Resources

Just too good to keep to ourselves

Welcome to our library. We strive to provide resources so that our clients know as much as they wish when it comes to being financially savvy. And it doesn’t stop there! We are part of a larger community – including you, wherever you may be. This is where we share content and tools that are important, fun and even inspiring, with everyone. Our resource vault will help you get smart about money, find your own motivation to move forward, and laugh and breathe a bit easier along the way.

Our 2021 Wish For You

Published in: Resources |

So this is what it’s like to live through a pandemic. It’s tough, to say the least. We have all experienced tremendous loss and disappointment and may have had some pretty dark days.

We’re not fans of forced “happy talk,” but we are grateful for the lessons learned in 2020. We learned so much this year — especially about ourselves and our strengths — individually and as a community.

So here’s to 2021! Let’s remember the values and qualities that got us through 2020 and use that as the perfect vantage point from which to look ahead.

As we jump into 2021, we thought it appropriate to celebrate our collective resilience and perseverance with some inspirational words.

1. Gratitude. Start the new year by reflecting on the days just left behind. What made them challenging? What did you cherish?

2. Connection. As Brené Brown says, “Connection is the energy that is created between people when they feel seen, heard and valued – when they can give and receive without judgment.”

3. Empathy. Think of someone in your life. If you could have a free and open conversation, what would you like to say to them. Put a plan in motion to make it happen.

4. Courage. Embrace the bravery and connection that comes with being your true, authentic self.

5. Community. Be grateful for the inspiring community of women you have in your life — reach out and let them know how much they mean to you.

6. Discipline. Harness your strengths. Know the risks. Work the problem. The future looks exciting.

7. Resilience. Doubting your abilities during financial, professional, or personal roadblocks? You already have the tools to succeed. You are strong enough.

8. Restoration. Lalah Delia says, “Self-care is how you take your power back.” Choose YOU by starting a self-care routine that powers you up.

9. Confidence. Be clear about your goals and values; you’ll find making decisions can be simple and straightforward. Start by defining what matters most.

10. Creativity. Creativity drives progress. Question stereotypes and look for new solutions and methods of doing things. Celebrate curiosity.

11. Generosity. Giving can contribute to your overall sense of life satisfaction and purpose. Consider what “time” or “talent” you could provide to someone in need.

12. Inspiration. Inspiration can come from the people and places in our lives. Who is inspiring you? Plan time together and start the year inspired.

These words of inspiration are a reminder that we have what it takes not just to survive, but to thrive. Cheers to 2021!

Rewriting the Rules: Building a New Blueprint in 2021

Published in: Resources |

In our eBook, Rewriting the Rules: Telling Truths About Women and Money, our research helped us distinguish myth from reality when it comes to women, money, and personal finance. Here were some of our key findings:

1. When it comes to investing, women gain a performance edge thanks to their patience, low-trading frequency, and goal-driven strategies.

2. Our money and our emotions are inextricably intertwined. The more we recognize and embrace this, the more our “elephants” (intrinsic motivations) can inspire our “riders” (rational actions), and the more we can harness our emotions for positive change.

3. Women aren’t afraid of risk — but their heightened risk awareness leads them to allocate their risk-budget prudently.

4. Women make financial decisions in a measured and patient way.

5.  Women learn best in group settings and are eager to benefit from the wisdom of their peers.

6. For women, investing is less about bragging rights than it is about accomplishing goals and reaching life’s milestones.

7. Keep it simple, sister — women aren’t seduced by unnecessary complexity.

8. Women are more engaged in financial wellness programs that are well-paced, relevant to their daily lives, and presented in clear terms.

Today’s financial institutions were built by and for men, so it’s no surprise that the “norm” does little to reflect the strengths and preferences of women, as described above. What would happen if we flipped the narrative? What if we redesigned the world of personal finance, using the strengths and preferences of women as our starting points?  Until very recently, the industry has kept women away from the table. Now that we have a seat, we don’t necessarily have to do things the way men have all these years.

Our ability to listen — truly listen — and engage in meaningful conversation is key. So far, women have been asked to reject or mask their femininity in the workplace, in the business world, and in financial conversations. Instead, let’s value our insights, derived from our lived experiences, to develop viable business models that can benefit us all.

In a capitalist society, money is power — there’s no getting around that. We deny it to our own detriment. How do we want to wield our financial power? To quote one of our heroes, Sallie Krawcheck, founder and CEO of Ellevest and veteran of Wall Street:

“Financial feminism is about women doing four very important things with money: earning it, making more of it, saving and investing more of it, and using it to make our world better. And it’s not just good for us — the more opportunities women have, the better off society is.”

