First Affirmative Financial Network, a Colorado Springs-based investment advisory firm that specializes in social, responsible and impact (SRI) investing, has been sold to its employees by financial giant Goldman Sachs.
The company, started in 1988, employs 18 people and works with about 70 financial advisers nationwide to manage or provide investing advice on about $1 billion in assets, making it one of the largest in the SRI sector. Goldman spun off First Affirmative last month as part of its $250 million acquisition of Folio Financial, a McLean, Va.-based company that provides clearing and custody services to investment advisers who work with institutional investors; Folo Financial acquired First Affirmative in 2016.
Employees are buying First Affirmative from Goldman during the next 10 years for an undisclosed price.
“We’re thrilled to reinforce more than three decades of values-based investment innovation with employee ownership that will help spread the First Affirmative approach, through unmatched enthusiasm and depth of experience and commitment,” First Affirmative CEO George Gay said in a news release. “We will grow our network of advisers and bring powerful, impactful financial management tools to more people.”
Gay hopes to more than double the number of advisers First Affirmative works with, to between 150 and 200, and triple the assets those investors manage or advise clients about to $3 billion during the next five to 10 years.
Folio’s acquisition of First Affirmative four years ago was designed to give First Affirmative the financial and technology resources to better compete in the financial services industry. Goldman decided to spin off First Affirmative after a strategic review of Folio’s operations, allowing First Affirmative to retain its specialized focus. Goldman will keep the annual three-day SRI Conference, which brought 800 people last year to The Broadmoor and was started by First Affirmative.
“We had agreed that First Affirmative and Goldman were not a good fit and looked at the various alternatives — we are better served by becoming independent. People in the sustainable and responsible investment community are very happy that we will be independent again,” Gay said Monday in a telephone interview. “We will still have a business relationship with Folio — they will be our custodian,” which physically holds securities for clients to prevent loss or theft.
SRI investment grew 38% between 2016 and 2018 to $11 trillion in assets, according to a report from the Social Investment Forum. Gay estimates the sector has grown at least that fast during the past two years, which would put its assets at more than $15 trillion.
First Affirmative creates SRI and environmental, social and governance investing models, builds portfolios for investment managers and creates analysis tools to help meet portfolio return benchmarks that are competitive with broader portfolios. Under employee ownership, the company is now is certified B corporation, a type of business that balances profit with a social purpose — in this case using “the power of capital to bring about lasting beneficial change, including stewardship of the environment and promoting social change” the release said.