Issue 30: 2015

Insights

In Conversation With Ron
And Stephanie Cordes

The co-founder and vice chair of the Cordes Foundation — who also happen to be father and daughter — discuss impact investing, second acts and millennials with Jackie VanderBrug, co-chair of the Impact Investing Council at U.S. Trust.

Photograph by Mackenzie Stroh

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After 25 years as a financial advisor, Ron Cordes sold the company he co-founded, using the proceeds to create the social impact–­focused Cordes Foundation with his wife, Marty. Later, in early 2014, their daughter, Stephanie, left a career in the fashion industry to join the foundation. Ron and Stephanie recently discussed the family-owned endeavor with Jackie VanderBrug, co-chair of the Impact Investment Council at U.S. Trust.

Jackie VanderBrug: Thank you both for joining
us today to discuss the Cordes Foundation, which
we’re very proud to have as a client of U.S. Trust.,
Ron, why don’t you start by telling us about why you
and your wife, Marty, created the foundation?

Ron Cordes: I was 47 and had spent 25 years at AssetMark Investment Services, the financial firm I’d built with two partners. I sold the business and was looking to do something more purposeful as a kind of second act in my career. Marty and I had always been interested in philanthropy, and we started the foundation in 2006 as a way to take some of the proceeds from the sale and “give back” by offering grants to help address social needs.

The foundation’s portfolio is fully committed
to impact investing, but it didn’t start out that way, did it?

Ron Cordes: That’s right. In 2007, we had a 20% allocation to impact investments. In September 2008 — when the Great Recession hit — we were surprised to find that the impact allocation was among the best performers in the portfolio. So, as investors we made a rational decision, allocating more — 30% and later 40% — to impact. Then subsequent to Stephanie’s joining the foundation last year, we committed to investing fully in the impact area. We also added a special focus on empowering women and girls — or investing through a gender lens.

Stephanie, in 2014 you left a blossoming career in the
fashion industry to join your parents in the foundation.
What prompted the move?

Stephanie Cordes: When I was younger, I never thought I would have any great involvement in the foundation. After I graduated college, I got my dream job at a fashion magazine in New York. I’d been there for about a year when I attended the foundation’s annual poverty alleviation retreat in Mexico, and that really opened my eyes. I met so many fellow millennials who were focused on solving global issues and passionate about their mission. I went back to work, and it just didn’t seem quite as fulfilling as it once had. I’d be reviewing items of clothing and wondering how the workers who produced them were being treated.

Did you talk to your parents
about your reflections?

Stephanie Cordes: Yes, I told them I wanted three things in my life: To learn something new every day, to know that I was making an impact and to enjoy what I was doing. When they offered me the opportunity to work at the foundation full time, I was ready to jump in.

Ron, how do you balance impact and return,
or grant-making and investing?

Ron Cordes: We try to look at it holistically. How can we leverage our grant budget and our investment portfolio? Since our investment portfolio is 100% committed to having an impact, it requires us to be much more rigorous and disciplined, because we have to look 20 years down the road. In order for the portfolio to be here, and for the foundation to still be making grants, we need to ensure we’re making good investment decisions today.

How do you approach different asset classes?
Do you favor some over others?

Ron Cordes: Our allocation is typically about 60%–65% equity with the balance in debt. Our investments can be public or private and range from secure debt all the way to earliest-stage equity in new companies. With new companies, a major concern is the level of risk we’re taking on with the investment.

Stephanie, transparency is expected in both
traditional investing and impact investing to
a far greater degree than it used to be. Why do
you think millennials find that appealing?

Stephanie Cordes: My generation has grown up using the Internet and social media, so I think it’s easier for us to find out the social and environmental impact companies are having. When we find those whose values are aligned with ours, we’re more likely to buy their products or invest in them.  

Ron Cordes: With regard to investing with the goal of changing lives, I think many in my generation are still asking, “Why should I invest in that way?” Millennials are asking, “Why shouldn’t I invest in that way?” of these issues.

Stephanie, could you tell us a little about what
you’re doing in the ethical fashion space?

Stephanie Cordes: Fashion is a roughly $1.5 trillion industry that's largely female-dominated and affects millions of lives. Unfortunately, there are serious issues in the industry, including sex and labor trafficking. I’ve been working with several non-profit groups and investing in for-profit social enterprises that empower artisans around the world and connect them directly with retailers, which we hope will help address some of these issues.

How has it been working with
your parents?

Stephanie Cordes: It’s exciting because I get to offer them ideas and learn from them. It’s funny, at conferences people would sometimes see my name tag and ask, “Oh, you’re Ron and Marty’s daughter?” And my dad would say, “One day people will be asking me, ‘Oh, you’re Stephanie’s father?’” And that’s actually started to happen.

Ron Cordes: There’s nothing cooler than when someone says to Marty or me, “So, are you related to Stephanie?” And we’re very happy because we didn’t push her into this. She made the decision for the right reasons and that was what made all the difference.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those of U.S. Trust or its personnel. Any of their discussions concerning investments should not be considered a solicitation or recommendation by U.S. Trust and may not be profitable.

