The following blog is by guest author Peter Roselle, the NYC Director for Archetype Wealth Partners, a leading Wealth Advisory firm specializing in family legacy planning and advanced charitable giving strategies. Peter is a published author on the topic of Sustainable Investing and a thought-leader in the growing field of portfolio values-alignment. Visit Archetype’s website at https://archetypewealth.com/story/.
The Signatry follows this practice of portfolio-values alignment by providing biblically responsible investment pools, which allow donors to invest their funds into pools that have been screened to remove organizations that conflict with Christian values. Learn more about our investment pools at thesignatry.com/investments
Sometimes it can be difficult to bridge the generational gap to talk about investments. Our clients often ask us to help facilitate discussions with their heirs about investing. We work hard in these meetings to create an atmosphere that is conducive to a two-way conversation. Each side wants to be heard and understood. The older generation has more investing experience, but the younger generation can be very well-informed and have strong opinions about the investment topics they find most important. As one author stated, we seek to be “the guide on the side”, not “the sage on the stage.”
We’ve had success sparking multi-generational investment conversations by focusing on Sustainable Investing. The topic resonates with the next generation because it reflects the realities of the digital age in which they have been raised. Our definition of Sustainable Investing is a stock-selection process that includes traditional financial analysis (tangible factors) with an additional overlay that scores dozens of “intangible” factors such as the quality and effectiveness of the Board of Directors.
We explain the advantages of investing in companies with resilient, sustainable business models. We spend time discussing how tools available today allow us to search beyond the financial statements to peer into the soul of the business, the quality of the leadership team and the viability of the business model.
What often catches the interest of the younger generation is the idea that a business can have a soul. Just like an individual, a company can “sell its soul” and make risky decisions in pursuit of profits that put the company in jeopardy. This theme has played out in countless news stories and movies portraying how businesses descended the slippery slope of poor risk-management and ended up damaging or destroying the business.
Each new generation is handed tools that were not available to their parents. Today’s 20-year-olds have been “Google searching” since early childhood. When their parents were twenty they were going to the library and using the Dewey decimal system. This means that today’s next generation is much more comfortable with the information explosion than their parents – they actually like having more data.
Let’s suppose the family has a philanthropic goal of helping to eliminate human trafficking. With a sustainable investing approach, we create custom portfolios that track well-known indexes but tilt away from companies that have scored poorly on human rights violations. This same process can be applied to dozens of other factors such as corruption, business ethics, and “adult-entertainment” (although there is nothing ‘adult’ about it from a biblical perspective).
No two families are exactly the same; in most cases there is not a clear “right or wrong” company or opinion. But it is important for the family to convey their values to the next generation, including investments they feel would be out-of-alignment with the family’s core values. For example, some families may view owning stock in a company as a tacit endorsement of their practices, therefore they would only choose to own businesses they would want their family members to support.
This approach allows families improve their communication and foster further conversations about money. Better communication leads to better decisions, planning and investments. We can follow the advice Jesus gave us at the end of the Sermon on the Mount (Matthew 7:24-27) – we have a choice to either build our house on the sand of speculation and short-term profits or the solid rock of long-term sustainable investment strategies.
Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.