Aligning Your Investments with Your Values

What matters to you belongs in the investment conversation. Consider how your preferences fit alongside retirement needs, investment costs, diversification and taxes.

Investors now have plenty of opportunities to align their investing with their values. Whether you’re passionate about climate change, human rights, or faith-based investing – in this article, we’ll explore how to get started in values-based investing.

Defining Your Values

Start by asking yourself what matters most to you. Begin with your own life experience, and think of the people, companies, or charities you most admire. For example:

• If you're a school teacher, you may be enthusiastic about companies that create a better future for children.
• If you're concerned about ocean wildlife, you may consider investments in companies that avoid single-use plastics.

You can also ask yourself, what do you think will be most important in your life ten years from now? Reflecting on what will matter to you over the long term can help you hone in on your fundamental values.

Talking with your family can help identify shared priorities and where preferences differ. Those discussions can guide the questions you bring to your adviser.

Discuss your preferences and their limits

Work directly with Todd Smurl, CFA, to identify the preferences you want considered. Review feasibility and trade-offs before documenting agreed exclusions. This discussion does not assume one religious or ESG standard fits every investor.

Exclusions can apply to the direct-stock portion of a Personal Index Portfolio. ETFs used for other exposures may still hold excluded companies; requested exclusions can change diversification, taxes and returns. Index-like performance is not guaranteed.

Next Steps: Putting Preferences into Practice

Before changing investments, discuss implementation with Todd. Questions to review include:

• Which preferences matter most, and which exclusions can be documented for implementation?
• Which holdings are individual stocks, and which ETF exposures would remain?
• What could the changes mean for diversification, taxes, transition costs and your retirement plan?

Review the trade-offs before choosing holdings or making changes. A fund label alone does not establish that an investment fits your preferences or financial needs.

Types of Values-Based Investing

Different approaches use different criteria and methods. These terms can help frame a conversation, but none replaces a review of the actual holdings and implementation.

Faith-Based Investing

Faith-based approaches consider religious beliefs when setting investment preferences. The requested exclusions and applicable guidelines differ by investor and faith tradition.

Environmental, Social, and Governance (ESG)

ESG approaches consider environmental, social or governance factors, but providers can apply them differently. Read how to evaluate an ESG label, including the fund's rules, holdings and costs.

Socially Responsible Investing

Socially responsible approaches use specified ethical criteria to include or exclude investments. The criteria and portfolio consequences need review rather than an assumption that one standard fits everyone.

Impact Investing

Impact approaches seek a stated social or environmental outcome alongside financial objectives. A label or investment alone does not guarantee that outcome.

Complementary Factors

Your portfolio is one way to express your preferences, not the only one. Charitable giving and personal spending can also reflect what matters to you and your family.

Consider how those decisions fit your retirement resources and other financial priorities. Discuss gifting and tax questions with Todd and your tax preparer before acting.

Parting Thoughts

Your preferences are part of the plan, not a substitute for it. Start with what matters to you, then review what can be implemented alongside your retirement needs, costs, taxes and diversification.

Agreed exclusions can apply to the direct-stock portion, while ETFs used for other exposures may still hold excluded companies. Exclusions can change diversification and returns; neither higher returns nor complete alignment with every preference is guaranteed.

Review your agreed preferences with Todd as your circumstances change. The goal is an informed approach that fits your priorities and acknowledges its limits.

Need help getting started? Review our values-based approach and schedule a free, no-obligation introductory meeting with Todd to discuss your priorities and whether the approach fits.

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions. Exchange-traded funds (ETFs) are subject to market volatility, including the risks of their underlying investments. They are not individually redeemable from the fund and are bought and sold at the current market price, which may be above or below their net asset value. Environmental, social, and governance (ESG) criteria are a set of non-financial principles and standards used to evaluate potential investments. The incorporation of ESG principles provides a qualitative assessment that can factor heavily into the security selection process. The investment’s socially responsible focus may limit the investment options available to the investor. Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.