Have you ever looked at your financial portfolio and, to your dismay,
discovered that you're investing in a company whose practices make you cringe?
Do you have strong beliefs about how the world could be better?
Maybe you support the work of some nonprofit organizations or you're
involved in taking direct action to make the planet a better place to live.
Wouldn't it be great if you could align the way you manage your wealth
with the values that you hold closest to your heart?
Believe it or not, it is possible to make money and still
manage it in a way that supports your purpose. In fact, in certain
circumstances, ethical investments may potentially outperform their peers.1
With so many options now available, strategies that align with your
personal values and beliefs can satisfy investing with integrity while still
maintaining a diversified portfolio.*
However, sometimes it can be difficult to find the right investments. Investment
companies may take very different approaches to what might seem like the same
value system.
When you want to make sure that your money only supports organizations
that you approve of, it's critical that you know what your purpose is. Do you
want to specifically invest only in something that you believe in, or do you
want to screen out the ideas that don't serve your beliefs? Or both?
If you dread finding out that something you disapprove of
is in your investment portfolio, you've come to the right place.
This step-by-step guide is specifically designed for ethical people with
strongly-held beliefs just like you who are searching for a way to manage their
money without losing integrity. While you want to invest with purpose, you also
need to make sure that your portfolio can help you reach your financial goals.
As a values-driven investor, you may be
asking yourself questions like these:
·
Does my current
portfolio align with my beliefs, and if not, how can I change it?
·
Where can I
find investments that get me to my goals, but that I can also feel good about?
·
Is there
anything I've overlooked in my search for ethical finances?
·
How can I make
sense of all the choices available to me?
If any of these questions had an impact
on you, keep reading...
Align Your Beliefs and Value System with Your Financial
Goals
In your eyes, what constitutes a company with ethics and integrity?
Think of a couple of businesses that you would be happy to invest in.
Are there certain industries you want to avoid because the entire field is
harmful to the world in some way? What are their characteristics?
Connect with what's deeply important to you. What are you
on this planet to do — what is your purpose? What matters most about the impact
you want to have on the world? Identify your priorities so you can determine
more easily what you want to include and what you prefer to exclude.
Once you've harnessed the power of your own purpose, consider your
financial goals, too. One of them is likely building a nest egg for
retirement, but you may have others as well. You want your investments to do
well (in terms of performance) and to do good (in terms of ethics). But don't
worry, those two categories are not always mutually exclusive!
Critical questions to ask yourself include:
- Are there companies, industries, or concepts that I
do or do not want to support with my investing?
- What values are absolute deal-breakers for me that I
would never consider including in my plan?
- Do I understand how to use my portfolio to reach my
goals?
- Is there someone who knows how to help me align my
beliefs with my investments?
Transform Your Current Plan into a Purpose-Driven Strategy
It's pretty common for people to save for retirement without really having a
concrete plan for their nest egg. Often they decide to save "as much as they
can." Many times they invest in securities that people they know have
recommended. Saving and investing in something is better than nothing, but this
isn't a plan that's likely to get you to where you need to go.
Think of a couple of businesses that you would be happy to invest in.
On the other hand, you might have someone who's knowledgeable about
money helping you with a financial strategy. But while they understand
the stock market, they don't understand your value system. Or they may not
understand how to invest specifically in alignment with your beliefs.
You might have a strategy, but your heart isn't in it.
Either way, you don't have an approach that unites your values with your
financial goals. Aligning your beliefs and your investments requires some
forethought on your part. It's critical to develop a framework with the
timelines for your goals as well as the plan to get you to those goals, and
ensure that all the tools you're using line up with your values.
That way you can reimagine your plan to account for both financial and
non-financial desires, without giving up either. You'll need to understand
what's currently in your portfolio, and what might need to change so that you
can finally feel good about your investments.
Critical questions to ask yourself include:
- What is my current strategy for reaching my
financial goals?
- Where does my plan account for my beliefs?
- What would a portfolio that supports my value system
look like?
- Do I know anyone who can give me constructive
feedback on my strategy for ethical investing?
Make an Impact While Building Your Wealth
You can help build a better world for your family and your community, and
also pursue your financial goals.
Many folks are content to invest without considering their values and simply
donate to the charities of their choice. But by investing in ways that
you can ethically support, you're living your values every day.
Critical questions to ask yourself include:
- Do I want to infuse my strategies with my values?
