Advisers who specialize in socially responsible investing tend to love what they do. They want to make the world a better place while making money.
With passion to burn, it’s no wonder that many of these advisers walk the talk. Beyond just helping clients invest in social change, they support progressive causes more directly by attending rallies, signing petitions and endorsing political campaigns.
That’s fine if financial planners have like-minded clients. But some individuals seek an expert who excels in portfolio management, tax planning or other technical skills — and may not necessarily share the adviser’s views on sensitive political matters such as reproductive rights or favoring a far-left presidential candidate.
“We work with a wide range of clients,” said Zach Teutsch, founder of Values Added Financial, an advisory firm in Washington, D.C. With his background in the labor movement and consumer protection, Teutsch remains active in local political races and makes no secret of his progressive stance on various issues. But he’s careful not to proselytize with clients.
“I often go to a rally and see clients there, but I don’t try to convince anybody to be an activist,” he said. “If I was into golf, some clients would want to play golf with me and others wouldn’t. The difference is that community engagement and activism serve a broader purpose and are more deeply personal so they build a different kind of connection and trust.”
Brimming with passion for impact investing, advisers who incorporate environmental, social and governance (ESG) factors into their fund selection will educate clients on how the performance of these products compares favorably with non-ESG offerings or how sustainability ratings work. It can be tempting for over-eager advisers to shift from educating to recruiting clients to take a political stand, from donating to certain candidates to championing controversial ballot initiatives.
“The big question for those advisers is where do you draw the line,” said Ben Smith, a Milwaukee-based certified financial planner. “I want to give clients a chance to invest in ways they care about, but I don’t like to talk about politics with them and I do not get involved in activism.”
Smith said he sees himself as an educator. If some people lack his enthusiasm for socially responsible investing after he explains it to them, he’s fine with that.
“The risk is that some prospects have no interest in impact investing, and as a result won’t pursue my services,” he said. “I think that having a specialty tied to my passions has led to much deeper relationships with my clients, even though I’m casting a narrower net from a marketing perspective.”
While it’s generally unwise to enlist clients to join your pet cause, there’s nothing wrong with showing interest in their outlook and opinions. As long as you listen without judgment, you can establish rapport and gain a better understanding of that person’s values and vision for a better world.
“Our job as advisers is to follow the client’s priorities, not set the agenda for them,” said Katherine Pease, head of impact strategy at Cornerstone Capital Group.
Rather than press clients to join you on the picket lines or vote a certain way in an upcoming election, she suggests asking questions to guide their thinking such as, “As you look to the future, what are you most concerned about when it comes to the planet?”
“It’s not about hitting them over the head with a hammer,” she said. “It’s more about what they can do with their assets, not what they should do.”
Read: ESG — or socially responsible — funds may soothe your conscience but could weaken your portfolio
More: Top stories from MarketWatch’s Financial Adviser Center