How does financial planning work with values integration? The question of personal values comes up daily. As Americans, we believe in life, liberty, and pursuit of happiness. We live by our personal values! We also encourage religious freedom.

Yet somehow, when we start talking about money, the foundation of personal values goes away. It’s rarely even considered! I once told a financial professional at an elite financial advisory I wanted to invest according to my values.  Instead, I was told to just allow them to focus on making me lots of money, and then give it to charity later!

The desire to work with ethical financial planning firms that are pro-women and minority hiring, with ethical business development practices, went unacknowledged. Moreover, I thought, the desire to invest in companies that promoted my values (supporting women and minorities) is not, and should never be viewed as, charity!

Integrating personal values and your financial plan

When financial professionals talk about personal values, it’s often in the context of charitable giving and estate planning. One of my clients has a goal to tithe 20 percent to their church. She sees this goal as a reflection of her religious beliefs. Have you had a conversation with your advisor regarding your religious beliefs? Many clients wouldn’t think so.

But these conversations are important. Maybe there are other areas of your lifestyle that are important to you; perhaps you love theater. What drives you other than the pursuit of money for money’s sake? Your personal values should be reflected in your money—how you spend it and save it, and in your overall financial plan.

You may even find that going to your local coffee shop and getting your favorite drink made by your favorite barista is an expression of your values. After all, our personal values are ours. A financial planner’s job is to find ways to support your values, so you can live a life that’s fulfilling beyond money.

Personal values and your investment plan

Perhaps you want to choose investments or funds that reflect your faith, or your concerns about climate change and sustainability. You may have to look for ways to invest in and support pro-women companies. Or you may choose to abstain from investing in any firm that works with abortifacients.

Have you shared these concerns with your advisor? More importantly, does your advisor work for an independent firm so that they can provide an investment portfolio that reflects these values? Advisors who work for large firms are usually restricted around the investment choices they are allowed to offer clients. And that may be one reason why they don’t ask you about one’s personal values when it comes to investment planning.

In fact, these restrictions may be one reason many financial professionals claim that investing with one’s values means compromising your returns. Yet this isn’t necessarily true. Let’s consider a benchmark for U.S. companies, the MSCI USA. Over the past 10 years, the index was up 13.56 percent. Now consider the MSCI KLD 400 Social Index, which tracks companies with high environmental, social, and governance (ESG) ratings and excludes companies involved in alcohol, gambling, tobacco, weapons, nuclear power, adult entertainment, and genetically modified organisms (GMO).

This index, which serves as a benchmark for investors looking to invest responsibly, is up 13.68 percent over the past 10 years. That’s right, the returns on the value-based index are higher than a broad benchmark of US companies. So as you can see, investing by value doesn’t mean losing money.

Getting a personal values financial plan

To deliver a financial plan that reflects your personal values, your advisor must get a 360° view of who you are. This means you need to be willing to share information that you may not have expected to discuss with your financial advisor! When you interview advisors, it’s important to find someone you feel comfortable opening up to.

You should also ask advisors about their knowledge of values-based financial planning and any limitations they may have in implementing. Your money and your financial plan should reflect who you are (your values) and not a retrofit to someone else’s idea of who you are.

Ask your advisor if they have tools to screen investment products, and learn more about their approach. To learn more about our approach, contact us today!

How well aligned to your values is your portfolio? See if you qualify for our complimentary values-based portfolio analysis here.

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