What she said!

We will do ourselves a disservice if we avoid getting smart about, recognizing, embracing, or talking about money and how it shapes our lives. Instead, women can recognize and embrace their leadership roles, within their family or on a team at work. In many aspects of our lives — including the financial ones — we can operate in ways that are similar and dissimilar to men. What starts out feeling uncomfortable becomes easier and less fraught over time. While we build skills and confidence, step-by-step, we can lean on each other, collaborate, share wisdom, and ask for help — but the point is to start.

You can download our eBook, Rewriting the Rules: Telling Truths About Women and Money, here.

What’s Your Worth: Discover the Art of Advocating for Yourself

Published in: Resources |

Whether something smaller — like asking for a discount on a defective item or negotiating for a cheaper rate at a hotel — or something bigger — like asking your employer for a raise or getting the information/answers/treatment you need from your doctor — the idea of advocating for ourselves makes many of us squeamish.

We worry about hearing the word “no.” We worry we don’t deserve what we’re asking. We worry we’ll make the other person unhappy or angry.

And not only do we need to fight that discomfort within ourselves — society is also telling us to “stay in our place.” Women are expected to be unselfish, caring, emotionally expressive, and interpersonally sensitive. If we do act “out of role,” the response we get is exaggerated. Self-advocating by women is seen as even more self-promoting, even more aggrandizing, than if a man were to do the exact same behavior.

The social cost of women self-promoting is that they’re less liked, by both men and women. And this is important — because being liked is a powerful tool of persuasion, whether at work, at the neighborhood association, or with your doctor.

So what do we do? How can we successfully advocate for ourselves?

Women Have a Superpower: Advocating for Others

Women have a superpower in this area — advocating for others. We are expected to advocate for others, and we’re more liked when we do so. And research shows we are better at it than men. Women are better at recognizing the value of what both sides bring to the table — which makes it easier to identify a win-win outcome.

So let’s use this superpower to our advantage. Those resources and strengths we use when we go to bat for our friends, family, or co-workers? We can use those resources when going to bat for ourselves.

Self-Advocating: Words of Wisdom

Next time you need to self-advocate, enlist the support of your fans. Ask others to advocate for you (e.g., nominating you for awards, suggesting you as a keynote speaker). Ask your peers to help you craft an effective case. What would they say about you? Resist the urge to tone down their words.

When self-advocating, think about whether you can also make a case for something larger, for the greater good. Position yourself as connected to a group and not just out for yourself. Think personally, act communally.

Remember, what you do for yourself as a self-advocate, and for each other as other-advocates, will impact not just your life/career but the lives/careers of others too, and for generations to come. Advocating for yourself — worthwhile in itself — is still advocating for others!

Lastly, keep this in mind: If you feel discomfort when self-advocating, know that it is caused by gender stereotypes, something outside yourself. And that the feeling is shared by many, many women.

Continue the Conversation with The Humphreys Group

Especially during this pandemic, we need to advocate for ourselves. We need to talk to employers regarding how we can feel safe during the pandemic and find a flexible working situation, and we need to set boundaries with family or friends. Want to continue the conversation about self-advocacy when it comes to your finances? Reach out to our team today.

New Year’s Resolution Ideas for 2021

Published in: Resources |

As financial planners, we’re passionate about setting goals (financial or otherwise), reassessing, and course correcting throughout the year. But after such a turbulent and unpredictable 2020, you might not feel motivated to set New Year’s resolutions for 2021.

Yet goal-setting is still important. In fact, a 2015 study found that when people wrote down their goals, they were 33 percent more successful in achieving them than those who formulated outcomes in their heads.

For 2021, we might not be able to confidently add “travel more” or “spend more in-person time with family and friends” to our New Year’s resolutions lists, but there are still many other goals that are within our control.

Here are some ideas:

10 New Year’s Resolution Ideas for 2021

1. Journal more. Journaling is a great way to de-stress and practice mindfulness. Whether it’s a gratitude journal, a “dear diary” journal, or a bullet journal, journaling helps you create structure in your day while also helping you self-reflect.

2. Take up other relaxing activities, such as yoga and meditation. Continuing the theme from goal #1, yoga and meditation will help you feel more centered and calm during this stressful time.

