Recently I met with a husband and father that was looking to invest in his personal values. He found me among advisor listed on a certain investment company’s website known for helping investors invest in their environmental, social and governance personal values. This company applies both financial and have various financial and environmental, social and governance criteria in its investment process. Within the same week I met another husband and father that was apprehensive in applying anything other than financial criteria for fear that there investment returns would be lower. What do you think?
The return on your personal values
What beliefs do you hold. Patricia Arquette during her Oscar acceptance speech expressed her belief that women should get equal pay for the same job. Do you have strong feelings regarding investing in alternative energy? Do you have feelings regarding divesting from fossil fuels? Do you mind if your company’s financial returns are results of human trafficking?
I find relatively few people are neutral on those criteria alone. Much less things like nuclear power, nuclear arms and guns. Often when we have conversations around investing they get simply framed like which one will make me the most money. No investment company can guarantee future returns. The only thing we can do as tell you about our past returns with certainty. Some of us do our best to diversification based upon financial science to create a more predictable pattern of returns aligned with the risk tolerance of the investor. Many investors want returns and hope that someone can tell them when to get in and out of the market so they’ll have to deal with the butterflies of seeing their account balances go up and down.
What return would you like to see regarding your investments in alternative energy getting us off of dependence on oil and the climate problems it creates? What would you like to see if we could get rid of the conversation around the quality of wages for women and for, sexual orientation and race if you have between today when you expect to retire and when you expect to expire you will likely be far more engaged with these issues then you will with the ups and downs of the market.
Financial return on your personal values
Would you like to know an investment firm that has been in the top 1% in its category for the one, three and five year rolling period ending 12/31/14? Hint: it uses Christian, biblically responsible investing principles in addition to its financial criteria. If that represents your personal values, what a bonanza. If interested, contact me and I will give you the answer.
Often investing conversations get framed around which investment will make me the most money. No investment company, investment advisor or pundit can guarantee future returns. The only certainty is past returns. Some of us do our best to use diversification based upon financial science in hopes of creating a more predictable pattern of returns aligned with an investor’s risk tolerance. Many investors focus on returns and hope that someone can tell them when to get in and out of the market to avoid the downs. Some don’t want deal with the butterflies of seeing their account balances go up and down.
The personal values investor that I mentioned earlier decided to meet with me. He explained the environmental, social and governance issues that he is concerned about. I asked him about his time horizon which was 20+ years and what risk or ups and downs in the market he was comfortable with. He explained to me that he understood the ups and downs of the market and likely would not make any changes until he had seen things through for several years. I explained that one of his choices would likely have extra volatility or extra risk. I felt that I could put together a portfolio that included his choices and by adding some other environmental, social and governance investments we could help manage market volatility.
I can’t guarantee these returns will continue in the future. As history as my guide and his 20+ year time horizon this portfolio appears aligned both to his values of retirement and the environment. Now he and I both hope that his nonprofit employer will also provide a platform that allows him to invest not only in his values but also achieve similar retirement investment risk and return performance.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.