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Values-Based Financial Planning and Investing—An Encouraging Trend

Values-Based Financial Planning and Investing—An Encouraging Trend

December 07, 2023

I started my career in the wealth management business in 2000, two years after Canby Financial Advisors’ founding.

When I first started out, my clients’ chief concerns were maximizing investment returns.

By the time I joined Canby Financial as a financial advisor and Partner in 2014, I noticed that some of these attitudes were changing.

While they were still concerned about building their wealth, many of my clients were also seeking guidance on tax-advantaged strategies that would enable them to give more of their money to charity and less to Uncle Sam. Others were looking for ways to make sure that their investment portfolios reflected their personal values.

These trends continue today. More than ever before, people want their financial planning and investing priorities to align with their moral and political values and beliefs.

This isn't a new phenomenon. For example, many religious institutions and colleges have always had investment policies that prohibit their endowments from owning stocks of liquor companies or gambling casinos. But over the past two decades, I've seen greater interest in values-based financial planning and investing among individuals and families. 

I believe that this rising interest has its origins in several key events that occurred over the past two decades:

  • Fallout from the Great Recession. The market meltdown of 2008-2009 wiped away decades of growth in the value of many investors’ retirement portfolios. This so-called “black swan” event was caused, in great part, by greed and malfeasance among many banks and wealth management companies that had previously been considered model corporate citizens. As a result, many investors no longer wanted to own companies that seemed interested only in serving their own self-interests.
  • A greater demand for corporate action on climate change. The increasingly evident impact of global warming drove many investors to divest their holdings in fossil fuel producers and motivated others to demand that all companies demonstrate their commitment to combating climate change.
  • Increased demands for social responsibility. Over the past two decades, a growing number of investors are scrutinizing corporate commitments to increasing the presence of women and minorities in senior management roles and promoting diversity and equality in their workforces.

How are people achieving their values-based financial and investment objectives?

They’re investing where their beliefs are

Many people want to feel good about the companies they’re investing in. The asset management industry has responded by rolling out a plethora of value-based investing options.

Some exclude entire industries, such as tobacco and fossil fuel producers. Some are industry-agnostic, and instead only invest in companies with high scores in predefined (and often confusing) Environmental, Social and Governance (ESG) factors. Other funds target investors with specific religious or political beliefs. 

They're incorporating their values into retirement and legacy planning decisions

Many of my clients are either retired or will be in a few years. When we discuss what they’d like to do with the money they’ve save, I've found that many want to use a greater share of their wealth to support their favorite causes.

But they’re looking to go beyond donating cash. They want to give more strategically.

They want to donate appreciated securities to remove them from their estates and avoid paying capital gains taxes when these assets are sold.

Some make qualified charitable distributions from their IRAs to reduce the tax impact of Required Minimum Distributions. Some establish donor-advised funds with community foundations that allow them or their children to make grants to local nonprofits in perpetuity. Others set up charitable remainder trusts that generate income for themselves or their children while they’re alive and then donate remaining assets to charities when they’ve passed on.

Many are taking advantage of new kinds of charitable giving opportunities made possible by the Internet, such as microfinancing, which allows donors to help aspiring entrepreneurs around the world get their small businesses off the ground.  

Some join giving circles organized by their house of worship or by their neighbors, book clubs and other interest groups to pool their money so they can make larger collective donations to specific nonprofits.

I’m also seeing a greater number of clients of all ages getting more actively involved with the charities they support financially. Many of them volunteer their time and skills on a pro bono basis, while others serve as trustees.

An encouraging trend

I believe that the popularity of values-based financial planning and investing will accelerate over time. Recent research has shown millennials and members of Generation Z are embracing values-based investing to a point where they’re asking their employers to include these options in their retirement plans.  And many retiring baby boomers will want to set up estate plans to pass on some of the wealth they’ve inherited from their Greatest Generation parents to their favorite charities while they’re alive and after they’ve passed on.

The relentless evolution of technology will provide more ways for people to find and fund charities that align with their values and see the results of their generosity in real time.

I’m looking forward to helping them use the wealth they build throughout their lives to fulfill their vision of a better world.

This material has been provided for general informational purposes only and does not constitute either tax, legal or investment advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax professional, attorney or financial advisor.





This article was authored by Dan Flanagan and Jeffrey Briskin. Dan is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or    Jeffrey Briskin is Director of Marketing at Canby Financial Advisors

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