Mindset more valuable than skillset when it comes to a career in social finance

There’s no shortage of people with the skills to make social finance successful, but attracting them to the field can be challenging, say those in the sector.

“We try to be a fair-wage employer and pay our employees the best we can, but we don’t pay traditional finance sector wages,” said Mary Warner, co-executive director at Tapestry Community Capital. 

“And so, I think that has been a challenge for us to attract the right kind of talent.”

If people plan to move from traditional finance work to social finance work, they should be prepared for the possibility of a substantial salary reduction, she said.

“They need to be really committed to the cause,” Warner said.

Lars Boggild, a portfolio manager at Rally Assets, believes working in social finance is more about having the right mindset than the ideal skillset.

“It’s a sector that lends itself to individuals comfortable with a bit more complexity,” he said. 

“It’s a question of being able to work in different dimensions — risk, return and impact — all at once, all the time.”

Impact investing or social finance is designed to generate financial returns while creating positive social impact. 

Navigating the trade-offs between those goals can be challenging, said Boggild.

However, Liz Simmie, co-founder of Honeytree Investment Management, said the most significant barrier to working in the social finance sector is the sector itself.

“There are tons of qualified people out there, but I think the industry is exclusionary,” she said.

There’s an expectation that people need a finance degree from a prestigious university, Simmie said, which isn’t the case and can perpetuate a lack of diversity.

An overreliance on nepotism also robs Canada’s growing social finance sector of innovation and talent, she said.

“If you’re trying to find a role in the industry, you have to network your way in,” she said. 

“You don’t need to be a member of the right golf club, but the reason the kids at the right golf club get hired is because their parents are part of the network and an owner or a portfolio manager.” 

Warner said that increasing awareness of social finance and its impact on communities and organizations would help draw more people to the industry.

“What’s holding the sector back more than anything is the knowledge base about community finance or social finance,” she said. 

“So I don’t know that there’s a skills shortage in this sector, but I think there’s a big knowledge gap.”

Transferable skills the solution to finding new talent

What Tapestry looks for when hiring new talent is transferable skills, Warner said.

“We’re looking for people who are comfortable with numbers. They don’t necessarily have to have a math background, but they do need to be comfortable with understanding basic numbers,” she said.

“We’re also looking for people who can problem solve on their own,” Warner said.

New hires, no matter how skilled, spend their first four to six weeks on the job just learning about social finance and community bonds, she said.

Most business schools focus on conventional, for-profit finance, meaning most graduates aren’t well-versed in alternative models.

“But I do think studying business administration is not a bad choice,” Warner said.

“And, if you want to work in the numbers processing or transaction processing side of social finance, some kind of accounting designation or a bookkeeping degree might be a path into the sector.”

 “It’s a sector that has many entry points,” Warner said.

Boggild said apprenticeship-style learning offers many benefits to those looking to enter social finance, particularly because post-secondary institutions don’t often gear their business courses towards impact investing or social finance.

Funds and asset managers should also look beyond finance when searching out skilled employees, said Simmie.

“Why aren’t we hiring more social science grads? Why is there this belief that everybody has to be a finance grad?” she said.

“There are tons of very successful social science or STEM folks in the industry who stumbled into the sector … we should be recruiting beyond traditional business programs.”

Necessary competencies also vary by role and objective, Boggild said.

“The skills someone needs to be a really strong lender versus a really strong equity investor often aren’t identical … because the ideal outcome for someone in those two seats is actually quite different.”

However, social purpose organizations also need to acquire skills and increase their understanding of social finance if the industry is going to reach its full potential.

“In terms of skills shortages impacting the social finance sector, we often hear from peers and partners the need for investment readiness support,” said Smitha Das, director of mission and impact investing at World Education Services.

Few social purpose organizations explore building sustainable business models, allowing them to tap into investment dollars, she said.

“There needs to be more clarity and support on how to tap into the social finance ecosystem and better coordination between stakeholders,” said Das.

Social Finance Fund wholesalers are offering organizations some investment readiness support, she said, but there are still gaps in the market.

“Another need we’ve seen and heard in the sector is the need for more builders and less investors,” Das said. 

“In other words, more impact investing shops need people on their investment and portfolio management teams that know how to build and scale businesses alongside the skills to diligence and structure investments.”