Izabel is the CEO and Co-Founder of Arnie, an automated portfolio builder for the ethical investor – a new robo advisor that lets you align your investments with your values. Her eyes were first opened to the world of sustainable and impact investing while servicing high net worth and endowment & foundation clients as an investment manager at Sepio Capital. She managed over $1.5 billion in client assets and spent much of her time mission-aligning portfolios, gaining extensive experience allocating to ESG and sustainable investments. The impact was significant, but it left her thinking about the 95% of American households who couldn’t afford the minimums and fees to work with a private advisor like her. She believes individuals at all income levels should have access to wealth management that allows them to speak with their money and align their investments with their values. Her solution? Build Arnie – a platform that combines the customization of a personal wealth manager with the affordability and accessibility of a robo-advisor.
Eliza is the COO and Co-Founder of Arnie- and no, the last names are no coincidence. They’re sisters! Before entering the world of sustainable finance, Eliza lived in blissful ignorance as a creative director and writer, creating campaigns for some of the biggest companies in the world, including P&G, YouTube, Amazon/AWS, CashApp, ABinBev, United Nations, Hasbro, Canon, Volvo, and Walgreens. She has deep experience executing successful multi-channel campaigns and new product launches with a focus on social impact, consumer engagement, and product innovation. Her work has been shown across the country and has been the recipient of several industry awards, including Cannes Lions, Brandweek, and Shorty Social Media Awards.
They are joined by their shared passion to hold corporations accountable for their actions – they believe this can be done collectively by using the power of shareholding to shift the focus to all stakeholders.
Q: What inspired you to found Arnie and what were the main challenges you faced?
The initial spark to build Arnie came at almost exactly the same time, but from very different perspectives. Eliza was looking to invest her money responsibly after doing an audit of her 401k and realizing she was invested in companies with practices she disagreed with, and Izabel’s job as investment advisor was to do this exact thing for her clients. It seemed like an easy solve, but we quickly realized none of the solutions Izabel could offer applied to Eliza.
Izabel spent much of her time sustainably aligning the portfolios of very wealthy clients- individuals with net worths above $50 million and large foundations. These clients paid hefty fees and met high minimums to access customized sustainable investing. But for people like Eliza who haven’t made their millions...yet ;), this isn’t a viable solution. As a creative director and writer, Eliza noticed all of her clients were coming back with the same ask and consumer research result: purpose is what consumers are reacting to.
Izabel’s clients were asking for mission-aligned portfolios, and Eliza’s clients were asking for purpose-driven campaigns — it’s clear consumers want their money to align with their values, but unless you’re wildly wealthy, there’s no good option. Izabel soon realized that the right investing technologies (fractional share trading, index optimization, large sustainability data sets...) finally existed to make this possible. So Arnie was born.
Although people know they want to be intentional with their money, we’ve found it challenging to educate our user base on the practice of sustainable investing, since our target demographic includes even the most inexperienced investors. Striking the right balance of giving our users control over their portfolio construction, while still keeping the process simple and quick, hasn’t been an easy endeavor.
Q: Did you start the venture alone?
We’ve been together on this incredible journey from the start! While it’s certainly a unique experience founding a company with your sister, we can’t imagine building Arnie with anyone else.
Q: In your opinion, what are some key opportunities in the investment management space going forward?
We may be biased in this belief, but to us, the most valuable opportunity in investment management is the promotion of a more socially-responsible form of investing. The pandemic has exposed significant underlying structural problems with our corporate system, and this creates an opportunity and obligation for corporations to shift their focus to stakeholder capitalism and be held accountable for their impact- on workers, the environment, communities, and customers. It is up to investment management professionals to educate their clients on the practice of ESG and impact investing, and to offer them the tools to integrate it into their portfolios. Many investors are unaware of the idea that you can in fact align your investments with your values, and this needs to change.
