The Power of the Purse

There’s a saying that money never sleeps.  And that’s certainly true regarding your investment portfolio, and your retirement account.  But are your investments working towards the world you want to live in, or against it?

There is a way for your investments to follow your values and be competitive with traditional investments called socially responsible investing (SRI) - an investment strategy which seeks to maximize both financial return and social good.

And it’s not just for one’s weary conscience.

“There’s a misconception that investors have to sacrifice financial return when investing in their values, but that simply isn’t true,” comments Michael Smith, a member of the Progressive Asset Management Group, the socially responsible division of Financial West Group, member FINRA/SIPC, with a branch located in Newfields, N.H. 

There are a growing number of academic studies which have demonstrated that companies with an eye towards treating their employees well, treating the environmental sustainably and exercising good corporate governance are better managed than those which don’t address these factors.  Better managed companies in turn tend to outperform.  Companies which don’t take these factors into consideration tend to have hidden liabilities which are eventually passed on to the investor.  

“Sustainability is fast becoming the economic imperative of the global economy as companies around the world recognize the strategic, financial and competitive advantages associated with superior sustainability performance,” added Smith.

“Our clients have seen long-term returns comparable with those of more traditional investments, and they feel a lot better about how their investments contribute to a more socially just and sustainable world, and how they are supporting the kind of community-oriented, social and environment progress they want to see.”

Along with his partner, Hunter Brownlie, who’s been running the New Hampshire chapter of the Progressive Asset Management Group since 1996, Smith and Brownlie serve clients who primarily want to have their investments and their wealth follow their values, without sacrificing financial return. 

“While we’ve always assisted clients who identify themselves as ‘green’, we’re also seeing a lot more people who don’t want to be directly or indirectly invested in companies which have been plagued by scandals,” said Smith.  “Plus, there are plenty of terrific investment opportunities in areas like alternative energy, clean technology, and sustainable manufacturing which we offer to our clients, and they can feel good about the things they are invested in.  Think of it as doing well by doing good.”

Add to this the corporate abuses of the past two decades, and people becoming fed up with those abuses, and you see a significant interest in SRI by both institutional investors and public investors. 

In fact, in a study released in 2010 by the Social Investment Forum, nearly one of every 8 dollars under professional management in the US is involved in some strategy of socially responsible and sustainable investing, which is now, and has been for several years, the fastest growing segment of the financial services industry.

“If you don’t like the actions or culture of the companies you’re invested in, whether it’s by owning the stock directly, or indirectly through a mutual fund, divesting of those companies and investing in companies which share your values sends a powerful message.  And these companies certainly pay attention to the actions and opinions of the investment community,” adds Brownlie.

Equally there are an increasing number of companies telling us how green they are and what they are doing to improve the planet.

“Figuring out which ones are really backing up their words with actions and not just 'green washing' can be difficult, and that’s where we help shed some light,” adds Smith.

The firm acts as an investment advisor, meaning Brownlie and Smith can assess their clients’ investment goals, risk tolerance, asset allocation, needs for liquidity and diversification, and how this all fits into the overall economic conditions.  But they also look at the client’s values and what they want to support as an added layer, providing peace of mind in their clients’ financial lives and helping them to contribute to a more sustainable world. 

That means Progressive Asset Management Group can invest in a variety of investment vehicles on their clients’ behalf including mutual funds, individual stocks, bonds, green exchange-traded funds - just about every vehicle people use for traditional investing is available for sustainable investing - all while helping them follow their values and providing a strategy for competitive financial return.

And as veterans of the investment industry – Brownlie’s been involved with SRI for 15 years, while Smith’s background in finance and biology/ecology serve him well when analyzing balance sheets as well as environmental footprints – Brownlie and Smith are adept at balancing financial concerns with larger social issues.

“We tailor each client’s portfolio to his or her financial goals and specific values,” mentioned Brownlie.  

They also handle retirement accounts, so if people have old 401(k)’s or retirement plans from previous employers, those often-ignored assets can easily be rolled-over and consolidated while maintaining their tax-deferred status, and be invested in things which they want to support.

Brownlie and Smith walk the green walk at home as well as at the office. Brownlie uses bio-heat at home, and is passionate about organic and local food, while Smith uses wood heat, grows his own organic vegetables, and belongs to an organic community supported agriculture (CSA) in neighboring Brentwood.

To further increase their regional exposure, the New Hampshire chapter of Progressive Asset Management Group has joined the Green Alliance, a union of green businesses across New Hampshire, southern Maine, and Northern Massachusetts which connects businesses to the region’s eco-conscious community.

“I really like the idea of belonging to a community of like-minded businesses and citizens,” said Brownlie.

And the recent displays of corporate abuse by financial and energy industry stalwarts have given some hardened, veteran investors reason for pause.  

“The fact that we can offer competitive financial returns is a compelling reason to consider investments that don’t cause social harm,” Brownlie concluded.

[Representatives of and securities offered through Financial West Group, Member FINRA, SIPC.  Progressive Asset Management Group is the socially responsible division of Financial West Group (FWG).]