- How do I want to make an impact on the world?
- Is my current investing strategy allowing me to have
the influence that I want to have?
- Have I discussed marrying my money and morals with
my family?
- Do I have a trusted financial professional who can
give me objective feedback?
Vet Your Investments
You know that modern-day advertising is designed specifically to target
certain parts of the brain to make people feel good about buying. You also know
that many companies include purpose and values in their mission statements… and
that many of them don't live up to their own hype. But how can you tell which
is which?
Investing with integrity means results matter. It's not
just about claiming that the company is doing good in the world, it's about the
company actually making a meaningful impact. As a result, examining these
companies is key for ethical investors.
The problem, of course, is that as a busy American, you simply don't
have the time to read every prospectus. Or examine every SEC filing to
make sure that the prospective investment meets your standards for performance
and purpose. Yet it's important to sift the wheat from the chaff, which is
easiest when you have a process you use to make sure your investments include
your ethical preferences.
Critical questions to ask yourself include:
- What actions can companies take that tell me they're
on my side?
- Are there existing screens or regulations that can
narrow down investment opportunities for me?
- Do I understand the criteria for a company I'd be
comfortable investing in?
- Is there someone I trust who can help me vet the
available options?
Find Aligned Investments
You might be wondering where all these wonderful opportunities are hiding.
Maybe you're already aware that there are certain mutual fund families and ETFs
whose values are like yours. But you want to make sure you're not missing out
on anything.
You may not want to spend time wading through the thicket of opportunities
to find the ones that are just right for you and your family. Even if you'd
like to, you may simply not have the availability. You want to spot these
investments quickly, ensure that they're up to your standards, and start
investing in them as soon as you can.
Who wants to waste any more time supporting companies you really don't care
for, when you could have an entire portfolio that's aligned with your ethics?
Screening for industries, companies, and investment managers that share your
values will help you bring your portfolio into alignment.
Critical questions to ask yourself include:
- Can I find an easy method to locate the financial
professionals who share my value system?
- What opportunities haven't I looked into that would
suit my ethics and values exactly?
- Do I understand the costs of these investments?
- Is there a financial professional who can help me
find what I'm looking for?
Transform Your Plan to a Heart-Driven Strategy
Imagine knowing that every day…
You're not trading performance for integrity.
You're only supporting companies who align with your ethics.
You're actively making the world a better place with your money.
You're pursuing your financial goals while living your values.
Because you have a strategy that combines your ethics, your beliefs, and
your heart with your financial goals.
The purpose-driven investment world is wide, which means that you have
plenty of opportunity to ensure your investment options align with your values.
However, that also means that you can easily get lost in a tangle of
acronyms, lip service, and meaningless mission statements.
We understand all the options available, so you can avoid spending your free
time reading through legal statements. Book your personal and complimentary Heart-Driven
Planning Session today to start aligning your purpose with your
planning.
We'll help you wield the tools you need to ensure that your
portfolio fits your goals and intentions. We can help you sift through
the array of choices to find those who meet your criteria for both ethics and
performance. We help investors align their beliefs with their finances so they
can make the world a better place and pursue their personal financial goals at
the same time.
*Diversification cannot guarantee a profit or protect against loss in
periods of declining values.
Risk Disclosure: Investing involves risk including the potential loss of
principal. No investment strategy can guarantee a profit or protect against
loss in periods of declining values. Past performance does not guarantee future
results.
This material is for information purposes only and is not intended as an
offer or solicitation with respect to the purchase or sale of any security. The
content is developed from sources believed to be providing accurate
information; no warranty, expressed or implied, is made regarding accuracy,
adequacy, completeness, legality, reliability, or usefulness of any
information. Consult your financial professional before making any investment
decision. For illustrative use only.
Securities offered through Kestra Investment Services, LLC (Kestra IS),
member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory
Services, LLC (Kestra AS), an affiliate of Kestra IS or Beacon Financial
Group. Beacon Financial Group is a member firm
of PartnersFinancial. Beacon Financial Group is
affiliated with Kestra IS and Kestra AS. Kestra IS and Kestra AS are not
affiliated with PartnersFinancial. Neither Kestra IS nor its affiliates provide
legal or tax advice. The opinions expressed in this commentary are those of the
author and may not necessarily reflect those held by Kestra Investment
Services, LLC or Kestra Advisory Services, LLC. Kestra
Disclosures Beacon Disclosures