7 Top Reasons Why Financial Advisors Should Offer Values-Aligned Investing to Their Clients

7 Top Reasons Why Financial Advisors Should Offer Values-Aligned Investing to Their Clients

Discover the powerful benefits of values-based investing for financial advisors and their clients. Learn why it's important to build client trust by helping them invest in alignment with their beliefs.

Jack Casady

Practice Management
July 10, 2023

The great wealth transfer is just beginning and new clients of all account sizes are looking for Financial Advisors that offer something unique and personal to them. In fact, one study by McKinsey saw that since 2021, 71% of consumers expect companies to deliver personalized interactions, and in fact, many were frustrated if the experience was not personalized to them.

Offering personalized investment solutions for them can be a powerful differentiating factor that can win you more clients and retain your existing ones.

One great way to provide personalization is through Values-Based Investing. This form of investing is becoming increasingly more popular because it helps advisors build better relationships with clients and can even lead to clients sticking through market volatility because their money aligns with their values instead of a cookie-cutter portfolio that often feel misaligned to them. 

What is Values-Based Investing? 

Values-based investing allows for a client to align their portfolio with their individual values. This is different from standard ESG Investing because instead of looking at different metrics that fit into the 3 main buckets: Environmental, Social, and Governance, clients and advisors can work together to build an investment universe that fits them instead of a set schema.

For example a client no guns, pro-clean energy, anti-pharma, or pro-pharma. Finding a portfolio to fit their requests can be time-consuming and difficult to find investments that align with your client's needs and achieves strong financial performance.

Advisors can help their clients figure out what they care about and then pick investments that fit with those values. 

To make this kind of investing work, advisors need to do a few things. They have to understand what their client wants through open conversation or questionnaire. Then the Advisor must build an investment universe built form those values to discover what securities provide the best overall values alignment that also meet financial performance needs. Finally, the Advisor must monitor the portfolio overtime for both values and financial goals. Overall, values-based investing is a powerful way for financial advisors to help their clients make choices about investing their money in a way that aligns with their beliefs.

We’ve put together a list of the 7 top reasons why Values-Based Investing gives you the upper hand with your clients.

7 top reasons why Values-Based Investing gives you the upper hand with your clients.

1. It is more personal then ESG: Values-based investing allows clients to support companies that reflect their personal values and beliefs instead of just an ESG label. This allows for better flexibility for clients to find the right securities for them instead of a one-size-fits-all ESG fund.

2. It can lead to long-term financial success: Research has shown that companies that prioritize values-based initiatives often have better long-term financial performance, making them attractive investments for clients and provide long-term portfolio stability.

3. It can improve client engagement: By offering values-based investing options, financial advisors can deepen their relationships with clients who are looking for more bespoke portfolios and investment options. 

4. It can attract new clients: Values-based investing is becoming increasingly popular among younger generations and those who prioritize social and environmental issues, making it a powerful tool for attracting new clients, especially as we face the next great wealth transfer.

5. It can help manage risk: By investing in companies that prioritize ethical and sustainable practices, clients can reduce their exposure to companies that may face legal or reputation risks in the future or have unsustainable business practices.

6. It can promote positive change: Values-based investing allows clients to use their financial resources to support companies that are making a positive impact in the world, promoting positive change in society, or empowering others to be better.

7. It gives Advisors an upper hand: More and more clients will look for higher levels of personalization in their portfolios. Values-Based Investing makes this possible and using platforms like YourStake can make it seamless so you don’t need to spend more time providing personalized investments to your clients. 

The Verdict

Investors today are well-informed and conscious of their investments, preferring to invest in companies that share their values. Therefore, values-aligned investing has become an essential aspect of investment rather than a mere trend. Financial advisors should keep up with this paradigm shift and offer their clients investment opportunities that align with their values. This approach is mutually beneficial as investors can make a positive impact on society while potentially achieving better returns. Financial advisors who provide values-aligned investments can meet their client's expectations, ensure the sustainability of investments, and remain relevant in a rapidly changing world.

If you’re interested in seeing how YourStake can help provide Values-Based Investing services to your practice, sign-up for a demo to see how our platform can win you more clients.

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