Five Questions: Robert Kim
We can’t do it all, no one can. Access Ventures partners with the Caprock Group as financial advocates for our values within the broader asset management system. Caprock provides investment options we wouldn’t otherwise find, backed by a rigorous diligence process on both financial and impact performance.
In this Five Questions video we talked with Robert Kim, client advisor at Caprock, about a one-pocket mindset and impact investing. Watch the video below to learn more about how Robert and his team are rethinking asset management.
What is a one-pocket mindset?
And so the one-pocket mindset essentially is: both pockets are just one pocket. Essentially, you can align your entirety of your assets with the values and the things you want to see in the world and in the meantime, maintain the financial objectives and achieve your financial objectives. So that’s really the one pocket philosophy. And it’s really exciting because a lot of folks are starting to look at it and starting to adopt that mindset.
Is a one-pocket mindset part of impact investing?
Impact investing is essentially, investing for impact while achieving financial returns. One-pocket mindset looks at really what are the entirety of my values and how do I reflect that in not only in things that I invest in, but the way that I interact with those investments. So I think it’s a much broader concept than just impact investments. And a lot of impact investors also have a one pocket mindset. They may say, you know, a portion of my assets are going to impact investing but a portion of them are going to non-impact investments. So one can be an impact investor and not adopt a one-pocket mindset, but one pocket mindset is a much broader philosophy that drives how you view your money.
Why have found a one-pocket mindset to be important?
It really broadens the pool of things you can do as an investor. I think that’s why it’s really important. It sort of cuts to the core of how you view money, as well. And for those who have a very healthy relationship with money, often times they’re happier.
“You can align the entirety of your assets with the values and the things you want to see in the world and in the meantime, achieve your financial objectives.”
What are some common themes you’re seeing in one-pocket organizations?
The first thing is they have a very strong leadership. What I mean by that is all these leadership team members, especially the CEO, has a conviction towards something, whatever that might be. They want to see something different about the world, they want to create good change. And often times it’s from personal experiences. Second is, they’re able to compartmentalize their theory of change. So let’s say you care a lot about underprivileged youth and their education. There’s a lot of factors that go into having a positive experience as an underprivileged youth or as a youth, for example. You not only need high quality teachers, you need access to high quality curriculum. But also you need to have parents that have spent time with you, right. They’re not running four or five jobs. So how do you create jobs for these communities?
Third is, a lot of people don’t talk about it but, you know, impact investing is at the end of the day, investing. So you need a very strong financial architecture to meet the financial objectives. So, you know, how much was the total required returns that you need to have to sustain the organization that you’re leading or the family that you’re leading. And then within that framework, you can figure out at this part of the portfolio we can do this type of impact investments. This part we will do this type of investments. And making sure that it’s diversified and uncorrelated to the best ability that you can. And so designing that financial architecture is key. Fourth is, they have an investment team that has an expertise in the areas they invest in. But those same folks have a passion towards change.
What are some of the challenges involved with implementing a one-pocket approach?
One of the tensions obviously is impact and financial returns and we believe that you can achieve both but at certain times if you want to really go further in the impact scheme you may need to sort of manage the financial returns around that. And there’s always tension on every investment so you need a process to really help manage that tension. You know a lot of the families I work with or organizations, they may not have it all put together, and oftentimes they don’t. You know, Access Ventures is sort of one of the rare ones that sort of had a maturity around these five points. But a lot of them don’t. But all of them are very humble and willing to learn, willing to bring people together, and I think that’s really important.