Recently, I interviewed Gloria Nelund, Chairman and CEO of TriLinc Global, LLC—a private investment company dedicated to creating a global platform for impact investing through alternative investment funds. With the launch of a $1.25 billion Global Impact Fund for “mainstreet” retail investors, TriLinc will help businesses in developing countries create jobs, grow the middle class and generate measurable positive impact. While many organizations focus on micro-enterprises, TriLinc concentrates on providing growth capital to the “missing middle” – established small to medium sized businesses in stable, emerging markets.
Gloria spent 30 years on Wall Street as one of the most successful and visible executives in the international investment management industry. After retiring from Deutsche Bank as CEO of their $50 billion North America Private Wealth Management division, she co-founded TriLinc Global; a private investment company dedicated to creating impact investment products that will attract significant private capital to help solve some of the world’s most critical issues.
Gloria’s background includes significant expertise in the creation, management and distribution of investment products for institutional, HNW and retail investors, including the support and development of an early Socially Responsible Investing (SRI) product for HNW investors at Scudder Investments and multiple programs for Deutsche Bank’s HNW investors to participate in the development of the microcredit industry.
Gloria currently serves as an independent trustee on the board of the RS Investments’ $22 billion mutual fund complex, sits on several not-for-profit boards and actively supports entrepreneurship research and education through the Massachusetts Institute of Technology, including as a MIT guest lecturer.
Rahim Kanani: How would you describe your initial connection to the world of impact investing, and was this connection by choice or by chance?
Gloria Nelund: Definitely by choice. I have always been a big believer that the key to economic growth and environmental sustainability is a thriving middle class and that the critical driver of a successful middle class is “responsible” small and medium-sized businesses. Further, I believe and have experienced that companies who strive to balance the needs of all of their stakeholders and run their companies responsibly, in the long run will outperform those that don’t. It all comes down to people – people want to be productive, self-sufficient and have meaning and purpose in their work and will work hard to achieve goals given the opportunity, and people want to be treated fairly (as customers, as employees, as vendors and as shareholders). So, if you can tie all of that together by investing in “responsible” companies you can create jobs, pay fair and increasing wages, raise the tax base for the community which leads to more/better infrastructure (water, energy, roads, transportation, etc.), more/better education and healthcare systems.
So, after I make that statement, I am often asked about my view on aid and development. And, just for the record, I am an active supporter of philanthropy – there is no doubt that aid and charity play an important role in solving social problems, particularly in emergency relief situations, but there is a point when commerce needs to replace aid and I think we often miss that tipping point. If we don’t eventually set up the systems for people to begin to productively provide for themselves and their families, we create a dependency on aid that leads to unintended consequences and rarely results in long-term sustainable impact.
Rahim Kanani: While at Deutsche Bank, how did you steer the organization to become an institutional supporter of microcredit?
Gloria Nelund: When I joined Deutsche Bank, they were already involved with microcredit through an effort being led by Gary Hattem, the President of the Deutsche Bank Americas Foundation and Head of Community Development. As Head of Private Wealth Management for North America, I was invited to serve on the Board of Deutsche Bank Americas Community Development Group and initially learned of microcredit through that activity and became a big supporter of the Bank’s efforts in that area. Additionally, Steven Rockefeller was part of my wealth management team in New York and he was very involved with microcredit and Grameen Bank.
Ultimately, working with the Women’s World Bank and Steven, I began to host educational events on microcredit for our Wealth Management clients. Initially, we incorporated a presentation about microcredit in some of our premier New York events, like our private viewing of the Guggenheim and then eventually, as interest grew, we developed special panels and discussions at our Wealth With Responsibility events across the U.S.
Rahim Kanani: Similarly, while at Scudder–now part of Deutsche Bank–you were also a pioneer in the development of Social Impact products for institutional and high net worth investors. What was the motivation behind your efforts and how did you manage to build organizational allies towards this very new type of venture?
Gloria Nelund: At Scudder, there was a small investment team who had developed a Social Responsible Investing (SRI) product at the time when SRI was still a very new concept. One of the investment counselors in my group, Scudder Private Investment Counsel, began to use the same screening tools and investment style for a few of his private clients and was having good success for his clients who were interested. Going back to my initial comments about my long held beliefs about what makes a good investment, I was a huge supporter of this whole concept and supported the development of a new product for our whole private client group.
Eventually, we were able to develop systems and research to really grow the SRI investment style, including a composite so that we could track the performance of the SRI product. Ultimately, after the acquisition of Scudder by Deutsche Bank, I sold some of the Scudder private client offices to Legg Mason. Our team that was managing the SRI product was part of that sale and is now a very successful part of the Legg Mason SRI team.
Rahim Kanani: What was the “aha” moment that led you to want to launch TriLinc Global and create a global platform for impact investing aimed at main-street retail investors?