Beyond just bringing sustainable and impact investing to a broader pool of investors, we believe it is time to tear down the exclusive access that the wealthiest investors have had to alternative asset classes and more bespoke investment solutions. Innovations in investment technology, like index optimization and fractional share trading, are what make Arnie possible, and this holds true for other investment areas. It is now possible to use technology to make scalable and accessible solutions for investment instruments that have historically only served a small group of people.
Q: What's your business model, and how have you grown your revenue?
Arnie charges a percentage based fee on assets in each user’s account, as is typical in the investment management industry. This is an all-in fee for our users, so they’re not paying transaction or custodian fees on top of that. By utilizing direct stock ownership instead of all funds, as other robo-advisors do, our users also avoid fund fees in every asset class.
While we haven’t launched yet, our initial platform will offer a solution for individuals to build customized portfolios (both savings and IRAs), followed soon after with a 401k solution for corporations to offer their employees individually customized sustainable retirement portfolios.
Because users are invested directly in companies, we can modify portfolios at a granular level so they stay aligned to the most pressing issues, ensuring we always meet our users’ needs. We can add new values to align portfolios with, based on real-world events in real-time, so people can use Arnie as an avenue for activism. For example, right now we would offer a new value focused on Corporate Response to COVID, which would include issues like offering paid sick leave, or reducing executive pay before laying off staff. Users will be motivated to add funds to their portfolio to make an even bigger impact.
Q: Do you think luck played a role in the success of your company?
While the strides we’ve made with Arnie are first and foremost a result of our grit and determination, I’d be naive to say that luck hasn’t played a role on a high level. But more than luck, it’s our privilege. Our networks, experience, and access to the right resources have come as a result of the community we were born into.
Q: What are your goals for the future?
We want to contribute to the shift of sustainable and impact investing becoming synonymous with simply investing. We hope our platform demonstrates to people that you don’t have to give up financial goals to achieve your sustainability goals. We’d love to get to the point where no one is separating purpose and intention from investing, but instead sustainability and impact become an inherent part of the investing process. To do this, we want to become the primary solution for anyone looking to align their investments with their values. And then what follows from that is anyone looking for a wealth management solution.
Personally, we sit at the intersection of 3 very male-dominated worlds; finance, tech, and being a founder. Like our goals with Arnie, we want women’s success to simply become synonymous with success. So that we are no longer a notable story, but simply the expectation.
Q: If you had to start over, what would you do differently?
We would’ve started the journey with the understanding that things take longer than you expect, and you can’t do everything at once. At the beginning, we tried to tackle fundraising, product development, getting user feedback, setting things up operationally...the list goes on. All at the exact same time, with only two people to do it. Eventually we realized that we’re more productive and effective when we prioritize and go all-in on one goal at a time.
Q: Can you talk about one woman who has impacted your life?
Our mom. We know that’s cliche and expected, but it’s the truest answer we have. We often feel like everyone in our family is on this journey with us. It was risky quitting our jobs that we’d worked so hard for (still is), but she always encouraged us to do what we believe in, and not just what’s the most practical. Juggling single motherhood and being a startup founder would have been nearly impossible for Izabel without our mom’s constant support.
Q: What are your favorite books?
We recently read Sing, Unburied, Sing by Jesmyn Ward as part of our book club. We both went to Tulane University in New Orleans where she now teaches English and being immersed in the language of that region again was a wonderful trip of nostalgia for us. We also absolutely love Harold and the Purple Crayon (an often requested book by Izabel’s four year old). Reading it now feels like an exact replica of our journey as founders; you have no idea where you’re going until you draw the path yourself.
Q: What's your advice for female founders who are just starting out?
Be flexible and open to change! We’ve made countless modifications to our initial product vision, shifted priorities constantly, and gone down paths we never predicted. Building a company from scratch doesn’t come with a manual, and that’s what makes it exciting. On the flip side of this, although it’s important to embrace changes, be sure to take everyone’s advice as just that: advice. At the beginning of our journey we lacked the confidence to reject advice from those more knowledgeable and accomplished than us, even when that advice went against our beliefs or made us hesitant. Take in as much information as you can, and talk to anyone and everyone, but remember that each person comes with their own biases.