Rally Assets, an independent, full-service, Toronto based firm discusses their transition from an impact investment consulting firm to a registered impact portfolio manager and advisory firm using capital as a tool for social and environmental progress. In this episode Kelly Gauthier, Managing Director & Partner, explains how they are using capital for impact and doubling-down on more capital to create change.

“We have investors relationships that we have completed and executed on the initial commitment, and all of those investors are moving forward to double down with more capital, they are all supremely engaged in the impact work that we are doing together and what they are trying to achieve from an impact perspective. Which is obviously what we need to grow the sector and to have a greater impact in the areas in which we are trying to create change.”

Kelly Gauthier, Managing Director of Rally Assets


Transcript of Interview with Kelly Gauthier

Jenelle:
Hello and welcome. Thank you for speaking with us today, Kelly.

Kelly Gauthier:
Thanks so much for having me.

Jenelle:
Today we have with us Kelly Gauthier, Managing Director of Rally Assets in Toronto and you can learn more about Rally Assets at rallyassets.com. So Kelly, the history of Rally is long and was previously another organization. I’d love for you to tell us a little bit about the origins of rally assets, how it came together and its mission and your role within it.

Kelly Gauthier:
Great, yes, I’m happy to. As you mentioned Rally Assets used to be Purpose Capital and that joint organization has a history of over 10 years at this point. I have been lucky enough to be part of this organization for most of that timeline and has seen it through a number of really interesting changes that both relate to the organization but also to the broader impact investing context. So we did change our name about a year and a half ago to Rally Assets and that was part of a rebrand post and acquisition. Our new CEO, not so new at this point of Upkar Arora purchased the firm from the original three founders of Purpose Capital about two years ago. And so in thinking about how we we’re going to take purpose capital forward, one of the big gaps in this sector was around asset management specifically for impact investing.

Kelly Gauthier:
And so as we sort of agreed and strategized around how to move into that space from a purely consulting organization we decided to do a rebrand and to signal to the market some of what we were headed for. And I’m pleased to say that at this point we have accomplished those goals. We have, you know, obviously executed our rebrand and our name change and we are now a registered portfolio manager and exempt market dealer which allows us to take assets in. So in terms of what we do and what the organization is all about, so Rally is an independent, full service impact only asset manager and advisor. And what that means in real plain language is that we have the privilege of helping investors to navigate this new and evolving space of impact investing. And that can mean from the beginning of their journey around understanding what impact investing is. How does this fit into the mix of what they’re already doing or their existing service providers. It can mean helping them to execute on that in terms of finding impact investments, doing the research and due diligence that goes along with that process and impact investments and then placing them in their portfolio and, and monitoring them over time.

Kelly Gauthier:
Obviously tied into that and you know, and is key in this space is we do a lot of impact measurement and management of that impact data. And so we’re able to work with clients in a number of different ways and really meet them where they’re at on their impact journey. In terms of how they execute and impact investment. My role specifically is I’m the managing director and like I said, I’ve had the benefit of being with the organization for a long time, working with investors over that period of time and spending a lot of time with clients whether those are individual investors and sort of sitting at kitchen tables and hearing how they feel about impact, what their challenges are and helping them to overcome those or whether it’s institutional investors like foundations, family offices and endowments, pension funds, and so sitting around those boardroom tables and investment committees. And that’s a part of my work that I really liked the best is really working with clients to help understand how to do things. So I’m responsible for our client portfolio, managing our clients and managing our team who services those clients.

Jenelle:
That sounds like you’re responsible for a lot, that’s for sure. And what’s really great to hear is that it seems like there’s a holistic approach with how you work with your clients. So the consulting services have continued on through the asset management and obviously the expertise has carried on throughout the company as well. You started to talk a little bit about how your favorite part of the role is that you get to work directly with clients directly. Can you talk or give us perhaps a stat or a metric that you feel like highlights the impact of Rally?

Kelly Gauthier:
Yes, so I can. We’re at this really interesting transition point in Rally’s evolution because we have this long history and sort of rich depth of understanding having worked with clients. We have a track record on the consulting side of our business, right? We’ve worked with over a hundred clients and help them to deploy about a half a billion in impact focused mandates. And so I think that speaks sort of to our history. But for folks that are familiar with financial services and financial management, becoming a registered portfolio manager means we have to start all over again in terms of building our track record. So as an asset manager, that piece is what we’re really in our first year of launching. And so it’s really interesting and I think I’m exciting to think about how we build up that track record of assets managed by us versus the extensive history we have of working with clients to help them deploy assets.

Jenelle:
Can you highlight for us, it’s interesting when that you’re operating almost like a startup in that you know, that you’re building a new track record. You’re getting the company re-established and of course you’re offering a different service offering as well. But can you speak to maybe even just over the last year and a half and tell us about an anecdote or a story that you feel like really reflects the impact of Rally?

Kelly Gauthier:
Well, I mean, I think the stories that I would lean on, you know, really relate to the investor journey. That’s where I spend most of my time and that’s what I’ve been, you know, been able to watch evolve, both with the pace of the industry in terms of learning about impact investing and as it’s grown tremendously over the last 10 years. I’d have investors, right? And so the clients that we work with, and you know, I can I can talk about a few sort of specifically, but it’s really emblematic of a lot of our investors and a lot of folks that are looking at impact broadly is they come to us with an interest. And there’s always an initial spark to that and an excitement around you know, knowing that this even exists and that this is a possibility and an option for them as they look at how they manage their portfolios.

Kelly Gauthier:
And then that journey kind of really transitions through lots of learning about really what does all of this mean and how does it play out in practice. Inevitably kind of getting over some hurdles around either misconceptions or myths that are out there around, the common ones that we’ve all heard around return, greenwashing, these types of things. So getting sort of the real speak around those pieces and then moving into execution. I think what is exciting for me is that we have investor relationships at this point that have had a long enough duration that we have completed and executed on sort of their initial commitment. And all of those investors are moving forward to double down with more capital. They’re all supremely engaged in the impact work that that we’re doing together and what they’re trying to achieve from an impact perspective. And so are super excited about committing more capital to it which is obviously what we need to grow the sector and to have a greater impact in the areas in which we’re trying to create change.

Kelly Gauthier:
So, one specific idea I can kind of walk you through. We have one investors high net worth individual who has her own family foundation. And so you know, she came to us with an initial idea around gender lens investing and wanting to do a gender lens portfolio globally and to think about how she could impact, but with a fairly narrow initial view, so how she could impact women and girls globally and sort of think through the challenges that they face. And so as we started from building that relationship over the last few years, as we started with thinking about what that looked like for her initially and educating her and then again, kind of going through that process of learning and deepening that piece, we’ve been able to open her up to you know, really such a so much more of a broader perspective on gender and how she’s doing it, not just in her impact portfolio, which is part of her overall portfolio, but how she’s including that into the rest of her investments.

Kelly Gauthier:
I saw her over the holidays and she came to me and said, you know what, I was so excited because I was at one of these cocktail parties with one of my big managers. And she said, had our service rep in the corner. And I started grilling him about gender lens investing and how they were considering gender and how they were considering diversity and inclusion in all of their portfolios. And did they have this in their research and were they measuring it and all this. And she was so empowered and excited about her agency because of the knowledge that she had to be able to go and have that conversation and help to move the needle with other managers beyond what she was doing with her impact portfolio. And I think we see that in lots of different ways that there’s there, there are so many avenues for continuing to press for impact and looking for sustainability, be that in gender or in another sort of thematic area.