3. Read more, and/or join a book club. With everyone socially distancing, a virtual book club is a great way to stay connected with friends and colleagues. Looking for your first read? We recently shared on the blog three inspiring books on impact investing.

4. Give back. There’s been a record-breaking amount of charitable giving during the pandemic. In a Fidelity Charitable survey, 46 percent of millennials said they will give more in response to the pandemic. Looking for local San Francisco organizations to give back to? Here are some suggestions we recommended on the blog back in March, such as Meals on Meals, St. Anthony’s Foundation, and The Safety Net Fund.

5. Find new creative outlets. You might not be able to go to museums, movies, or concerts or take up a pottery or other art class in-person, but there are other safe creative outlet ideas. For instance, consider trying new recipes at home, taking a virtual art class, or trying other crafts at home.

6. Create personal work goals. Whether it’s getting a promotion or trying a new career path entirely, define what your professional goals are for the new year.

7. Step away from your phone. With all of us working remotely, it’s easy to stay glued to our phones all day — and doom-scroll on Twitter and news sites all night. Try to limit screen time in 2021; schedule phone-less breaks and leave your phone in the other room at night.

8. Spend time with family and friends (virtually). With the whole world telling us to stay inside and social distance, it’s easy to give up trying to make social connections. But for your mental and emotional health, you need to stay in touch with loved ones. Make sure to schedule video calls with family and/or stay in touch via email, text, or snail mail.

9. Review where your money is going. We had to include some financial New Year’s resolutions in here. Make it a goal to see where your money is going — what are your foundation expenses, discretionary expenses, intermittent expenses, and subsidized expenses? We go more in depth about this here. Armed with this knowledge, you can make more informed financial decisions throughout the year.

10. Build a budget — and create room for changes. Create a cashflow spreadsheet and plan out how much you want to spend and save each month.

Goal-Setting with The Humphreys Group

Our eleventh New Year’s resolution idea? Consult with a financial advisor. A financial advisor can help you define your values and create a path to reaching your financial goals — whether that’s paying off debt, saving up for a vacation in the future, buying a house, funding your child’s education, or saving for retirement. Make it a goal to at least have an introductory call with a financial advisor.

If you’re interested in working with The Humphreys Group, you can set up a complimentary introductory call with us today. We look forward to hearing from you!

The ABCs of ESG: Our ESG Investment Approach

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

We’ve discussed how ESG investing can motivate the corporate world to make positive change and have acknowledged the complexity of the investment decisions that are being made within ESG funds. Another complex aspect of ESG investing is that different financial firms adopt different investment strategies that are suited to their clients’ needs. It’s time for us to share our take on it!

How We Approach ESG Investing Within Your Portfolio

The Humphreys Group has invested in ESG mutual funds for 20+ years, and such funds currently make up about 15% of our clients’ assets. We have worked closely with industry leaders like Impax Asset Management and Parnassus Investments as well as newer entrants, such as Dimensional Fund Advisors, who are interpreting ESG in new, interesting, and valid ways. Our approach to ESG investing has evolved as has the industry, as the “opportunity set” has expanded as a wider range of funds has been made available, as the evaluation process has become more nuanced, and as the false choice between performance and social impact has been debunked.

All of this has led us to a robust process for implementing ESG investment strategies within your portfolio. First, we’ll ask you to complete an ESG questionnaire. This identifies what issues are most important for you — for many, it’s the environment, for others, it’s gender diversity, while others may focus on avoiding for-profit prisons or weapons manufacturing.

We’ll then review the questionnaire together, talk about priorities and about the issues you care about, and most importantly, we’ll help you identify the values that underly your passion for the issues. ESG funds will almost never match your preferences exactly, but truly getting to the heart of the matter is how we can find the investment strategies that will leave you feeling fulfilled while still helping you accomplish your investment and financial goals.

Based on this conversation, we’ll implement an ESG investment strategy in accordance with your overall portfolio investment guidelines, and when appropriate, we’ll refer you to resources for alternative strategies. Over time, you can expect us to include your ESG funds in your portfolio and performance reports and notify you of any changes or new developments that may further align with your values.

ESG Funds Outperform Their Competitors

Back to that false choice we mentioned earlier: how do these funds perform? For a long time, there’s been an often-repeated myth about ESG funds. Many advisors will offer these funds to placate well-intentioned clients, but in the same breath will caution that they require a sacrifice on the performance side of the equation.

