Advisors help clients go from value to virtue

An increasing number of professionals and firms are helping clients pursue faith-based investing

Advisors help clients go from value to virtue

While the long-term importance of impact investing and considering ESG factors has been established through many studies, certain firms are taking the idea in a slightly different direction by helping their clients arrange their finances around their faith.

One example is Ronald Blue & Co., a US$65-billion multi-branch advisory firm that incorporates religious values and laws into financial plans, according to a report by the Wall Street Journal. Composed mainly of evangelical Christians, its business has grown to 7,000 clients from 6,000 in 2014.

Ron Blue, founder and former CEO of Ronald Blue, founded a non-profit called Kingdom Advisors in 2003, which has trained more than 2,500 advisors to serve Christian clients. The program educates participants on bible verses pertaining to money along with Christian values and priorities, which include charitable giving.

Meanwhile, non-profit firm JLens Investor Network provides education and advocates for Jewish shareholders, which include foundations and endowments associated with Jewish institutions. According to JLens Executive Director Julie Hammerman, the group is planning to launch an S&P 500 index fund “based on Jewish values” such as fair treatment of workers, environmental preservation, and support for Israel.

Interest in values-based investment seems to be on the rise, according to the Forum for Sustainable and Responsible Investment: from $6.6 trillion in 2014, assets managed using socially responsible, faith-based, or other such screening methods have increased to $8.7 trillion.

While some faith-based advisory firms cater to lower-value investors — Thrivent Financial, a non-profit membership organization with 2,400 advisors, requires no minimums — many serve relatively high-net-worth clients and charge higher than the standard 1% of assets per year. At Islam-oriented Azzad Asset Management, fees start at 1.75% to 2% of assets and decline with increasing asset values. The high fees are justified by labour-intensive services such as screening out certain stocks and calculating the zakat, which is the mandatory 2.5% of certain property that should be used for charitable and religious purposes according to Islamic law.

Faith-based advisors assist clients with financial planning, investment management, insurance, and other aspects of wealth management that their secular counterparts do. But according to Kingdom Advisors President Rob West, faith-based advisors generally help clients determine “what’s enough” for them to live on and use the rest to “serve others.”

Another priority among certain faith-based advisors is the avoidance of debt. “Debt in the Scriptures is not forbidden but it is discouraged,” said Ronald Blue Executive Vice President Erik Daniels, who added that his firm would even advise clients to reduce their liquid investments to prepay a mortgage.

Islamic law doesn’t allow for interest-bearing securities, but Azzad helps clients access a bond-like return through a mutual fund invested in “sukuk,” or “Islamic bonds,” which give the bearer a percentage of earnings from income-generating assets like toll roads and apartment leases.

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