Independent broker-dealer Vanderbilt revamps to focus on impact investing

The $3B AUM firm rebrands itself with commitment to sustainability in investment options and own culture

Jul 25, 2017 @ 2:26 pm

By Liz Skinner

+ Zoom

An independent broker-dealer with roots dating back 52 years, Vanderbilt Financial Group is growing a new reputation for itself by committing to the socially responsible investing space.

The Woodbury, N.Y.-based firm calls itself the sustainable broker-dealer. Its dedication to the investing strategy and a focus on prioritizing impact within the firm culture has helped it expand its adviser headcount at a time when many independent broker-dealers are exiting the business.

Vanderbilt has recruited 66 new advisers over the past two years, a 75% jump in head count to about 150 reps.

"I don't want to force people into SRI, but I want to open their eyes," said Stephen Distante, chief executive of Vanderbilt. "I know the next generation of investors will absolutely embrace this method, because it's very much in line with their values."

It's also in line with the values of Mr. Distante, a self-proclaimed Tesla lover who bought his first electric car in 2010.

(More: Robos are offering SRI, so shouldn't live advisers?)

He bought the broker-dealer from its founder in 2001 and changed the name to reflect the entrepreneurial heritage of Cornelius Vanderbilt.

In 2013, Mr. Distante learned about SRI from a lawyer who focused on the investment strategy, and he decided to line up his business with his beliefs.

"I wanted to be congruent in my life where my firm represented my values," he said.

He began by creating Impact U, an online education center that includes content from SRI thought leaders, and by 2014 had rebranded the firm as the sustainable broker-dealer.

By the end of the following year, Vanderbilt's office building became the first on Long Island to become LEED Platinum certified, an accomplishment achieved through details like low-VOC paint, carpets made from recycled fishnets, LED lighting and parking lot spaces where employees can charge their electric cars for free all day.

The firm also is working on becoming a certified B Corporation, a sort of "fair trade" assessment for businesses that firms like Patagonia and Ben & Jerry's have attained for their superior standards for treating employees, choosing vendors and other practices.

In May, Vanderbilt received regulatory approvals for an impact focused crowdfunding site, where even non-accredited investors can invest in impactful projects.

About a third of the advisers who use Vanderbilt make investments available to their clients that aim to marry client dollars with their environmental, social and governance standards, Mr. Distante said. Of the $3 billion in client assets, about $1.5 billion is in sustainable investing.

"Eventually the others will wake up — they'll see," he said. "When a client or a client's child inherits some money, I guarantee they'll be interested in this sort of a thing."

Jeffrey Gitterman, co-founder of Gitterman Wealth Management, recently switched from Triad Advisors to Vanderbilt, even though he hadn't initially been planning to make a change in broker-dealers before meeting Mr. Distante.

"It was surprising to find a broker-dealer with a strong interest and affinity to the SRI community," Mr. Gitterman said.

(More: Seeing green, asset managers ramp up purchases of ESG shops)

That focus jives with Mr. Gitterman's business, which includes developing client portfolios that support client values using model portfolios that have been screened to include investments with high-ranking ESG funds.

Mr. Gitterman said client interest in sustainable investing has soared over the past five years, and he expects in the next five years there will be an even greater leap.

"Sustainability metrics are now 100% known to improve returns and reduce risk," he said. "In three-to-five years, there will be so much product and awareness and so many advisers will be using it that SRI won't be a term anymore, it will just be one of the ways we score companies."

He was one of 20 advisers who joined the firm in June, bringing about $1 billion in client assets to Vanderbilt. Another 10 advisers joined this month, adding $250 million in assets. Both were teams with some advisers who are specialists in SRI.

"We are all do-gooders, trying to make our industry have significance beyond returns," Mr. Distante said.

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