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When most people first come to a financial advisor, they expect the conversation to be all about the dollars and cents of their financial lives. They show up loaded down with tax returns, banks statements, printouts of their 401(k)s and the like. In order to help clients prepare for a financial future that will allow them to live their dreams, an advisor should know each individual’s goals and objectives.

Typically, conversations with clients cover standard topics like retirement plans, tolerance for investment risk, and asset allocation. These necessary and important subjects can be supplemented with a discussion of impact investing.

Impact investing is a hot topic in the investment world these days. According to a recent report from the Global Impact Investing Network, there are currently more than 1,300 organizations managing $502 billion in impact investing assets.

Asking clients how they feel about “impact investing” is a great way to start talking about what their core values are. It may well be that clients will say they would like their money to have a positive impact.

That in turn can lead to an even deeper dialogue on what kind of impact they want to make. Under the impact investing umbrella there are a lot of different avenues to pursue, and it’s important that the advisor understand what is most important to that individual client. For example, the approaches that have come to be known as socially responsible investing (SRI) and morally responsible investing (MRI) both have specific and very different impacts in mind.

SRI can address a broad spectrum of economic, political and environmental issues of the type covered in mainstream media and popular on college campuses, while MRI focuses on making investment decisions that support the sanctity of life, marriage and the family. An SRI orientation might steer away from companies that allegedly “despoil the environment,” “exploit oppressed minorities” or “contribute to international conflict,” but have no problem with the company donating to Planned Parenthood, while an MRI investor would screen out companies that support abortion, pornography or embryonic stem cell research.

Understanding those nuances in your clients’ thinking is crucial in creating an investment strategy that is reflective of their values while attempting to achieve investment goals and objectives. Advisors should understand what type of screens are going to matter to that client and how important it is to them that their investments be consistent with their beliefs.

As always, advisors should be good listeners, but asking the right questions at the start can give advisors what they need to keep their clients’ investment goals and moral aims in balance. For a lot of people that’s as important as rates of return.


George SchwartzGeorge P. Schwartz, CFA, is chairman and CEO of Schwartz Investment Counsel and co-portfolio manager of the Ave Maria Rising Dividend Fund and the Schwartz Value Focused Fund.