Ruth Sturkey on B-corp status and the value of financial education
A few weeks ago we published the first part of an interview with RUTH STURKEY, one of the key figures within the financial planning community in Britain. Ruth sat down to talk to Regis Media founder ROBIN POWELL about starting up her planning business, Red House Consulting, and later merging it with Bristol-based Paradigm Norton.
In this second part of the interview, she explains the complex but rewarding process of achieving B-corp status with Paradigm Norton, elaborates on her championing of financial education in schools, and talks about the changing status of women within the financial services industry.
RP: Ruth, Paradigm Norton has recently achieved B-corp status. For those who don't know, perhaps you could explain exactly what that is?
RS: A B-corp is a business that publicly declares that it will consider three things in the way that it does business. Instead of just following on from the Milton Freedman diktat of 50 or so years ago that the sole purpose of a business is to generate profits to its shareholders – a B-corp changes its articles of association to say that it will consider people and planet, as well as profit, in all its decision making.
People will often say “well, a business still needs to make profit” - and we’re not saying we don’t have to make a profit; we just want to be more considerate about how we do that. Whether that’s looking at supply chains, whether that’s looking at our investment strategy, whether it’s the way that we operate as a business, or our carbon emissions, etc.
Why did you feel that that was worth pursuing for your business?
I think it was in about 2015/16, so just before the Red House joined forces. One of our directors was talking to a client who was the founder of Cook – they’re frozen food specialists, and were one of the very first B-corps. Richard was listening to this guy talk, and thought “Blimey, I don’t know what that is but I need to look into it because it sounds right up our street!”
The more we dug into it, the more the general consensus was that this just sounds like a really Paradigm Norton type of thing to do. The interest started to grow and we’ve been a B-corp now for about 18 months, and we started the process probably about 12 months before that.
What did you have to do as part of that process?
It’s quite an in-depth process, and it does really make you stop and think. We all tend to think we’re doing the right thing: that we’re making good decisions, that we’re the “good guys” – and we all are until we’re asked very specific questions! “Have you actually documented that policy and procedure? How does it genuinely show up in your business?”
So it was a real learning process and I think we’re very much at the start of that journey. You have to get 80 out of 200 points to become a B-corp, and I think we got about 86. We scraped a pass! But (a) we’ve got our foot in the door, and (b) we want to do better. We’re naturally competitive as a firm, in a positive way, and we now have a whole bunch of people who we call our B-keepers, who are working on really trying to further our score in this area. There are some quick wins; I think carbon footprint points are the key ones – let’s get green energy into the business, let’s try to cut down on business mileage (COVID aside), let’s think about what kind of questions we’re asking of our suppliers…
It’s fascinating and what I really like about the whole B-corp idea is this ripple effect. We’ve had suppliers already, where we’ve said: “tell us a little bit about diversity and inclusion in your staff?” or “how do you pay people? Are you paying at least the National Living Wage?”, etc. and it’s making other people stop and think. So I think business is well-positioned to help drive the change that, hopefully, government will get to.
You run educational workshops in schools; what inspired you to do that, and how are the children benefiting?
This is quite an early-stage project for us at the moment and I think we, as a business, are acutely aware of the lack of general knowledge amongst the public around their own finances and the decisions that they should be making. We’ve got a genuine belief that, if you can try to educate children or teenagers or young adults before they go to university, then that’s the time to try to ingrain some good habits.
I think, for kids, it’s quite abstract to talk about money. What we’re trying to do is to help children think about budgeting. That is very un-glamorous, but it is important to teach them that there isn’t a money tree that you just shake, that you have to have less going out than you have coming in, that you need to notice where you’re spending money… and just general awareness, for instance, about when credit cards can be useful and when they can actually become quite a dangerous thing.
To say we’re experts in this field would be inaccurate, but we are trying to impact as much as we possibly can. We have also worked alongside the PFS and their My Personal Finance Initiative (formerly known as Funding for Futures). What I observe is that there are lots of firms, and lots of individuals, that would love to help in this space; and my vision is that we should collaborate and do the work as one – rather than Paradigm Norton maybe having a way of doing it with schools in the Bristol or London area, and maybe Rock Wealth having a way of doing it in Cheltenham, and another firm having a way of dealing with it in the Midlands.
Whether we do that through collaborating more with the likes of the PFS, or the Money Charity, or something else; I just feel that it’s a little fragmented at the present moment, and I’d like to see thought and change going into that.