Gloria Nelund: After I retired from Deutsche Bank in 2005, I began to get more involved in philanthropy and make some private investments but I realized that it wasn’t really fulfilling enough. In 2007, I was invited to join the mutual fund board at RS Investments, a $22 billion mutual fund company. After my first meeting, I realized how much I really love and missed the investment business and so I knew I wanted to do something more. I then focused on trying to figure out a way that I could use all of my experience, skills and contacts to do something good. Impact Investing was not yet an “industry” but there were obvious trends that caused me to start interviewing a number of private equity funds that were focused on “social good.” The consistent theme from all of the funds I spoke with was lack of access to capital. It was really then that I had the “aha” moment of how I could help the industry move forward.
I spent my whole career in investment management and over my 30 years, I had created, managed and distributed investment products in all channels (Institutional, High Net Worth and Retail) and know what the issues and challenges are of attracting capital in all of them. What I decided would be the most helpful to the industry was to create a big success story – a big fund with broad distribution and visibility. That was my first thought for creating a retail Impact fund for non-accredited investors. Also, knowing the issues and challenges of product distribution in the Institutional and High Net Worth channels, a retail product made even more sense. The next step was to test my idea and so I went to friends in the industry who sell products through the retail channels and literally said “if I can create this Impact product for retail investors, do you think you can sell it.” The response was overwhelmingly positive so that is when I launched TriLinc Global and began the journey of developing the product, figuring out registration and distribution, creating a team, and so on.
Rahim Kanani: Looking back on your experience as CEO of the U.S. Private Wealth Management Division at Deutsche Bank, for which you held fiduciary responsibility for more than $50 billion in investment assets, what are some of the leadership lessons you’ve learned that you’re now putting to work at TriLinc Global?
Gloria Nelund: Wow – there is so much that I learned. Here are a few things I can think of:
* It is important for the organization to have a purpose beyond just bottom line profitability. One of my major undertakings at Deutsche Bank was to integrate Deutsche Bank’s Private Bank with the three wealth management firms that had been acquired (Scudder Private Client Group, Alex Brown Private Client Group and Bankers Trust). By then I had long been a believer in having organizational purpose and getting employees involved at every level but I had also just read the book “Good to Great.” So, as my team and I set out to develop integration plans, we took time to work through and develop a purpose of serving our clients that everyone could rally around and get behind and then worked with an organizational consultant to implement a change management plan that involved everyone at all levels of Private Wealth Management. The integration was successful, but I was also able to see first hand the importance of having purpose. So, the first thing I worked through with my TriLinc partners was clearly defining our purpose as a company, and TriLinc’s purpose is “to change the world through impact investing.”
* Communication is critical. I have always been a strong advocate of open and honest communication but my experience at Deutsche Bank just reinforced that belief. I had the benefit of working for a German organization and a Swiss German boss, Pierre De-Weck. I think the German culture is much more open and direct, which ultimately is more efficient and productive. During our integration, as part of the change management program, our organizational consultant took our teams through an exercise called the “red/black” game that demonstrated how lack of communication is often very destructive because in the absence of information, people make stuff up. So, one of my biggest requirements for our TriLinc team is open, honest and direct communication.
* Always do the RIGHT thing. In every situation, if you step back and objectively look at any situation, you can figure out what is the “right” thing to do. Recently, I had the opportunity to participate on a panel with Ralph Larsen, the former CEO of Johnson and Johnson. He is a public company CEO who I’ve always admired for doing the right thing, even when the short-term financial consequences appear to be devastating. In the end, it always pays to do the right thing. It is a practice that I apply in all areas of my life, not just at TriLinc.
* Be genuine and sincere and care about others.
* Always play fair – even when no one else is.
Rahim Kanani: Coming from a career in executive management at financial institutions, and now having moved into the world of impact investing, how would you sell the promise and potential of your new found work to your former executive peers in traditional finance?
Gloria Nelund: Actually, I find myself doing that all the time. Most of my friends are still in the traditional investment world and I am always talking about Impact Investing. What I usually say is that Impact Investing is the same as what they do today but with a concentration on creating impact and that impact is usually focused on Economic Development, Environmental Responsibility and/or Social Impact. Then, I give them some tangible examples of investments that achieve both commercial financial returns and significant impact.
I also talk to them about the importance of using mainstream approaches to process, strategy, product development, distribution and management to be able to attract and deploy capital at scale to have significant impact. Since it is no different than what they are used to, they start to get the picture.
I also focus on the fact that while there is a broad spectrum of impact investment styles, market-rate financial returns and positive measurable impact are not mutually exclusive. That usually is what gets their attention, because, after all – who wouldn’t want to be able to utilize their same experience, talent and skills and “do good.”