Taking the time to understand your clients will deepen your relationship and help you design a portfolio that reflects their values and beliefs

By Alex Laipple

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At Ethic, our vision is simple: Invest in the future you want to build. 

What does that mean? In my last article, we discussed how investment portfolios should be as unique as the investors themselves. Now we’re going one step further. Each investor has a unique view of the future they want to create. Wealth advisors can play a vital role in helping their clients articulate that future vision, understand how their behaviors and choices influence it, and design an investment strategy to support their goals.

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The Importance of Trust

The first step toward helping your clients articulate their vision is taking the time to explore their values and what kind of future they want to create. These conversations can be difficult because everyone has different beliefs, and discussing them can make people feel vulnerable. But relationships are built through shared connections, and you can only have shared connections if you have vulnerability and trust. So these discussions can lead to a deeper relationship, leaving you in a better position to help your clients and prospects realize their investment goals while supporting their visions for the future. 

Begin these conversations with our Value Mapping Exercise (VME) or ask your client to list things they care about, such as family, time on the beach, spending time in nature, education, their children, advocacy, spirituality, or religion. Next, connect those beliefs to the future they want to create and how it will look across the many components of the world we live in. What is their vision for the environment, gender diversity, health, the job market, and myriad other spheres? 

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Educating Investors on How They Can Influence the Future 

The next step is helping your clients understand what they can control. This includes their personal choices and behaviors, such as where they live, where they go to school or send their children to school, how they connect with nature, how they interact with other people, and, of course, how they invest. Again, wealth advisors can help educate their clients on how their choices impact the future. During these interactions, it’s important to remember that there is no perfect solution to some of the issues we face, and perfection is the enemy of progress. 

We’re not talking about policing your clients’ behavior or holding them to an impossibly high standard where every single decision they make and action they take is scrutinized. It’s about understanding how each choice can affect change locally, politically, and financially. 

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From the Theoretical to the Practical 

After some interesting philosophical conversations with your client, you will be ready to apply everything you’ve learned to their investment strategy across asset classes. At Ethic, we focus on the public markets and have designed our 19 Sustainability Pillars to focus on sustainability issues as well as the company behaviors that can move the needle toward making improvements. 

What does this look like in practice? It depends on what your clients care about and what sustainability issues impact their lives. In 2022, over 1,300 drugs were recalled by the U.S. Food and Drug Administration – 83 of these recalls could cause serious health issues or even death. 

Or let’s consider hazardous waste spills. If your client lives in Virginia, they might have found it troubling in 2022 when a tanker truck overturned, spilling 8,200 gallons of gasoline over a highway near storm drains. Or, if they live in Ohio, they might have been impacted by a 2023 train carrying toxic chemicals that derailed, killing thousands of fish in nearby waters and causing people to report nausea and rashes. 

In situations like these, it’s easy to feel disempowered — but you can empower your clients by using research from our sustainability pillars to help guide better decision making at the companies they are invested in. For example, you can use data from our Pollution Pillar to suggest investing in companies that carefully manage their hazardous waste emissions to avoid impacts on communities or take a look at our Health & Wellness Pillar to support investing in companies looking to demonstrate their commitment to the public by adopting policies that ensure safer drug production. 

It’s easy to focus on the client’s short-term needs and overlook asking them about the future they want to build. Set aside time for annual conversations with your clients about their hopes, dreams, motivations, and visions. Make sure to look deeply into the sustainability issues they find most important and provide concrete examples of how their investments may be used for good. As their advisor, you can be a catalyst and conduit for change, leading to long-term relationships with clients.

If you ask people what they care about, many will answer that they care about their legacy. They want to leave the world a better place than they found it. Your clients’ portfolios should reflect the world they're trying to build.