SRI dilemma

[gwendally]

Most of my clients want to invest in "socially responsible" funds. I need to smooth out my answer to this. I still haven't found a really good conversation about this anywhere in my industry even though I've tried from various times

Comments

[belleweather]

Huh. We do a LOT of work with the Aegis Onshore system, which I am highly impressed by. This may be entirely because it means that I get to have lunch with people whose day job it is to shoot missiles down in space.

[gwendally]

My first degree is in astronomy and physics, but I got a minor in computer science. My first job was doing research in astrophysics, which turned out to mean programming. So when I decided not to go to grad school I got a job doing programming for a company that did a bunch of stuff with optics. I ended up doing NOTHING with the physics and - as one of the few female engineers - doing "human factors" software engineering. Basically I designed and coded console interfaces

[lorigami]

Disclaimer being I'm obviously not of the investor class, but I think the way you explained it where you asked if that was the best use of the person's 175$ was both relevant and very simply relatable. With 175$, they could invest thru something like Kiva, which might offset whatever karma they feel they need to offset from investing in Exxon, lol.

[gwendally]

Thanks, that's helpful feedback.

[anonymous]

This was a really useful post for me. I inherited some money a few years ago which I decided to pay someone to help me invest (because as a perennial working poor person the idea of investing was totally foreign to me). It wasn't millions, so I needed it to do some work for me vs. just making nice statements. Still, I was somewhat horrified when I saw that some of the stocks in it were companies that I thought were completely counter to my values. I guess I had this vague idea that it could all be invested in wonderful little socially progressive companies. And maybe it could be, but that's not what my investment person came up with. My hunch was that's not where the returns are

[gwendally]

Thanks, that's helpful feedback.

My business gurus say that I'm supposed to have a blog and let my voice come through, but I get super nervous about posting under my own name. I sometimes clean up pieces and parts from my journaling here and repost them on my work blog, and that's more or less what I intend for this piece once I get it straightened out.

I'm pretty sure I have to kill the whole section on the virtues of working on the Aegis Combat System, for example.

[anonymous]

Although, rats*, because that part was such a good example of how doing something that's not obviously "good," is. Just shows that nothing is as simple as it seems, and something that looks bad might not be. But I understand that everyone might not see it that way.

(I remember that when I was in my early twenties I met a woman my age who was pursuing a business degree. At that point we were both sort of lefty-not-old-enough-to-be-hippies-but-we-might-have-been-if-we'd-been-born-sooner, and I was perplexed. Business!? Eww, gross. So establishment. But she was more of a smart, forward thinker than I was and said "Well, I'm going to get in with them so I can try to change things from the inside out." Smart cookie! Your mentioning your Combat System work made me think of her (30 years later).

*Oops, maybe I shouldn't have used that particular word in light of your current battle. BTW, that was a great piece of writing. I hope you'll post updates from the front lines.

[crazyburro]

Point out the real cost of the investment isn't just the much elevated (compounded) investment fee but the effect of perennial under-performance. I suspect a bunch of these funds aren't really so pure, anyway. As you point out it depends on how they define acceptable and just how deep they're willing to look. What about tax efficiency?

[barking_iguana]

Your clients likely enough would have different reactions than me. But as one data point, I wouldn't want to hear a desire to take global consequences into account as "values expression. It's not about self-validation through expression, like buying some stupid brand of car because their ads are designed to appeal to people who share my values, even if the company's practices don't. Maybe that's not what you meant, but too often people who don't share the belief that one should account for indirect effects of ones action dismiss that belief with just such language

[gwendally]

What global consequences do you think occur when you invest in SRIs

[barking_iguana]

In fact, I think the effect of unorganized SRI is very indirect, making it so minorly harder for companies engaged in whatever industry is being avoided to raise additional capital though new offerings that it's not worth worrying about unless you're investing hundreds of millions. And I think praying has no effect other than keeping the pray-er conscious of their desires. But I think it's up to you to take go through the logic and math of the situation, showing that the effect is very small. If you do that, your clients may well decide that indeed, it's not worth worrying about. But to assume that just because you have already done so and therefore they must also have done so and are doing this merely because they like Gwnenth Paltrow or something serves neither them nor yourself.

[gwendally]

"But to assume that just because you have already done so and therefore they must also have done so and are doing this merely because they like Gwnenth Paltrow or something serves neither them nor yourself."

Oh, I totally agree. I do need to inform them of the costs and benefits. It's just tricky and I'm trying to feel my way through this, because I end up accidentally signalling that I don't believe in prayer or that I'm fine with capitalism allowing pollution or something that isn't what I'm trying to do.

And a *very small* effect - or *no effect at all* is still worth it to some people and I don't mean to judge it, but my language ends up sounding like it's worthless to me (because it is) which doesn't mean it's worthless to clients (because they get to say whether it is or not) but now I've displayed that I don't value the same things they value and they were doing this LARGELY for the purpose of signalling so it's a major failure as a counselor on my part.

It's actually easier for us all if I pretend it affects the world.