However, the numbers simply don’t bear this out: Morningstar reported that sustainable funds comfortably outperformed their conventional fund peers in 2019 — a pattern that has only accelerated during the pandemic. In 2011, a Harvard Business School study examined 180 US firms and found that those with strong sustainability policies outperformed their competitors by almost 4% per year. And in 2015, Deutsche Asset Management and Hamburg University conducted the most comprehensive meta-analysis on ESG investing. After reviewing over 2,000 empirical studies since the 1970s, they found that the large majority of studies reported a positive relationship between ESG and corporate financial performance. The researchers concluded that the business case for ESG investing is well founded. It’s becoming impossible to ignore that ESG funds are not a risk, they’re an opportunity.

And you don’t have to be Janet Yellen to understand why this makes sense! Companies that incorporate ESG into their decisions tend to be less risky than those making bad decisions, because the bad actors are more likely to incur financial losses (think of the BP oil spill, Volkswagen’s emissions scandal, and Wells Fargo’s account fraud… you get the idea). Doing the right thing has increasingly become good for business, and therefore good for investors.

ESG Investing Is Always Evolving

Of course, it’s good to remember that impact investing exists as a spectrum — a spectrum that has and will continue to evolve as investors respond to the changes within our economy and on our planet. How we make a difference with our money is also sure to change, and we may find ourselves using different approaches on that spectrum to complement our goals and values over time.

Now that ESG investing has proven itself as an increasingly powerful force for good, we invite you to utilize it the next time you feel a calling to make an impact. Because if 2020 has taught us anything, it’s that fostering our collective power will get us closer to a more equitable, more sustainable, more empathetic world.

Are you interested in ESG investing? Contact The Humphreys Group to learn how we can help you meet your goals.

The ABCs of ESG: Investing in Action

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

As we noted in our most recent blog post (linked here), there has been a tremendous rise in the interest in impact investing and the dollars devoted to it. The primary driver of ESG, and the reason it has become so popular in recent years, is the simple desire to use our money to fund companies that are making the world a better place. Many ESG investors are pleasantly surprised to find that in addition, they’re supporting engagement between investors, businesses, and the government. What does that actually look like?

As is always the case, each asset manager has a different approach and different criteria. But let’s take a deeper dive into the acronym itself, then focus in on the most common investment strategies.

What does ESG stand for?

Before investing in a company, a portfolio manager typically analyzes a massive amount of financial data: everything from its balance sheet and profit margins, to the current phase of the economic cycle, and the current interest rate environment. Managing an ESG fund comes with the additional responsibility and opportunity to incorporate a variety of environmental, social and governance (ESG) factors into their analysis. Here’s what’s actually behind that acronym.

Environmental: What does a company do (or not do) to protect the environment? As you’d probably expect, the most important information that falls under this category is a company’s sustainability practices and their greenhouse gas emissions. But this may also include their water and land use practices, treatment of animals, product packaging, renewable energy usage, and whether existing climate change trends will threaten the company’s future.

Social: How well does a company treat their employees, customers, suppliers, and society at large? Mutual fund companies usually pay attention to labor practices, what sort of hiring, human resources and safety policies the company has adopted, how they protect consumer privacy, their customer satisfaction, and where their supply chains are sourced.

Governance: How do corporate leaders run their business and relate to their stakeholders? Asset managers are usually most interested in executive compensation and how their financial incentives align with the company’s success. They’ll also look at the quality and diversity of the board of directors and management team, how they communicate with shareholders, and examine past lawsuits brought against the company.

Mutual fund companies will use these factors, along with data from third-party rating agencies, like MSCI ESG and Sustainalytics, to develop a comprehensive analysis of the company — in fact, many often end up developing their own ESG rating system.

And here is where the rubber meets the road. When you buy shares of an ESG fund, portfolio managers typically invest your dollars using one (or a combination) of the following strategies:

Negative (or Exclusionary) Screening

If a fund is negatively screened, it means that it either underweights or eliminates companies that the portfolio management team has deemed objectionable based on their ESG data. For example, many ESG funds refuse to invest in tobacco, alcohol, or gun manufacturing companies. They may also eliminate companies that violate some set of norms, like the Ten Principles of the UN Global Compact, or operate in countries with corrupt leadership or human rights abuses.

Positive (or Best-In-Class) Screening

If a fund is positively screened, it holds or overweights companies with strong ESG performance. Oftentimes mutual fund companies will develop a minimum standard based on their ESG rating system, and this strategy invests in companies that exceed that minimum. This is also sometimes called the “best in class” approach. To be clear, this doesn’t always mean they eliminate the poor performers from their fund — it just means they overweight the best performers of a specific group or sector.

