Should Your Investments Align With Your Values?

Whether your investments should align with your values can be a sensitive subject for some people. I’m always cautious about when discussing the topic, since it can also mean so many different things depending on whom you are asking. Managing values-based investing on behalf of a group of people can also be a bit tricky because people have different values—and what might align with one person’s values mayt not align with another’s.

Managing values-based investments can be challenging because values sometimes shift or evolve while varying widely among investors. For example, in my early days of advising, values-based investing meant avoiding investing in companies that were involved in gambling or alcohol for some clients. More recently, I’ve seen that evolve into investors who want to avoid companies that may not be committed to specific environmental or social goals. I’ve also seen many investment companies that try to manage these goals end up disappointing investors because many of those investors do not feel like it is done sufficiently or how they would do it if they were in charge.

At our firm, most of our clients use fee-based discretionary management of their investments. In plain English that meanswe manage their accounts for a percentage fee based on the asset value, and we don’t charge a commission when the individual investments are bought and sold. We make the day-today investment decisions on behalf of our clients based upon agreed-upon parameters. Most people come to us because they prefer to have us make those complex decisions for various reasons. If a client doesn’t have the time, ability, or desire to do those things, they will usually utilize a firm like ours.

How Can We Align Your Life’s Values With Your Financial Goals?

Before we begin that process on behalf of a client, we will usually find out as much as we can about their goals, needs, and preferences. We frequently use the phrase “it’s not our money, it’s your money,” so we want to ensure we manage investments optimally for our clients. We usually ask, “Are there any investments you would like us to avoid or any sectors or companies with which you prefer not to invest?” Most people are usually interested in making money, so they answer that question with a no. However, a smaller number of people may have something that comes to mind.

There are a lot of financial advisors that only employ outside money managers through mutual funds, ETFs, etc. They don’t manage the specific investments themselves. Frequently this doesn’t allow for any level of customization. But let’s say there is a media company that you want to avoid because you don’t like their children’s programming. Or perhaps there is an energy company you think is insufficiently protecting the environment. Whatever your preference, if your advisor manages the portfolio for you, you should be able to omit these companies or ask for a substitute if you see something in your portfolio that you believe doesn’t align with your values. Obviously, this could be taken to excess. If you say that two-thirds of the companies in the S&P 500 are off-limits, you might be doing more harm than good. But if there are certain things you would prefer not to invest in, make sure you are using an advisor capable of making that happen.

Living and investing according to your values may be very important to you. A trusted financial advisor can work with you to develop an investment plan that meets your financial goals while also honoring the things you value most.

David Jackson, MBA, CFP^®, C(K)P™, is the Managing Partner at the Southern Springs Capital Group. For more information on Southern Springs Capital Group, visit www.southernspringscapital.com. Our offices are located at 2555 Meridian Boulevard in Franklin. We can be reached at 615-905-4585.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Southern Springs Capital Group is not a registered broker/dealer and is independent of Raymond James Financial Services.

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