I’d like to talk about diversity: we have far too few women in the advice profession. How, in your view, serious a problem is that? Do you think things are improving?
I definitely think things are improving. I’ve seen changes over the last 20 years: there are a cohort of women who are visible, and their voices are heard. I’m thinking about social media, and the conversations that are now starting.
However, I do still think we’ve got a way to go. It’s really interesting because I think you can sometimes sit in an echo chamber and think, “well, I know a bunch of female business owners, or senior women that are confident, articulate, that are doing well,” but you kind of step slightly outside of that and you realise that that isn’t the truth. I think that that is more the nub of the issue.
I was part of a Facebook group session a few months ago run by Charlotte Wood, who set up a Women in Finance Facebook group: there were about 30 women on the call, and I was quite staggered at the lack of confidence. That was a strong thing that came through to me about self-worth, confidence, those feelings of being an impostor, not feeling good enough… I think there’s a long way to go, but let’s not be too down on it! I think there are positive steps being made, and I think firms are becoming much more conscious of what they’re missing out on by not letting women in the right seats.
I do still find though, even at my age and with my experience of running a business, there are still forums that I will sit in where I’m the only woman or where a female voice just doesn’t seem to get heard. A white middle-aged man can say something that suddenly everybody thinks is a good idea, but it’s exactly the same ideas as I was articulating. That’s frustrating, and I know that to be true across sectors from talking to friends. We’re making progress but there’s a way to go.
In the news, we’ve seen that Neil Woodford is planning something of a comeback. What do you make of that whole business? What damage do you think it has caused to the profession and the wider industry?
I’m not sure that I’m the best person to answer this question because, as an evidence-based investor, I kind of switch off to the noise. However, back in the day when I still thought active management was the way to go – everybody knew of Neil Woodford from Invesco Perpetual, the Income and High Income fund; and they did seem to be always performing incredibly well, and to be the right fund to be with.
Obviously, back then Neil seemed to have the Midas touch and launched his own funds but, as I understand it, the shape and the flavour of those funds started to change quite significantly. Any financial adviser or planner who was doing their investment due diligence would have noticed how those funds were changing – the consolidation, the lack of diversity, the high propensity to smaller companies. That should have been clanging big bells if you’re offering advice to your clients. You should know what’s under the bonnet, you should make sure that the client is aware of the risk.
Then, there are the large D2C platforms that featured Neil Woodford and his funds, and it seemed to just be a never-ending merry-go-round of people who just wanted some of Neil Woodford’s funds. So – not to have a go at Neil Woodford per se – but, to my mind, any adviser should have made it clear to their clients what they were invested in. Platforms should know better if they’re giving out information to the unassuming general public about what they’re buying. So I think there are a number of people to ‘blame’ for what’s gone on.
Does it injure us as a profession or as an industry? I think it damages the wider industry, but I’d like to think that it actually makes the public more aware that they do need to make sure that they’re getting decent advice, and then they’d be able to steer around some of these blow-ups.
If there’s one piece of advice that you would give to a young person starting out in the profession, or who maybe wants to set up their own advice business, what would be your advice to them?
I think it would be: really stop and have a good long think about what is important to you. What are your own personal values? What is your vision, not only of what good financial planning might look like, but of where you would like to see your own career going? Who are the people you want to go to work with everyday, or be on a Teams call with everyday?
Then ask yourself: are you actually getting that in your own business? Now, there are two sides to that: as employees in firms, we often think we don’t have a voice, and I would always recommend going to talk to your team leaders, bosses, managers. Identify and talk about what you see, and why you feel that that maybe isn’t serving the business as much as it might. Now, you’re going to get one of two answers: you’re going to get listened to and maybe some progress will be made, or you’re going to get short-shrift and told to get back in your box.
Either is fine, because you’ll know where you are; and I think if you’re getting the latter then I would start to look around and identify the types of businesses that you would like to work for. What are the key criteria that those businesses should have? For instance, I know for a fact that we’ve attracted new talent recently because we’re a B-corp. I don’t think we always knew that that would be the outcome, but that’s interesting to know.
I think you should know your own currency: it’s a given that you’re going to get yourself qualified and get all the technical stuff, but be a sponge! Absorb everything you see, join things like Next Gen Planners, look at things like the PFS Power website, or the stacks of materials being put forward for new planners to learn and grow. Really hone your art, but don’t be afraid to speak up. I know that’s easier said than done, but that would be my advice.
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