Thematic (or Inclusionary) Investing

Then there’s thematic investing, which is not about rewarding or excluding certain companies, but instead about concentrating on one ESG issue. For example, a thematic fund may invest only in companies that use renewable energy, or only in companies that achieve a certain level of gender diversity in their management (like one of our favorite ESG funds, the Pax Ellevate Global Women’s Leadership Fund). Most of the time, thematic funds are focused on an issue that the portfolio management team believes will become a widespread (and profitable) trend over time.

Still, ESG Investing is Subjective

Some mutual fund companies practice just one of these investment strategies, and some may use a combination of all three.

But here’s the thing: try as we might to outline these strategies in a straightforward way, ESG investing in real life is not usually as simple as holding or not holding this or that company. In fact, it’s quite subjective, because every mutual fund company has developed different ESG criteria, offers different depths of research, exercises different levels of flexibility, and deploys a variety of investment strategies.

That means that you may hold a positive screened ESG fund, but still be surprised to find that it holds an airline or an oil company — when in fact the reason it’s there is because it has better ESG metrics, or is making significant strides, compared to other airlines or oil companies. Even negatively screened funds are not absolute: they may underweight, but still hold a very small stake in, companies you consider unfavorable.

All of that is to say, as it becomes more popular and more dynamic, ESG investing is moving away from the binary “yes/no” approach and toward a more nuanced and proactive methodology. The good news is that it can still be worthwhile. In our last piece, we bring this all a little closer to home and outline how The Humphreys Group approaches ESG investing within your portfolio. Check it out here.

The ABCs of ESG: What It Is, and What It Is Not

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

So, let’s say you’ve chosen one of the most accessible methods to make an impact: ESG investing. You happily buy some shares of an ESG mutual fund and think to yourself… what does holding this fund really do, anyway?

At face value, you’re buying a fund that has a specific framework for the companies it invests in, based on their environmental, social and governance practices. (We’ll discuss this in our next blog post and highlight some examples.) But there is a lesser known, equally important component to ESG investing. Investing in these funds also means that you’re supporting a significant level of dialogue between the mutual fund company and the companies it holds a stake in. Sometimes, that dialogue turns into much more overt pressure to incorporate more equitable and sustainable business practices.

Every asset manager is different, but it usually involves a combination of the following:

Shareholder Activism

Unlike traditional activism, shareholder activism doesn’t involve marches and boycotts, but like traditional activism, it does involve voting. You see, shareholders aren’t just entitled to quarterly dividends — depending on the class of shares, they’re also entitled to distinct voting privileges. And when an ESG mutual fund company owns a significant percentage of shares of a company, it leverages its rights as a shareholder to bring about sustainable and societal change. In addition to voting on a wide range of business decisions (such as board of director elections, environmental goals, executive compensation, among other issues), they may also propose their own recommendations to the board (called shareholder resolutions) that are voted on during the corporation’s annual meeting.

Engagement

If shareholder activism is analogous to voting in the political system, shareholder engagement most closely resembles advocacy. In this case, the “advocates” are the members of the mutual fund’s policy and research team(s), who meet directly with company executives and encourage them to adopt higher sustainability and governance standards. The asset managers will also share their expertise, research findings and other resources to support their demands. Depending on the willingness and progress that the company shows during the engagement process, the portfolio managers may change the fund allocation to invest more — or less — in that company.

What does this look like? Let’s look to Parnassus Investments as an example. Parnassus is a San Francisco–based firm and one of the first entrants in the world of impact investing, decades ago. Beginning in 2013, they voted in support of a shareholder resolution that called on Mondelez, which owns snack brands like Oreo, Ritz and Cadbury, to improve its packaging waste. Over the next five years, Parnassus also directly engaged with its head of sustainability and corporate security, and by 2018, the resolution grew to receive 31% of the shareholder vote. In October of that year, Mondelez announced that all the company’s paper packaging will be sustainably sourced by 2020, and all of its packaging will be recyclable by 2025. We love to see this kind of shareholder activism and engagement in action!

Advancing and Developing Public Policy

In addition to voting and appealing directly to executives to bring change within corporations, some ESG mutual fund companies broaden their advocacy efforts to influence policy. Portfolio research teams at Impax Asset Management, for example, serve as facilitators to help policymakers and investors understand how subsectors within industries operate. This makes it possible to identify the trends and components within industries that are needed to support sustainability.

