There is often a big disconnect when a client comes into an advisor’s office asking to invest based on their values and is then sold an ESG product.  At Gitterman, we believe it is important for advisors to be educated on how to provide products that align with a client’s values, if that is what they want, and that clients also need to be educated on how to ask for these products correctly.

As we recently shared in our past article, ESG Data: Woke Capitalism or Better Due Diligence?, ESG data and values-based investing are not the same thing.  ESG scores are not a measure of client values. This data is simply a reference point, but it does not tell us what to buy or sell.

We feel it is important for advisors to keep asking their clients what interests them in terms of outcomes in order to avoid disconnected solutions, and a host of resources are available for getting to know client values.  For us, this is something that can be layered atop an ESG process, but it is not a replacement.

In addition to ESG data, it is very possible to screen portfolios using value-based screening tools from companies like YourStake, YvesBlue, and Morningstar. YourStake offers impact reporting tools, and transparency on mutual funds based on a variety of values.  For example, an advisor can run a portfolio through YourStake, and then prepare a comparison portfolio that excludes tobacco, guns, or fossil fuels, etc., if this is what a client wants.  With YourStake, it is easy to show the difference between a portfolio that a client is in now, and how an alternative portfolio might take more cars off the road, reduce plastic pollution in the ocean, increase the number of women lead meetings in the c-suite, or address whatever issues might be of interest.

For clients expressing concerns related to climate, YvesBlue provides tools to analyze the carbon footprint of portfolios, and align them with net-zero decarbonization pathways. Used more as an internal resource, YvesBlue has an emission reporting alignment tool to create Paris Agreement aligned portfolios, which when exported into PFDs, are client-ready reports.

Morningstar also has filters through Sustainalytics.  From a search engine standpoint, you can search Morningstar, even their free site Morningstar Direct, for funds that align with what a client might be asking about, and you can also search thematically.

At Gitterman Asset Management, we aim to simplify the asset management needs of today’s busy advisory practices, and we do all of this analysis for advisors that do not want to do it themselves.  We run core portfolios with active asset managers via our SMART Investing Solutions, and our products also allow the end client to select from among thirty-two different value screens.  Based upon these chosen values, the core holdings of our portfolios can be tailored, but they do not prescribe values to the client.

So, if an advisor has a thousand clients, each can have a different portfolio based on how they screen their values.  We don’t believe that it should be up to the advisor to try and create a one-for-all values portfolio.  It would actually be impossible, because everyone has different values.

If you would like to learn more about the products that we have to offer your financial advisory practice, we would look forward to speaking with you:

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