Makes Sense

A Monopoly game update to match today's wealth accumulation strategies might come with a surprise twist: Dapper game mascot Rich Uncle Pennybags could go from bankrupting competitors to socially responsible investing.

It might not fatten Pennybags' dough roll quite as fast as would a railroad or real estate monopoly. But there would likely be fewer market pitfalls.

That's the approach and core strategy Naples investment advisers Andrew Hill and Jennifer Figurelli have used to build their firm, Andrew Hill Investments Advisors. The pair of outdoor enthusiasts and civic activists targets stocks and bonds from companies they grade in the categories of environmental, social and governance. “These factors can have a real impact on a company's brand, operations and ultimately its stock price,” says Figurelli.

While the socially responsible investing concept isn't necessarily new, Hill Investments is a case study of how a firm, in a high-net-worth hotbed like Naples, used the theory to drive significant growth. The firm, for example, has grown from startup in 2010 to just under $69 million in assets under management today, with relationship investments ranging from $400,000 to $4 million.

The companies Hill Investments selects for investment don't have to score an “A+” in each socially responsible category, Hill says. But the firms must show strength in each one. “We're all about mitigating risks,” he says, describing an emphasis on assessing a public company's supply chain and other potentially dicey situations.

The trouble shoemaker Nike encountered over Asian sweatshops comes to mind, notes Hill. “With poor governance,” Hill adds, “over time you under-perform the equity markets.”

Socially responsible investing also takes into account a broader range of risks, including environmental, social and corporate governance practices, says Investment Adviser Association President and CEO Karen Barr. “We have seen studies that show taking those things into account can reduce overall portfolio risks,” Barr says.

The investment strategy, says Barr, is “growing like wildfire.”

Domestically, socially responsible investing has increased 33% the past two years, with $8 trillion in investment assets taking “these factors into consideration in some way,” Barr says. She puts the same sort of investments at $20 trillion worldwide. Technology, financial sector and health care stocks make up the bulk of many socially responsible investing funds.

Hill and Figurelli worked together as investment bankers in Naples for much of the previous decade before they created Andrew Hill Investments Advisors. “We had two clients — my dad and another one,” Hill says. “Neither paid well.”

But by the end of the first year they had nearly $20 million in assets under management. Now they have about 90 clients. They've kept their typical fee at 1%, despite the extensive analysis their investment advice requires, the partners say.

Hill gained his father as a client after getting him out of BP stock a year before the company's disastrous 2010 oil rig explosion and massive spill. The younger Hill did not like what he saw in his analysis of the oil giant.

“I noticed numerous environmental regulatory issues, including mounting legal issues with a refinery explosion that killed 12 people in Texas,” he says. “I saw this was a company with disregard for any kind of regulation.”

Figurelli says the firm's holistic approach, or what she calls the “whole package,” sets it apart. “We don't know of any firm in our footprint that practices this kind of investment,” Hill says.

About 10% of the firm's clients signed on after contacting the firm, hearing about its approach. The firm doesn't do much marketing, but Hill and Figurelli have raised its profile through involvement in conservation causes and community programs and projects. “A lot of people in the Naples community know what we're doing,” Hill says.

“We aren't very good at marketing and sales,” he adds. “But we are involved and present ourselves in a professional and respectable manner when opportunities come around.”