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The Election and Values-based Investing

Mark Bateman - July 28, 2016

With one convention done and the other nearly so, political silly season can’t be far off.  But what’s the relationship between these political campaigns and your clients?

Whether your clients are supporting Donald Trump or Hillary Clinton, in most cases, their support is premised on deeply held beliefs.  It may be a self-described belief in social justice or a firmly held personal conviction on the primacy of freedom.  Your question as a financial advisor should be: how do these firmly held political beliefs translate into their investment portfolios?

Whether it’s keeping certain kinds of companies out of a portfolio—tobacco, guns, abortion, nuclear power, or any other topic—or finding better environmental companies, political beliefs often translate into values-based investing criteria.  During this campaign year, listen for hints at the political leanings of your clients, and for the underlying values that drive those leanings.

You may also discover that when you raise these questions, that while your clients care what they’ve invested in, and want to understand the relationship to their political views, they may choose not to change their investment portfolio.  That’s okay.  While the most frequent monikers for this kind of investing are “socially responsible” or “values based,” a label sometimes used is “conscious investing.”

The most important aspect of these discussions is for the investor to understand, consider, and decide what investments are appropriate given their values.  Facilitating this consciousness is your goal as an advisor.  There is no right or wrong decision, but it should be a decision, not a default outcome.