How To Talk to Your Clients About Values and Faith-Based Investing

Executive summary:

  • There is a growing movement among investors to align their portfolio to their values or belief systems,
  • Advisors can use Direct Indexing products and Separately Managed Accounts to help their clients pursue faith- or values-based investing,
  • Advisors who understand a client’s values may be better prepared to help with legacy or charitable planning,

You’ve heard the saying “put your money where your mouth is”? That usually means you are willing to spend money or take some action that supports what you believe in. Well, it seems more and more people are doing that these days.

An increasing number of companies donate a portion of their proceeds to charity or give consumers the chance to vote with their pocketbook. For example, shoe company TOMS donates one-third of their profits from the sale of their products to support grassroots organizations that focus on mental health support, ending gun violence or increasing access to economic opportunities.1 The outdoor clothing store Patagonia pledges 1% of its sales to the preservation and restoration of the natural environment.2

Chick-fil-A, the popular fast-food restaurant, goes even further in tying its values to its profits. It not only donates surplus food to shelters and soup kitchens, it supports numerous charities and is probably best known for closing Sundays to allow its staff to rest and worship if they so desire. Indeed, its corporate purpose as indicated on its website is “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.”3

This trend is showing up in the investment world as well. There is a growing movement among investors to align their portfolios to their values or belief systems – quite literally putting their money where their mouth is. For many investors, aligning their investments with their values can provide a sense of satisfaction and peace of mind knowing they are supporting companies and causes they believe in.

For some investors, the value they want to align their portfolio with is their faith. Using a Separately Managed Account can make it easier for advisors to help their clients pursue faith-based investing.