Many mutual fund companies will also band together to expand their clout worldwide. In 2019 alone, Impax wrote or signed letters to at least 11 public entities, including the EPA, three state legislatures, the SEC, and the government of Bangladesh, on issues ranging from upholding air quality standards, to increasing funding for energy efficiency, to maintaining corporate disclosure requirements — just to name a few! Both Impax and PIMCO are also part of the Institutional Investors Group on Climate Change, a network of 240 asset managers and pension funds that works with policymakers to advance climate policy on the global stage.

The Power of ESG Investing

As wealth managers, we’re excited that ESG mutual funds have become uniquely positioned to serve as a link between investors, businesses, and government, and appreciate how they’re doing the legwork and research to identify a sustainable path forward. By investing even a small amount in ESG funds, you are promoting a dynamic discourse and advocacy between institutions that you couldn’t otherwise do on an individual level. But that’s just part of it! In our next piece, we’ll explore the more granular side of ESG investing: how fund managers actually put your dollars to work.

If you’d like to learn more about ESG investing, check out Part III of our blog series on the topic here.

The ABCs of ESG: An Introduction to Impact Investing

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

In the year that has brought us COVID-19, a nationwide reckoning with racial injustice and undeniable signs of climate change, many of us — often feeling otherwise helpless — have opened our wallets in an effort to help correct the inequities that have been laid bare in our country. This isn’t particularly unusual: whether we choose to make a donation to a local nonprofit organization, drop a bill into our church collection box or contribute to a GoFundMe page to help someone pay their medical bills, when life gets difficult, many of us have a natural inclination to use our dollars to make a difference in a way that we otherwise can’t. Of course, we don’t expect to see that money again, or to see it grow. We simply hope it will have an impact.

For decades now, many in the world of finance have taken this traditional model of philanthropy a step further through what’s commonly called “impact investing.” While there are many flavors of this rapidly growing segment of the investment industry, they are all based on the desire to make money and do good at the same time.

Of course, we at The Humphreys Group heartily endorse the increased interest in investing to promote social good. It is one of the most effective ways we can vote with our dollars and have our money and values aligned — which we have seen results in better financial outcomes. Because 2020 has given us no shortage of causes that are deserving of our help, we decided to mark this year by focusing on what it really means to be an impact investor and explore a new strategy that can help you have the impact you seek.

Impact Investing Approaches

Let us start by acknowledging there are countless approaches to impact investing, and each depends on a variety of factors, including your resource level, your risk tolerance, your values and your goals. While we surely can’t cover each individual strategy, we think the best way to understand impact investing is to envision it as a spectrum, with direct strategies on one end, and indirect strategies on the other.

Direct Strategies: One End of the Spectrum

When we talk about direct impact, we’re referring to strategies you’re most familiar with, like charitable giving and political donations. They are approaches in which we often have a fair amount of control over where our money goes, generally know how the funds will be put to work, and rarely, if ever, expect a financial benefit.

Humphreys-Group-ESG-Chart-1

Less Direct Strategies: The Middle of the Spectrum

As we get closer to the middle of the spectrum, we lose some of that control, but we’re still quite aware of how we’re effecting change. Perhaps we choose to practice intentional spending, like supporting businesses that are women-owned, Black-owned, or certified as a B Corp. Maybe we choose to participate in a program that provides loans to underserved populations, like a microfinance organization or lending circle. Remember that these strategies are less direct because, for example, you cannot instruct how a loan recipient or business owner puts your money to use. But you are still broadly aware of how your money is reflecting and advancing your values. In some situations, like a lending program, you may expect some interest or a small return on your investment.

Humphreys-Group-ESG-Chart-2

Indirect Strategies: The Other End of the Spectrum

The best example of an indirect strategy is called ESG (environmental, social and governance) investing. It involves you (as an individual investor), buying shares of a mutual fund and essentially putting your trust in a number of intermediaries (portfolio managers, other shareholders and corporate executives) to use your money for good. In exchange, your investment is expected to grow over time. ESG investing is also one of the most accessible forms of impact investing, especially compared to those with a higher asset base, who might be better financially positioned to engage in more direct programs like microfinance or private foundation work. This indirect side of the spectrum is where wealth managers are most often engaged, and while ESG investing specifically can seem “hands off,” you may be surprised to know that it is an incredibly powerful way to bring about change.

