federally guaranteed. “By having your cash spread among 70 or 80 institutions you get a multiplier effect of the government guarantee,” said Mr Tiedemann.

As evidenced by initiatives such as Tiedemann’s, and the impact and ESG-oriented products coming out from larger wealth management shops like Merrill, it is clear the industry believes sustainability and impact are becoming critical elements in the battle for investors’ business.

“It’s a ‘need-to-have’, not a ‘nice-to-have’,” said Mr Tiedemann.

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