Author: FINBOURNE– finbourne.com

In the latest of our Culture and Diversity interview series, we speak to Georgia Stewart, CEO and Co-founder of Tumelo. Established in 2018, Tumelo is an impact-focused financial technology firm on a mission to empower shareholder democracy and create better voting infrastructure. Tumelo builds technology that supports impactful stewardship, providing products to multiple stakeholders in the investment sector to improve alignment between fund managers and retail and institutional investors.

In this interview, Georgia tells us more about Tumelo’s mission and why technology has the potential to create a more transparent and representative stewardship process, to deliver better outcomes for investors and the industry as a whole.

Tell us about your career to date, and your current role as CEO of Tumelo?

I studied Natural Sciences at Cambridge, which is where I first became interested in shareholder voting and the power of impactful stewardship. I helped campaign for the university to be more proactive about the £6 billion in assets invested through its endowment fund. That experience — as well as experience from working across the sustainable investment sector — led me and my two co-founders to start Tumelo just a few years after graduating.

Tumelo was founded to create greater shareholder democracy for all investors. While that mission reads clearly, setting out on pursuing our mission wasn’t a straightforward path.

We first went down the investment app route, and then pivoted to offering a platform aimed to get underlying investors and pension-members engaged in their investments’ voting activity. While this was successful, we knew that in order to align voting preferences with actual voting outcomes, we needed to make them real votes with real impact. So we pivoted (again), and now offer pass-through voting and expression of wish products to fund managers looking to provide greater choice to their retail and institutional investors.

Right now, my role as CEO involves being steward of the company’s strategy, helping the company grow through sales efforts and promoting a culture that ensures our people are at their best. It’s that last aspect that I’m particularly proud of. We have more than doubled in size since our series A fundraise, but we’ve managed to keep the high-performing, supportive and empowering culture we’ve always had. It’s down to having a great team that live by our values day in, day out.

From climate change to board diversity, investors are demanding more say on the issues that matter to them. Can you tell us some more about the critical role of stewardship in today’s market, and how Tumelo is empowering investors with pass-through voting?

First, I think it’s important to distinguish between two types of investors: retail investors and institutional investors.

For retail investors, the story usually starts with the “Big Three” fund managers: BlackRock, Vanguard, and State Street. These three firms cast about 23.5% of the votes at companies listed on the S&P 500, and this influence is predicted to rise to 40% by the mid-2030s[1]. That’s a lot of influence concentrated in just a few fund-management houses.

They have massive influence on companies’ actions. ShareAction’s 2022 Voting Matters Survey found that 49 additional AGM resolutions would have received majority support if the “Big Three” fund managers had voted in favour of them. As these resolutions discuss issues like climate change, diversity, and corporate accountability, it’s no wonder that our increasingly educated society want to know how these big fund managers are voting on their behalf and have a say on the matter.

Institutional investors’ main concern is the success of their stewardship efforts. Proxy voting plays a tangible role in that, as it can shape corporate actions that may affect the investors’ stewardship goals or financial returns. But because most voting activity is carried out by investors’ fund managers, we have found instances where the fund manager’s proxy votes don’t align with the investors’ stewardship goals.

Pass-through voting solves the pain-points for both retail and institutional investors, as it allows an investor in a pooled fund to vote the shares in proportion to the AUM they have invested, effectively allowing them to take back control of the vote to ensure their assets are being voted in line with their values and investment goals.

According to research by McKinsey, women represent the new wave of growth in US wealth management and are expected to hold $30 million by the end of the decade[2]. At this inflection point, how do you see this as an opportunity for investment to firms to contribute to greater shareholder democracy, to attract and actively engage with a more diverse investor base?

I think overall this research raises a clear point for the asset management industry: more diversity in asset owners means more diversity of perspective on stewardship matters, making a flexible fund offering with an emphasis on trust, transparency and choice hugely important.

There are two statistics in this article that really make this clear. One being that “a third of affluent women say they would only work with an investment professional they trust, roughly ten percentage points more than men”, and the second being that “[w]hen affluent women take over financial decision making for a household, they typically seek out new wealth management relationships to better suit their needs.” This clearly implies that a shift in demographic for wealth ownership will mean a re-evaluation of the products and services provided by an asset or wealth manager, with potential for managers to lose or win clients based on elements like trust as well as performance.

This wealth transfer may also force the asset management industry to reckon with its currently poor gender diversity. Asset management is still a male-dominated field, which becomes an issue when, as McKinsey highlights, there is evidence that women are likely to select asset managers that mirror themselves demographically. In this environment, to win this “critical battleground”, managers will not just have to understand women’s needs, they will need to hire them too.

Tumelo has great growth plans, how will the FINBOURNE x Tumelo partnership support fund managers in meeting their fiduciary duties and increase transparency across the industry?

Both Tumelo and FINBOURNE share a core mission: to provide fund managers with valuable data insights that can empower impactful decision-making.

Our partnership offers fund managers access to stewardship data and client preferences. Insights such as real-time vote reporting, aggregated preference data, and investor-voting behaviour are integrated seamlessly into fund managers’ existing workflows.

The end goal? A closer relationship between fund managers and their clients that is built on trust and two-way communication.

The fact is fiduciary duty is changing. It is no longer enough for managers to assume people invest to only pursue short-term financial returns. Shareholders and fund beneficiaries have become increasingly attuned to ESG issues and how they impact their lives; can fund managers confidently say they are accurately representing their interests?

I’m excited to see how Tumelo’s partnership with FINBOURNE can support fund managers in fulfilling their fiduciary duties and ultimately make shareholder voting more democratic.

Fintech is a rapidly evolving industry, but unfortunately one that still lacks diversity, especially at a senior level.  As a co-founder and a woman in tech, how do you hope to inspire women and girls to pursue a career in this field?

I hope I inspire the women I work with to raise the bar for themselves, their colleagues, and their employers. I want them to continue in their careers speaking up when they feel something is not right and asking the tough questions we like to ask at Tumelo – are we doing this the best way? How can we be more daring? More nimble?

In terms of the tech industry, I mainly want to inspire by having an impact with Tumelo. For me, building a successful company that makes a tangible difference on the investment stewardship system would be an action that speaks louder than any words I can write here.

[1]http://www.law.harvard.edu/faculty/bebchuk/The_Power_of_the_Big_Three_and_Why_It_Matters.pdf

[2]https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management