Humphreys-Group-ESG-Chart-3

Why ESG Investing Is So Effective

The reason ESG investing is so effective is because it’s multifaceted. While enabling us to proactively use our money to support that which we want to thrive, this strategy also leverages research, financial support, shareholder activism and policy development to apply pressure on the private sector to become more equitable and sustainable. And it happens to be at an inflection point. According to Morningstar, the first half of 2020 saw a record $20.9 billion flow into ESG funds — almost as much as the $21.4 billion in ESG flows in all of 2019.

As we’ve seen ESG investing evolve, we’ve grown more excited about its potential. In the next three blog posts, we’ll take a deeper dive at why this indirect strategy may actually become the future of impact investing. First, we’ll take a look at how it can influence business leaders to act more equitably, then we’ll talk through what investment decisions are being made within the fund, and in our last post, we’ll share our specific perspective and investment approach. After a long, difficult year, we think it will give us all a much-needed renewed sense of hope.

If you’d like to learn more about ESG investing, check out Part II of our blog series on the topic here.

Q&A: What Does It Mean to Be a B Corporation?

Published in: Resources |

We recently shared the exciting news that The Humphreys Group is now a Certified B Corporation. We wanted to further explain what that means, especially since the issues of sustainability and social responsibility are so prevalent right now.

In this Q&A, President Diane Bourdo, CFP®, shares why earning this certification was so important to The Humphreys Group and the firm’s goals for 2021 and beyond:

1. Why did The Humphreys Group want to earn the B Corp certification?

Diane Bourdo (DB): I initially learned about the B Corp certification probably two decades ago. I’ve always aspired to run The Humphreys Group to serve the interests of all stakeholders, so validating that effort with a B Corp certification was a no brainer. I wanted to recognize and foster the idea (and my belief) that business success is not measured solely by the bottom line.

The world of wealth management is steeped in numbers and metrics, of course, and I wanted to explore other ways to measure value and success in a for-profit environment. I wanted to see (and felt challenged by) whether we could pass muster in this regard and earn the certification.

Joining a community of like-minded endeavors has great appeal. I want to add our voices to the growing belief that making money and doing good can happen at the same time.

2. What does the B Corp Impact Score mean?

DB:  From my perspective, the score measures how well we are doing when it comes to including the interests and concerns of all stakeholders in our business decisions and functions. Looking at the various groups of stakeholders:

  • Clients:
    • How well are we serving our clients?
    • Specific to our investment management services, how much of our managed asset base is invested in impact investments?
    • What are the fees that we charge and what is included in them? Are they reasonable and fair, considering the competition?
    • Do we hold ourselves (as we should) as fiduciaries? Do we put our clients’ interests ahead of our own? Yes, we do.
  • Staff:
    • What is the nature of the human resource component?
    • What is the difference between the salaries of the highest paid vs. the lowest paid employees?
    • Are we providing strong benefits including retirement account funding, paid time off, and the like?
  • Environment:
    • This process allowed us to take a close look at our environmental footprint. We are delighted that 60+% of the energy in our building is produced from alternative sources. We are committed to making the greenest choices possible, down to the hand soap and paper products we use.
  • Our Local Community: 
    • Everyone on the team lives in San Francisco, so we have no shortage of organizations we want to support — with our time, talent, and treasure. We commit to closing the office three to four days per year to do community service as a group. We provide financial support to organizations from the firm as a whole and at the direction of each of us, individually. We also regularly provide pro bono financial planning to underserved communities.
  • Our Professional Community:
    • Sisterhood was powerful in the ‘70s and it remains so today! In ways direct and indirect, we support our fellow female financial advisors and share our knowledge and resources.

3. How does being a B Corp change how The Humphreys Group is run?

DB: It formalizes what we already do and our commitment to it — and it also inspires us and motivates us to do better. It provides a much-needed morale boost (2020!) to know that our approach is valued and that we are part of a community of like-minded organizations.

4. What benefits do all stakeholders (clients, employees, communities, the environment) get from The Humphreys Group becoming a B Corp?

DB: They can see what we are committed to, and as it applies to them (see answer to question 2). We are putting our flag in the ground for what we believe in and are committed to doing — in a public, transparent, measurable way.

5. How does becoming a B Corp further The Humphreys Group’s mission of helping women own their financial power?

DB: We frequently urge our clients to align their money and values. We have seen that when that happens, our clients are more engaged in their own financial life, they gain confidence, they make better decisions for themselves, and they achieve better financial outcomes.