Jenelle:
The concept of creating agency and empowering the individuals that you’re working with is really powerful because of course, you know, essentially what we’re talking about is the reallocation of resources towards more sustainable and environmentally friendly investments. And so it’s so great to hear that you’re creating individual agency within those individuals who have a lot of control over where money ends up being allocated. And of course empowering them to be able to individually be able to make those decisions and have that impact. It sounds like you guys are also having a significant impact on what most would consider a culture shift happening across the country. So that’s really exciting to hear.

Kelly Gauthier:
Yes, thanks. I mean, I really hope so. I think it’s certainly something that we think about a lot at Rally and that we recognize, right? We have a small footprint and a small business and obviously we’re trying to grow that and have as much impact directly for our clients and in our own backyard as we can. But I think the systemic changes that need to happen are going to take those ripples. And it does matter how individual folks act and how where they decide to to use their resources and then what they have control over. And so I think that does matter we’re constantly thinking about the system change perspective and how the small amount of work that we’re doing can help to influence that.

Jenelle:
That’s great. Speaking of system work to ensure this ties into your goals for the coming year. Can you tell us and our audience a little bit about what you’ve got for big goals coming up this year and how you plan on tracking this?

Kelly Gauthier:
It’s an interesting question to ask at this point. Obviously our goals have shifted in the midst of the crisis that we’re facing globally right now. But I think for impact investors and for those of us in the impact community, it’s really amplified the needs that we already saw. And so our business goals haven’t really changed, our impact goals if anything are clearer than they were a month ago. We are looking really for resilience, right? And what are the moments, what are we going to look like after this is all over? And what are the opportunities that are presented in this historic moment for pivots, for big pivots, right? The things that we’ve talked about being impossible to change and too entrenched and decades old systems that could never possibly be changed. Those things are all on the table right now. And there’s a lot happening.

Kelly Gauthier:
So if we think about you know, the climate emergency which is the other big emergency out there. There’s a lot happening right now in terms of how we decide to come back from this current economic and health crisis that has a huge implications in climate and how the systems have all shut down and the thing that we said could never happen. So how do we turn them back on? When we think about the government bailouts, what do those look like? What are the conditions attached to those that help move us towards a greener economy that helped move us towards more sustainable jobs and more security for those workers going forward?

Kelly Gauthier:
You know, and the same is true on social inclusion and inequality. We’re seeing, you know, potentially the first time that our cities will house all the homeless people on our streets, for the first time ever. And that innovation has come out of, you know, dire necessity. But what does that look like after that necessity is removed, after the health crisis is over. So I think impact investors are all, you know, wanting more than anything to be helpful and to help respond to this crisis in a positive way. These are the same trends and the same shifts that we’ve been talking about for years. But really this health crisis has shone such a bright light on some of the areas of our economy where there’s opportunity, where there’s the greatest need. And where we’ve seen amazing, fast and innovative responses that I really hope we can capitalize on through the rest of the year to try and make some big leaps and see what this looks like going forward.

Jenelle:
That’s such a bright picture that you’ve painted in terms of how innovation can happen specifically within social innovation across across the social sector. And of course what ends up happening is you see emergence, so outcomes that you weren’t necessarily expecting as a result of a crisis or even if something that you couldn’t have planned. So I’m sure a lot of what you’re speaking to in terms of the innovative solutions have certainly not only come from necessity and crisis, but also from some innovation in ensuring that those needs are met.

Kelly Gauthier:
I hope so. I hope so. I am hopeful and optimistic and we are certainly more committed to our impact thesis than ever. I think the world has seen a lot of what we’re, what we’re talking about and the need for doing this type of work and committing capital towards these types of solutions. So I hope you’re right.

Jenelle:
That’s great, I’m glad to hear that Rally is continuing to focus on business objectives for the year. I’m looking for more resilient and innovative ways to achieve those and still focused on a green economy. So thank you so much for speaking with us today, Kelly, and to all of our listeners out there, you can learn more about Rally Assets at rallyassets.com. Thank you.

Kelly Gauthier:
Great. Thanks so much for having me Jenelle. I really appreciate the chat.

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