We Now Offer Values-Based Investing!
We are excited to announce that Guide Financial Planning now offers a values-based investment portfolio for clients who want their investments to better reflect their Christian convictions.
As Christians, we believe that all we do should be a reflection of our Savior. The Apostle Paul instructed in 1 Corinthians 10:31, “So, whether you eat or drink, or whatever you do, do all to the glory of God.” (ESV)
In some areas of life, it’s obvious how to act for the glory of God. In others, it’s not so obvious. When it comes to finances, some ways we believe we can glorify God are to: give first to God, prepare for the future, act legally, care for family, and seek God’s wisdom. But what about investing? Can the way we invest our money also bring glory to God?
Guide Financial Planning Investment Principles
At Guide Financial Planning, our investment philosophy is built around five principles:
- Earn market returns
- Diversify broadly
- Choose a sustainable investment strategy
- Keep costs low
- Overweight potential market premiums.
These are the principles that we follow with our own money and that we apply as we manage our clients’ money. You can learn more about our principles here.
Over the last several decades, there has been a movement toward choosing investments that align with an investor's values. We've been intrigued by investment options that seek to align with biblical values and have conducted significant research on the topic over the years. Although we've discovered many excellent resources and built relationships with several firms in this space, we've chosen not to recommend these options broadly because we weren't convinced they met our standards. Specifically, we struggled with three concerns:
- Determining appropriate biblical screening criteria
- Maintaining broad diversification
- Keeping investment costs low
Guide Financial Planning Values-Based Portfolio
Over the past year, we revisited these concerns and believe we've found a solution that adequately addresses each of them. As a result, we're excited to now offer a values-based investment portfolio alongside our standard investment portfolio.
Because every investor's convictions are somewhat different, there is currently no practical or cost-effective way to customize investment screens for every client's unique values. For that reason, we don't pressure clients to choose either portfolio. Instead, we explain both options so they can decide which best aligns with their convictions.
After reviewing numerous screening methodologies, we chose guidelines developed by the United States Conference of Catholic Bishops (USCCB). While we are not Catholic and don't necessarily agree with every position taken by the USCCB, we believe these guidelines provide one of the most thoughtful and comprehensive biblical screening frameworks currently available.
Some of the things that are being screened out are companies who earn significant revenue from the following:
- Pornography
- Gambling
- Abortion-related services
- Tobacco
- Alcohol
- Embryonic stem cell research
- Weapons
Also screened:
- Companies violating environmental guidelines
- Companies violating human rights standards
You can view the full list of screens and more information about the USCCB in a document released by the group.
Even after applying these screens, the portfolio still owns approximately 12,000 companies worldwide compared to roughly 13,000 in our standard portfolio. In other words, investors retain nearly the same level of diversification while more closely aligning their investments with their values.
The fees are modestly higher, but not so much that we believe they violate our principle of keeping costs low or wise biblical stewardship. For a portfolio invested 60% in stocks and 40% in bonds, the investment fees for our standard portfolio are 0.20% while the values-based portfolio is only slightly higher at 0.24%. For a 90% stock and 10% bond portfolio, the standard fees average 0.21% while the values-based fees are 0.26%.
We don't expect our values-based portfolio to consistently outperform or underperform our standard portfolio over the long term. Because the portfolio excludes certain companies and industries, there will be periods when it performs better than our standard portfolio and periods when it lags. Over the past eight years, the two portfolios have experienced remarkably similar performance, although past performance does not guarantee future results. Our goal isn't to outperform by screening companies, it's to provide an investment option that allows clients to better align their investments with their convictions while remaining broadly diversified and keeping costs low.
Investing with Guide Financial Planning
Faithful Christians may reach different conclusions about values-based investing. We don't believe that owning a traditional index fund is sinful, nor do we believe values-based investing is the only biblically faithful approach. Rather, we want to offer an additional option for clients who desire to align their investments more closely with their convictions while maintaining a disciplined, evidence-based investment strategy.
If values-based investing is something you've been considering, we'd love to help you determine whether it's a good fit for your financial plan and convictions. The first step in working with us is creating a comprehensive financial plan that covers every area of your financial life. We need to understand your full situation before we can advise you on your investments. After we present your financial plan to you, you can choose to work with us on an ongoing basis and have us manage your investments. That way, you have the opportunity to work with us and get to know us before making any kind of long-term commitment. If you’re interested in learning more about working with us or our approach to investments, schedule a free introductory phone call today.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner® and Certified Kingdom Advisor®. He has a passion for helping people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.