Values-based investment growing in Tri-Cities, nationwide
By Eleanor Cummins
Preparing for retirement isn’t just about getting finances in order. Faith-based financial advisers, whose ranks are rapidly expanding in the Tri-Cities and across the country, say retirement is also a time to reaffirm commitments to family, friends and the causes you believe in.
[blockquote quote=”You can leave your money three places. You can leave it to people you love, charities that you’re passionate about, or the IRS.” source=”Michelle Clary, financial planner at Thrivent Financial” align=”right” max_width=”300px”]
Michelle Clary is one such adviser in Kennewick. Many clients have found Clary through her affiliation with Thrivent Financial, a national nonprofit membership organization that helps Christians manage their wealth. They seek out her services so they can meet with a professional planner who also understands the role faith plays in their lives.
This makes Clary part of a growing trend of faith-based financial planning. Thrivent alone has 2,400 advisers across the country and the company is just one of dozens of faith-based financial planning organizations. Additionally, a variety of socially responsible investment screening methods have become available over the past decade with $8.7 trillion now managed according to a variety of measures, including core tenets of Christian, Mormon, Muslim, or Jewish faiths, as well as principles of environmental sustainability or feminism.
In a first conversation with a client, however, Clary tends to avoid talks about screening investments, Excel spreadsheets or growth projections. Instead, she engages new clients in a deeper conversation about values.
“In order to plan … it’s almost inherent that people care about something or somebody other than themselves,” she said. Some people want to set aside money for their children or grandchildren’s college education. Others want to be know they can regularly tithe their church, even as their income becomes fixed in retirement. Knowing these things allows Clary and other financial planners the opportunity to make a client’s visions of retirement a reality.
Planning for charitable giving is one of the most important conversations wealth managers and their clients have, said Matthew Riesenweber of Kennewick’s Cornerstone Wealth Strategies, which also provides faith-based financial counsel. Many people are nervous about giving their money away when they first start living on a fixed income.
“Fifty percent of people give less because they’re a little nervous about giving too much … earlier in retirement,” Riesenweber said, “but often they pick up later in retirement.” Riesenweber’s data and experience can advise clients how much to give, as well as when and how to do it for a bump on their tax returns.
While Riesenweber can provide his clients a snapshot of their financial future with a high degree of certainty, he said what he can’t provide is a projection of what retirement will really feel like. But that doesn’t stop him from trying.
If a client wants to get involved but doesn’t know where to start, or Riesenweber thinks one of his clients seems a little listless in retirement, the Cornerstone team will try to guide them to local volunteer causes that align with their values and interests. “It’s the other part of retirement—what to do with all that extra time,” he said.
What matters most?
Faith-based financial planners aren’t the only advisers who rely on intimate understanding of their clients’ interests and values to guide their financial advice, however. Shelley Kennedy of Edward Jones in Richland also begins her conversations by asking clients about what really matters to them.
“Everything we do is about you,” Kennedy tells her clients. “What does retirement look like for you? Because everything we do is going to be framed around the picture in your head.”
While most clients simply want advice on how best to spend the wealth they’ve accumulated from savings and traditional investments, some also want to grow their wealth in new ways.
In addition to faith-based considerations, Kennedy also develops socially-responsible investment strategies for clients. In these cases, clients are interested in investing more of their money in the stock market, but they want to screen out individual stocks that don’t align with their values. Selective Roth IRAs and 401Ks allow people to avoid investing in (and therefore making money off the sales of) tobacco, guns, alcohol, fossil fuels and more.
The trouble is, Kennedy said, these types of investments still underperform traditional investments. Fossil fuels and other companies may not always align with a client’s values, but they can and do make money.
If clients are determined to screen their investments based on religious, environmental or other values, financial advisers will make it happen. “If somebody feels that strongly, and people do, that they’re willing to underperform by a little bit, but they can sleep at night because of it, there’s nothing wrong with that,” Kennedy said.
Start saving early
While reputable financial planners have the savvy necessary to help clients meet their goals in retirement, it’s all predicated on having money to invest with. To accumulate the wealth necessary to help the environment, or fund their children’s futures, people need to start saving early, Kennedy said, and be realistic about their money-spending habits.
She advised that people put at least 10 percent of every paycheck into savings, with big spenders saving more. “People develop their habits early in their life as far as money,” Kennedy said. “And they think they’re going to change… The reality is, they don’t.” Clients need to save for the spender they are, instead of the spender they want to be. “Our job is to help come to reality in a way little bit,” she said.
Unanimous among financial planners is the conviction that everyone should start saving sooner. Kennedy said that young people in particular should know, despite whatever they may think, saving money never gets easier. In other words: you may as well start now. Some clients bring their children with them to their financial planning meetings to learn this lesson firsthand, or set their children up as clients in their own right.
In the end, the benefits of deliberate retirement planning are clear, at least to Thrivent’s Clary. “You can leave your money three places,” she said. “You can leave it to people you love, charities that you’re passionate about, or the IRS.” The more prepared people are to retire, the more likely their retirement will be filled with love, not taxes.