Examples might include companies that look positive in the U.S., but engage in troubling marketing practices overseas. Another example: Companies that produce technologies that can help the environment, but are produced using forced labor. As soon as you know about these things, if you are taking ownership and responsibility for how your money affects the world, you need to reevaluate your investment through the lens of your faith.
That doesn’t mean these decisions are clear or easy, and different managers will make different choices depending on how they apply their rules. That’s okay, but if an investment reflects your faith, it needs to be a choice that lets you sleep at night.
Helping Advisors Can Build Stronger Client Relationships
It’s easy to see how faith-based investing will be of interest to some investors, but what does it offer advisors? In an industry that is dominated by big names and a focus on returns, offering a faith-based option can help advisors differentiate their business. Faith is a deeply personal matter, and investors will want to know how their money is being invested in alignment with their values. That’s a message a real live person can deliver far better than an automated report.
Additionally, faith-based investing can open doors to other conversations, such as planning for charitable giving and leaving a legacy. Many people today care not only about how much money they have, but also about where the gains they’re making on their investments come from. And for an investor who believes that all their possessions really belong to God, the conversation can change from “How much can I keep?” to “How much can I give?”
Starting these conversations early and including the family can help ensure that everyone is aligned and that the faith traditions of the family are respected – a perfect role for a trusted financial advisor.
Allowing Investors To Be Thoughtful
It comes back to ownership—owning a company, owning a set of values, owning the effects of your investments, and owning up to your beliefs.
Faith-based investing is a deeply personal decision, and it won’t be right for every investor. But in a world where people can and do rationalize almost anything when it comes to their money—you’ll hear people say “It doesn’t matter where the money comes from if I use it for good”—I think it’s better to give people options that allow them to be thoughtful, deliberate and purposeful with their worldly wealth.
Robert E. Miller, CFA, is chief executive officer of Frontier Asset Management.