It is so important to us to show our clients that we believe this to also be true for ourselves, as a firm. Living by and espousing one’s values is easier said than done.

Becoming a B Corp is a way for us to demonstrate exactly what it means to align your values and your wallet. We all have power in how we deploy our financial assets and this is a way to show just how powerful that can be. We are setting the example — leading by doing.

6. How does the B Corp certification align with The Humphreys Group’s values?

DB: For most of my adult life, it’s been important to me to use my financial resources as a way to express my values. In addition to boycotting certain companies and products, I aim to direct my spending toward enterprises I wish to support and whose values are aligned with mine — and The Humphreys Group.

The metrics that go into a B Corp certification are extremely similar to our firm’s values and the ethic we strive to embody in our work with clients and each other. I have long believed that while the traditional metrics are crucial for business success, the broader business purpose must recognize and value the experiences of those it serves, those working within it, and the broader community.

7. What are The Humphreys Group’s goals for 2021 and beyond being a B Corp?

DB: We look forward to getting more involved in the B Corp community — learning from other B Corp organizations and offering our expertise and experience to the community as well.

We want to do our part in changing the narrative about “profit at all costs” in our own industry as well as championing those values more broadly.

Additional Resources

Miss our B Corp announcement? Check out the press release here! You can also learn more about what a B Corp is here.

Influential Women in Impact Investing

Published in: Resources |

Once viewed as a “finance backwater,” impact investing has come to the forefront as the world collectively comes to grips with issues exacerbated during the COVID-19 pandemic — from climate change, to systemic racism, to gender diversity in the workplace, to unequal pay, to food insecurity.

While impact investing is now a hot topic (it has $502 billion in assets under management globally), women have been leading the way in this field for decades. Women have been better represented in impact investing possibly because “this sector is inherently — perhaps by design — more diverse and equitable,” Irene Mastelli of Phenix Capital explains.

The list of women shaking up the impact investing field is endless, and we’d never finish this blog post if we listed them all (check out this article for a list of some of them). So in today’s blog post, we’ll just be highlighting three inspiring women in impact investing.

1. Amy Domini, Founder and Chair of Domini Impact Investments

Amy Domini

Amy Domini is a well-known leader in socially responsible investing. In the 1970s and ‘80s, she was a stockbroker in the Boston area. It was then she learned that many investors had strong views on what they would, and wouldn’t, invest in. That led her to understand the power of mission-driven investing, and soon she began pushing for divestment from South Africa, which was under apartheid rule. In 1990, she created one of the first social indexes of U.S. companies based on ESG criteria; later that decade, she started her company based on similar sustainable principles.

What are Amy’s hopes for the future of impact investing? “Companies need to report on the impact their operations are having on people and the planet in a manner that is quantifiable and relevant,” she told InvestmentNews. “With this information, investors will make better, more informed choices.”

 

2. Julie Gorte, Senior Vice President for Sustainable Investing at Impax Asset Management

Julie Gorte

Julie Gorte leads Impax Asset Management’s Sustainability Research team in conducting environmental, social, and governance (ESG) security analysis on prospective and current investments as well as the firm’s shareholder and public policy advocacy initiatives. According to Julie’s LinkedIn bio, her team was instrumental in the development and launch of the Pax Global Women’s Leadership Index, a custom index calculated by MSCI, in 2014.

Julie serves on the boards of the Endangered Species Coalition, E4theFuture, Clean Production Action, Great Bay Stewards, and is the board chair of the Sustainable Investments Institute. She also serves on the Investment Committee of the United Nations Environment Programme Finance Initiative.

 

3. Sallie Krawcheck, CEO and Co-Founder of Ellevest and Owner and Chair of Ellevate Network

Sallie Krawcheck

Sallie Krawcheck’s professional mission is to help women reach their financial and professional goals. She hopes this will enable them to live better lives and unleash a positive ripple effect for their families, communities, and economy.

Sallie is the CEO and co-founder of Ellevest, a digital, mission-driven investment platform for women. Ellevest is a champion of impact investing; ESG funds are a big part of their Ellevest Impact Portfolios because they believe that by investing in companies who follow good ESG practices — and excluding those who don’t — their dollars can help advance women.

Impact Investing with The Humphreys Group

At The Humphreys Group, we’re passionate about helping investors align their money with their values. If you’re interested in getting started with impact investing, reach out to our team today.