From the August 2009 issue of Boomer Market Advisor • Subscribe!

Meet the needs of boomers who give

Our society's shift in global awareness over the past few years has caused people to step back and reevaluate their needs and desires, and to get in touch with what is really important to them. For advisors, this sometimes translates into a client who desires to invest in something they feel is socially responsible and will contribute to their own legacy.

Boomers in particular are becoming more interested in investing their assets responsibly. Socially responsible investing (SRI) is based upon what is important to the client, and how they feel it will benefit others. For example, a client may want to avoid investing in companies producing high carcinogen level products because someone in their family was lost to cancer.

It then becomes our responsibility to make clients aware of these investments and place the same importance on them. Like any investment, we have to weigh perceived social value versus investment performance - and with SRI this is not a purely numerical exercise.

Use of a screening tool is one of the best ways to provide options for clients interested in these types of investments. Screens allow advisors and clients to work together to create a custom portfolio that validates what is important to them. Nevertheless, even with solid tools, you must be well prepared to manage the details anytime you embark on a route that requires customization.

In moving ahead with SRI there is a lot to be considered. Although these investments contribute to a worthy cause, they may not seem so worthwhile for the advisor. SRI requires more attention and may not be as efficient (i.e. profitable) as standard investment vehicles. Unless this is an area of focus for a firm, SRI is generally better handled through the use of separately managed accounts or mutual funds, rather than dedicating your staff resources. There are a lot of moving parts in this class of investments, and utilizing a manager who is handling the screenings and keeping up to date on companies, acquisitions and divestitures allows for better effectiveness and efficiencies than an individual advisor is able to provide.

Though with the proper management, SRI can become a win-win for everyone involved. We have to remember that if investing in particular companies (or avoiding them) is important to one client, it will likely be important to others. This opens an opportunity to proactively reach out to others who may share the same values. Whether it is a religious affiliation or a global group, an advisor can conduct a presentation on SRI investments geared toward that group's particular belief. This provides an opportunity for some economies of scale, and to ultimately address a need.

The calculator does not drive these investments - and if we do not provide options for clients who want to invest according to their values, somebody else will. Boomers want to find a way to maintain their finances while finding importance in what they are investing in and advisors have the opportunity to capitalize on this need. To be a socially responsible advisor you have to be open to the importance of the values of your clients. SRI then becomes a vehicle for total involvement - the client, the advisor and the cause.

Congratulations to this year's Boomer Market Advisor Socially Responsible Advisor of the Year Judith Seid, and to the many other advisors who understand client values and work diligently to find socially responsible investments to match them.

Mark A. Cortazzo, CFP is senior partner with MACRO Consulting Group in Parsippany, N.J.

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