3 Ways To Help Clients Align Their Money With Their Values

By Paul Feldman

By Chris Stroup

It’s hard to escape the many challenges facing us nowadays. Turn on your TV or open your social media and you’re quickly reminded of the many injustices facing the world, the ongoing effects of climate change, or the immediate needs of our communities.

With what seems like an onslaught of endless crises, clients have begun asking about what they can do to help bring about more positive change. Beyond donating to charities or allocating time to volunteer, are there other actions they can take to make a difference? Going beyond smart charitable giving, can they use their money in a way that is the catalyst for the positive change they hope to see in the world?

In helping address these questions, we’ve found several changes clients can make to orient their finances as a force for good.

Explore Socially Responsible Banking

A great place to help clients align their money with their values is to start with their banking relationship. Traditional banks take deposits and lend them out for the most profit with the least amount of risk.

Consequently, most banks utilize practices that direct resources to communities and businesses that are the most financially stable or credit worthy. This practice means that many people in minority communities won’t qualify for these loans that would otherwise allow them to purchase a home or begin entrepreneurial ventures. Without this access to traditional banking, these minority communities are often left to rely on more risky lending practices.

Better options do exist in banking that provide traditional banking services while encouraging more access to credit for underserved communities. These include:

1. Community Development Financial Institutions (CDFIs): These are financial institutions that provide credit and financial services to underserved markets and populations. Visit cdfifund.gov to learn more.
2. Global Alliance for Banking on Values (GABV): This is an independent network of banks and banking cooperatives with a shared mission to use finance to deliver sustainable economic, social and environmental development. More on this at gabv.org.

Develop A Conscious Consumer Mindset

Beyond where clients choose to establish their banking relationships, you can help them reconsider the impact of their shopping habits. To help practice being a more conscious consumer, it may be best to begin with this two-step framework.

1. Shop Locally or Nationally: It all begins by starting the shopping journey close to home. If they can buy something locally, or even in the United States, they can bet it comes with reduced transportation-related carbon emissions compared to an item purchased outside of the United States. By spending locally, it has the added benefit of directing more dollars to their community, which can galvanize growth in the local economy.
2. Back Certified B Corp Businesses: Companies operating as a certified B Corp have made a commitment to stakeholders to balance purpose and profit. They operate in a way that positively impacts their employees, their community, and the environment. If the alternative is shopping with companies who haven’t considered these items, perhaps your client would rather send their dollars to a B Corp. You can visit bcorporation.net for a full directory of certified B Corp businesses.

Implement A Values-Aligned Investment Portfolio

The last step to help a client align their money with their values is to evaluate their investment portfolio. Over the long run, investing in the market can build a large amount of wealth. That said, investing in everything available can mean the wealth was built on business practices, environmental damage, and social harm that doesn’t align with their core values.

Better options might exist for your clients. Impact investing and socially responsible investing (SRI), commonly known as environmental, social, and governance (ESG) investing, are options to invest their money that considers both financial performance and impact on the world.

Since each client has different convictions and investment needs, due diligence is key to guide your client to a socially responsible investment strategy or ESG portfolio that supports their values and financial requirements.

Christopher Stroup, MBA, CFP® is an LGBTQ+ financial advisor working for Abacus Wealth Partners in Santa Monica, CA. He focuses his work on LGBTQ+ members of senior leadership across emerging and Fortune 500 companies.

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