Past performance is no guarantee of future results. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Fixed Income Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments, and yield and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop, and vice versa

International International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility.

After 25 years as a financial advisor, Ron Cordes sold the company he co-founded, using the proceeds to create the social impact–­focused Cordes Foundation with his wife, Marty. Later, in early 2014, their daughter, Stephanie, left a career in the fashion industry to join the foundation. Ron and Stephanie recently discussed the family-owned endeavor with Jackie VanderBrug, co-chair of the Impact Investment Council at U.S. Trust.

Jackie VanderBrug: Thank you both for joining
us today to discuss the Cordes Foundation, which
we’re very proud to have as a client of U.S. Trust.,
Ron, why don’t you start by telling us about why you
and your wife, Marty, created the foundation?

Ron Cordes: I was 47 and had spent 25 years at AssetMark Investment Services, the financial firm I’d built with two partners. I sold the business and was looking to do something more purposeful as a kind of second act in my career. Marty and I had always been interested in philanthropy, and we started the foundation in 2006 as a way to take some of the proceeds from the sale and “give back” by offering grants to help address social needs.

The foundation’s portfolio is fully committed
to impact investing, but it didn’t start out that way, did it?

Ron Cordes: That’s right. In 2007, we had a 20% allocation to impact investments. In September 2008 — when the Great Recession hit — we were surprised to find that the impact allocation was among the best performers in the portfolio. So, as investors we made a rational decision, allocating more — 30% and later 40% — to impact. Then subsequent to Stephanie’s joining the foundation last year, we committed to investing fully in the impact area. We also added a special focus on empowering women and girls — or investing through a gender lens.

Stephanie, in 2014 you left a blossoming career in the
fashion industry to join your parents in the foundation.
What prompted the move?

Stephanie Cordes: When I was younger, I never thought I would have any great involvement in the foundation. After I graduated college, I got my dream job at a fashion magazine in New York. I’d been there for about a year when I attended the foundation’s annual poverty alleviation retreat in Mexico, and that really opened my eyes. I met so many fellow millennials who were focused on solving global issues and passionate about their mission. I went back to work, and it just didn’t seem quite as fulfilling as it once had. I’d be reviewing items of clothing and wondering how the workers who produced them were being treated.

Did you talk to your parents
about your reflections?

Stephanie Cordes: Yes, I told them I wanted three things in my life: To learn something new every day, to know that I was making an impact and to enjoy what I was doing. When they offered me the opportunity to work at the foundation full time, I was ready to jump in.

Ron, how do you balance impact and return,
or grant-making and investing?

Ron Cordes: We try to look at it holistically. How can we leverage our grant budget and our investment portfolio? Since our investment portfolio is 100% committed to having an impact, it requires us to be much more rigorous and disciplined, because we have to look 20 years down the road. In order for the portfolio to be here, and for the foundation to still be making grants, we need to ensure we’re making good investment decisions today.

How do you approach different asset classes?
Do you favor some over others?

Ron Cordes: Our allocation is typically about 60%–65% equity with the balance in debt. Our investments can be public or private and range from secure debt all the way to earliest-stage equity in new companies. With new companies, a major concern is the level of risk we’re taking on with the investment.

Stephanie, transparency is expected in both
traditional investing and impact investing to
a far greater degree than it used to be. Why do
you think millennials find that appealing?

Stephanie Cordes: My generation has grown up using the Internet and social media, so I think it’s easier for us to find out the social and environmental impact companies are having. When we find those whose values are aligned with ours, we’re more likely to buy their products or invest in them.  

Ron Cordes: With regard to investing with the goal of changing lives, I think many in my generation are still asking, “Why should I invest in that way?” Millennials are asking, “Why shouldn’t I invest in that way?” of these issues.

Stephanie, could you tell us a little about what
you’re doing in the ethical fashion space?

Stephanie Cordes: Fashion is a roughly $1.5 trillion industry that's largely female-dominated and affects millions of lives. Unfortunately, there are serious issues in the industry, including sex and labor trafficking. I’ve been working with several non-profit groups and investing in for-profit social enterprises that empower artisans around the world and connect them directly with retailers, which we hope will help address some of these issues.

How has it been working with
your parents?

Stephanie Cordes: It’s exciting because I get to offer them ideas and learn from them. It’s funny, at conferences people would sometimes see my name tag and ask, “Oh, you’re Ron and Marty’s daughter?” And my dad would say, “One day people will be asking me, ‘Oh, you’re Stephanie’s father?’” And that’s actually started to happen.

Ron Cordes: There’s nothing cooler than when someone says to Marty or me, “So, are you related to Stephanie?” And we’re very happy because we didn’t push her into this. She made the decision for the right reasons and that was what made all the difference.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those of U.S. Trust or its personnel. Any of their discussions concerning investments should not be considered a solicitation or recommendation by U.S. Trust and may not be profitable.

Past performance is no guarantee of future results. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Fixed Income Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments, and yield and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop, and vice versa

International International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility.