You're Hiring an Advisor and a Firm

One of the first things I learned in my own journey is that it's not just about the advisor. It's also about their firm. When I decided to shift my money into alignment with my values, I hired my first financial advisor. I selected him specifically because of his reputation as a leading thinker in impact investing. When I signed on with his firm, my new advisor recommended that I sell a significant portion of my stock so we could reinvest my assets with more impact. Super-eager to move in this direction, I did that. Unfortunately, that was a big mistake!

Although my advisor had experience with impact investing, the firm he worked for did not. As it turned out, my advisor had other priorities and did not have the time to work with me as promised. I was passed onto a junior advisor with virtually no impact experience. My advisor kept promising that he would have time for me soon. So my money sat in cash while I waited. After nine months of watching the stock market tick up, I realized his “soon” was never going to happen, so I pulled my money and moved on to my second advisor.

Chances are that at some point in your relationship, your advisor will leave their firm or move into another role. When this happens, your account will most likely be shifted to another advisor. So it's important that you feel comfortable with both the advisor you are selecting and their firm.

Seven Foundational Questions

These seven attributes can be turned into a set of questions that you can ask any advisor to help you decide if you want to continue working with them or hire them. Since the questions about investment philosophy and relationship style are the most complex, they're last in this list. If you aren't happy with the answers you receive to the earlier questions, you can end the conversation before getting into the meatier topics.

1. Are you a fiduciary?
2. Are you paid through commissions?
3. What services do you offer?
4. Will you have discretionary power over my assets?
5. What are your fees?
6. What is your firm's investment philosophy?
7. How will you work with me?

A Values Advisor Litmus Test

As sustainable investing becomes more mainstream, you'll find that a growing number of financial advisors claim expertise. But when you dig a little, you find that sustainable investing is not central to their business. While these firms may suggest investments in ESG stock funds, their ability to help you with a broad range of impact investments is often limited, as is their deeper knowledge of the field. If an advisor tells you that values-aligned investing is not profitable in most asset classes or just too hard to achieve, keep looking.

An advisor for whom values-aligned investing is essential to their business should be able to speak to you about it in detail—across asset classes. They'll recognize references to industry organizations like B-Corp, US|SIF, Confluence Philanthropy, Toniic, or GIIN—and may even be members of one or more. They should be able to point you to investment opportunities in virtually any asset class. And if they cannot help you directly, they should be able to point you to resources that can. Many will be involved, at some level, in shareholder advocacy. The following seven questions can provide insight into the depth of an advisor's knowledge with values-aligned investing.

Finding My Second Values-Aligned Advisor

After leaving my first impact advisor, I went back to the drawing board and interviewed a few advisory firms that specialized in values-aligned investing. This time, I interviewed the head of the firm as well as the person who would be my personal advisor. When I settled on a firm, our philosophies seemed aligned, and I liked some of their ideas about where they would move my money. There was also an opportunity for my stock to be used for shareholder advocacy. And they passed all the basic hurdles: They were fiduciaries, took no commissions, and charged industry standard fees. I hired them. True to their word, my assets were moved into fixed-income and public equity investments that were as socially responsible as possible at the time, and I was getting a solid return. I was happy for a while.

Values-Aligned Robo-Advisors

Due to their ease of use and low fees, the appeal of robo-advisors is increasing, particularly among younger generations. As Table 12.2 suggests, these firms have strengths and weaknesses that you should consider to determine if they're right for you.

Some well-known robo-advisors, such as Folio, Betterment, and Wealthsimple, provide values-aligned financial products on their platforms. Newday Impact, OpenInvest, and EarthFolio go even further. As shown in Table 12.3, these robo-advisors were designed with values alignment as a core part of their investment strategies.

A Female-Focused Robo-Advisor

Ellevest is a very unique investment platform. The platform was built from the ground up by women for women. Their algorithms take women's longer life expectancy, earlier peak annual earnings, and increased time out of the workforce into consideration. Their site also includes an online “magazine” filled with information targeting women's financial concerns and needs. In addition to online portfolio management, which you would expect from any robo-advisor, Ellevest offers financial advice through a digital offering and in-person support from a team of female professionals.

The company was founded in 2014 by Sallie Krawcheck. Once considered the most powerful woman on Wall Street, she recognized the investing industry had traditionally been “by men, for men,” and she wanted to change that. With Ellevest, Sallie set out to help women realize that if they are going to achieve financial success, they need to be investing.

The Ellevest platform makes investing easy and possible for as little as $1 per month, so any woman can participate. The site offers women the opportunity to use their money to make an impact on the issues that affect them and their children the most. The company's private wealth philosophy includes getting more money into the hands of, and in support of, women. The female-centric focus and range of services that Ellevest provides makes it a standout choice for women.

Working with Your Current Advisor

Just because you aren't working with your current advisor to integrate values into your investments doesn't mean they aren't prepared to help you or that they aren't willing to learn. If you love your advisor but are now ready to build positive impact into your portfolio, it's worth checking in to see if that's an area where your advisor would be willing to work with you.

You might be pleasantly surprised and find they're ready to help. This happens sometimes because advisors can be reluctant to introduce the topic of impact investing. Instead, they choose to wait until their clients initiate the conversation. If this is what happens to you, congratulations!

Another possibility is that your advisor doesn't know much about values-aligned investing but is willing to learn. In this case, you have a number of options.

As a first step, consider sharing this book with them. You could also introduce them to industry forums, membership organizations, and educational websites that can help them build their expertise.

Your advisor could also partner with impact providers, such as Aperio, C-Note, Ethic, HIP Investors, Nia Capital, Just Invest, and OpenInvest, that have investment products or platforms that your advisor can leverage to access more values-aligned opportunities for you. There are even a few consultants who can work with advisors to help them bring ESG and other impact-oriented financial products to their clients.

