Switchfoot Wealth is bringing financial planning into the 21st century, helping people, businesses and professional advisers make the most of their time and their money and make a difference in the world. I talked to Sebastian Elwell, Director, and he explained why he started Switchfoot Wealth and how he helps people – and the planet.
We are financial planners. Financial planning has a potential to change the world. It could pump money into solving the future. It’s often doing the exact opposite and pumping money into the things that we must stop doing. Like it or not, we live in a capitalist society and financial planners have a role in pulling the capital lever. If you pull it hard enough and shift enough money, then dramatic things can happen. Most of the time the biggest lever that most people can pull is who they bank with and how they invest their money. It can go beyond who you bank with, how you invest and how your pension is invested. What Switchfoot Wealth have done is written a theory of sustainable financial planning.
A financial plan is a model of your financial future. You look at a client’s income, expenditure, assets, liabilities. You model how their financial world will change based on foreseeable changes in their life, and you see whether they have got enough money or not. Financial planners use assumptions that project into the future, using patterns based on the past. But the future’s not going to look like the past, and those forward-looking assumptions are not going to hold true in all climate scenarios.
Climate change is going to happen. There are things that we can do to adapt to climate change. If that adaptation is going to have an impact on your income, expenditures, assets, or your liabilities, then it should be part of your financial plan.
If it is not okay to live in a world much hotter than +1.5° then it should not be okay to invest for a world that is that hot. We are on course for 3°/ 4° increase by the end of this century. If that’s what the economy is driving us towards, the average fund (which tracks the economy) is investing for that increase. The only way we’re going to stop that is to take the money out of those funds and put it into funds that are investing for an increase that is closer to +1.5°.
Financial planners should be talking this through with their vulnerable clients. There are only a few of us at Switchfoot and we can’t influence all advisers. Our theory of change is to find the people that set the rules of the game; to influence them and get them to change the rules. Consumer duty has a cross-cutting principle of avoiding foreseeable harms. What could be more foreseeable than climate impact?
How do we get that change? Lifelong learning is one of our values. Being highly qualified means it’s harder for people to dismiss you. Winning awards helps too. We were awarded the PFS Retirement and Later Life Specialist of the Year Award. That gave me a platform to talk about climate in the profession and it led to an invitation to join their steering committee on sustainability. Now, my theory of sustainable financial planning has a voice within that committee. Hopefully we can start building that into advice standards. Once it becomes a model of best practice, the next step will be to make it a minimum acceptable standard.
So, our mission is to make sustainable financial planning the default, and to be a force for good in our clients lives so that they go on to be a force for good in the world.
What qualities do you think are really important in a leader?
Values are key and being able to articulate them clearly is important. Our core values drive all our decisions.
For example, when we’re thinking about recruitment; if a person’s values align with ours and they are inspired by the mission, then they require a lot less leadership and they are self-motivating. My job is just facilitating. If people are on board with the mission, people will just fly.
What do you see as the big challenges coming up for B Corp leaders?
I think challenges are going to be faced by all businesses.
B Corps will be in a far better place to deal with them. We either build a nature-positive, regenerative, low carbon economy of the future or global agriculture collapses. A B Corp company is more likely to do that.
If you ask why does your business exist, we all need to come up with a better answer than ‘growth’. If we rethink the point of business; it can be about serving some other need. That’s something that big business needs to learn from small business.
Sometimes it’s okay just to have a nice little business that produces a profit and allows you to have a nice life. Financial planning helps define what a good life looks like. The challenge for us is to work out how a person defines a good life. It is more than just “this is what I want to consume”. I’ve never met a consumer. I’ve met people. The most important thing about a person is not their consumption patterns. They are much more interesting than what they buy. Yet our economic language reduces them to the ‘consumer’.
People are at the core of this. What it means to live a good life and then plan your finances around that life rather than have your finances plan what you can do in life. We need to flip it the other way, so that people are at the heart of it.
What would your advice be to new leaders in B Corps?
One of the most successful strategies is to focus on the impact that you want to have.
It comes back to examining what our default biases are. They can show you the levers that you want to change. In my industry we have this default bias that is “traditional investing”, that ignores sustainability. Sustainable investing is presented as the moral outlier choice. That bias is an industry ingrained one, yet ‘traditional investing’ should be renamed. We should call it ‘unethical, irresponsible or unsustainable investing.’
Sustainable investing is currently viewed as a moral outlier choice. The subtext is that “there must be some kind of cost associated with it, or it must be high risk or low reward.” If you switch that default so that a portfolio aligns to a survivable future, then that lowers risk. Make that the default and turn the current unsustainable choice into the moral outlier choice.
That’s why we called the business Switchfoot. It’s a term from board sports. You have a preferred way of standing on a board. But if you jump round, you’re now taking a switch foot stance. You’re looking in the other direction and that can be hard and unbalanced at first.
You will never achieve expert level unless you master riding your board switchfoot. It’s all about taking a new stance on things to get you to the next level.
You can get in touch with Seb here.
Lucy Chaplin is a Leadership Coach who helps B Corps unleash full leadership potential. She works with new leaders and managers to build performance and lead with confidence, giving them all the tools they need to amplify their impact. Her bespoke IMPACT model guiders new team leaders through the six stages of effective management. You can find out more on her website or book a free discovery call here.
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