Perhaps when you spoke to them, your advisor warned you against investing with your values. Perhaps they said you'd have to give up financial return to achieve positive impact. If that was the case, ask them why they believe that. Question their beliefs to see if there is room for compromise. If you ultimately realize that your advisor can't—or won't—help you become values-aligned, then you may want to consider moving on.

Finding My Third Advisor

There could be a number of reasons you decide to move on from a current advisor. Perhaps you just never clicked with them. Or maybe you aren't seeing a lot of enthusiasm when you mention your values-alignment goals. Or possibly, like me, you've simply outgrown their abilities or interests.

As I gained confidence with investing, I was ready to take more risk and wanted to start investing in private equity and alternatives to diversify my portfolio further and achieve greater impact. I was excited by the possibility of engaging my money in new ways, and I wanted to support some of the amazing female entrepreneurs and positive social change businesses I was hearing about. Unfortunately, my second advisor wasn't engaged in this type of investing and had no plans to move in that direction. If I wanted to pursue investments beyond stocks and bonds, I was going to have to find them myself. Since I didn't have the time or experience to do that, my search began for yet another advisor. To be fair, my second advisor had been the right pick at the time, but I grew, and they didn't. So I needed to move on.

Moving On from an Advisor

Letting anyone you work with go, for whatever reason, is often difficult. The hardest part is preparing ourselves mentally. We can feel uncomfortable, possibly even guilty, when we have to dismiss someone. This is particularly true with longstanding relationships. It's even more challenging if you feel conflicted or unsure of your decision.

I've found that one of the best ways to prepare myself for a difficult conversation is to be extremely clear about why I am making my decision. It helps me to write down my reasons. I include the things that I need, or want, that my current relationship is unable to deliver. I recommit to the goals I set, the decisions that I made, and the reasons I am ready to step away. I used this technique when I realized I needed to fire my old CPA. Gaining clarity made the process so much easier. My old accountant understood—and agreed with—my rationale. As a result, we had a very amicable parting.

Realize in advance that your advisor may counter with arguments about why you shouldn't leave, or they might offer to do better. When that happens, be prepared to stand your ground. Regardless of the feedback you receive, listen respectfully and stick to your decision. Thank your old advisor for their service, let them know what you'll need from them during the transition period, and move on. Be prepared to pay any final management fees to your old advisor, some of whom charge in arrears.

If you're leaving your advisor because they aren't able to help you align your money with your values, please let them know. If advisors start to realize they are losing clients because of their inability to offer values-aligned services, they'll be more motivated to educate themselves about the field and to pressure their firms to support them in offering these services.

Finding a New Values-Aligned Advisor

When you're ready to hire an advisor with deep impact knowledge, look for a firm that has integrated sustainable investing into its investment philosophy from the start. Why settle for less?

There are a growing number of firms that meet this bar. Examples include Abacus Partners, Robascotti & Philipson, Veris Wealth Partners, and Zevin Asset Management, all of which have been providing values-aligned investment services since their founding. Other contributors such as Cornerstone Capital Group, Figure 8 Investment Strategies, Nia Impact Capital, Promethos Capital, Syntrinsic Investment Counsel, and Uplift Investing are newer entrants, but sustainable investing is also core to their models. What's more, all of these firms are either run by women or have women in prominent positions.

Almost every financial advisor who contributed to this book is steeped in impact investing. You can find more information about them on the “Meet Our Guides” tab of our companion website. You can also find values-aligned financial planners and investment advisors in the Financial Services Directory on the US|SIF website.² Another resource is the B-Corp directory, which lists companies that have built their commitment to sustainable and equitable business practices into their bylaws. As of this writing, there are almost 70 investment advisors listed as B-Corps.³ You can search by city and state to find an advisor near you.

Your First Meeting with a New Advisor

To be as helpful as possible, your advisor will need to know about your current financial situation, your aspirations, and the challenges you're facing. If your money is comingled with a spouse or partner, it would be a good idea for the two of you to have conversations about your financial aspirations before meeting with your new advisor. It's also a good idea for both of you to be present at any meetings so you can be equally informed, share perspectives, and discuss options.

In addition to your dreams and aspirations, you should also bring financial information with you to your first meeting. The most important pieces of information are your cash flow and an accounting of what you already own. Make this as thorough as possible. A cash flow document should show from where and how much money is coming in and going out each year. If some of your expenses are particularly large, you might want to highlight them.

Even if your advisor will be overseeing only a portion of your assets, it will be helpful for them to have a view of your entire financial picture so they can understand how the portion of your assets they'll be managing fits into your broader financial landscape.

At the end of a successful first meeting, you should understand how your relationship with your new advisor will unfold over the next three to six months as well as the steps your advisor will be taking to bring your investments in alignment with your financial and social goals. You should have discussed a written document that articulates the services your advisor will be providing, how they will be building impact into your portfolio, the reports you receive, and the frequency of meetings you can expect. This is a document you can reference, as needed, going forward.

The First Six Months

Expect to spend a significant amount of time with your advisor as they develop an investment and transition plan that will move your existing assets into a new value-based portfolio. Be sure you allocate enough time to be a reliable and engaged partner. Your advisor won't be able to develop the best plan for you without your input, thoughts, and consent.

You can also use this time to get to know your advisor and deepen your trust. Fostering trust requires an initial investment of time for the advisor and the investor. If you don't put in the time required to prepare and meet with your advisor, then you may not have a high degree of trust around their decisions. Trust is a two-way street that requires active and considered participation from all parties.