As an intellectually curious person who values personal growth and development, building and managing a wealth management firm has been a significant refining process for me, both as an individual and in team settings.  I think of the process as a sort of paint canvas that can be used to highlight strengths and work through areas needing improvement.  While I could choose to accept or even ignore weaknesses, I consistently step into and work on them instead.

Over the past six months, my team and I have discovered the power of aligning our business strategy with our core values. 

In essence, that alignment begins by answering this question: 

What do we believe in? 

Highland's Core Values

What an incredibly fun and rewarding process for all of us!  Although we had previously developed a value statement, it was filled with the practical and emotionless values that are a part of virtually every company: it listed things like communication, integrity, and initiative.  No one on our team could remember more than one of the five or six on the list when asked. 

This was a problem.

Yes, the “standard” values of good business are important and a central part of our culture, but they do not define who we are, they do not give us clear direction, and they do not create energy.  Our unique core values are the source of our identity and all that we do.

Understanding what you believe in will: 

• Unlock an amazing amount of energy and focus
• Provide a critical lens for decision making
• Attract opportunities (and people) to you with similar values
• Have the power to repel opportunities (and people) that don’t align with you and your purpose
• Allow for the alignment of your values to your life and increased fulfillment

Do your values give you a clear direction?

For most people in business, the concepts of strategic planning, goal setting, and tactics development (the outer rings of the target below) are well-worn paths. 

 Many of us have led or participated in facilitated exercises and all-day events designed to create buy-in around corporate plans and needs for profitability and growth.

 Much of this can feel robotic and emotionless, and in fact, it often is.  Strategies and tactics change frequently, communication is necessary but rarely done well, and plan execution and achievement has a spotty record of success.

The same can be true in personal wealth management. It can be difficult to create a long-term financial plan and build confidence around decision-making when goals are often changing—it’s hard to hit a moving target.

In the graphic above, notice that the center of the target near the bulls-eye is your core values. Values are your core beliefs and the internal code that you live by. Values don’t change much; they remain pretty constant over time.

The closer you can get to uncovering your values, the more successful your planning will be, and ultimately your ability to reach your objectives. 

 We take clients through a process called Discovering Your Ideal Outcomes™ as one way to pinpoint values and increase the odds of being successful.

 So, what do you believe in?      

The knock against Socially Responsible Investing (SRI) historically has been that if you wanted to invest with your conscience you had to sacrifice investment performance.

Not any more.

In fact, as SRI has continued to gain in popularity, and the quality and number of options have expanded, performance is no longer the central issue when discussing SRI versus traditional investment solutions.  Returns are closing the gap and in some cases even outperforming. 

Case in point, the  Social Investment Forum conducted a performance review of 160 SRI mutual funds for 2009. 

There were several interesting observations:

 1.      65 percent of SRI mutual funds beat their benchmarks net of fees. 

2.      US large stock mutual funds as a group have done the best job of closing the performance gap with their non-SRI alternatives.

3.      Specific SRI components are viewed differently e.g. the market tends to reward companies with high employee satisfaction, but not necessarily environmentally friendly firms. 

4.      Social responsibility in consumer-oriented industries tends to have better market performance than large industrial companies like steel, oil, and manufacturing.

Now, it’s not a tradeoff between conscience and performance: You can have both.

What’s your opinion on SRI?

A buzz phrase you may hear these days is “socially responsible investing” or SRI. 

Here’s a quick guide to what it is, why it’s important, and the different forms of participation.

 SRI refers to investing with a social conscience.  It’s not just about making money anymore: The SRI philosophy looks for opportunities that help a broad array of social concerns such as; reducing environmental effects, improving labor relations, or helping underserved communities.  At its core, SRI underscores the responsibility of corporations to function as good citizens in the global society. 

So what’s the big deal?  SRI has been around for several decades but the trend appears to be gaining momentum lately, and especially among wealth creators.  

In 2007, the Social Investment Forum, a non-profit organization focused on responsible and sustainable investing, conducted a study on SRI trends and found that $2.7 trillion of the $25.1 trillion in US assets under management employed some type of SRI strategy.  In addition, mutual funds with SRI screens (more details on screening below) grew from $12 billion in assets in 1995 to $202 billion in 2007. 

This pace of growth was significantly more rapid than the market growth as a whole.

More important than the potential opportunities and impacts of SRI as a trend in the markets, SRI is a way for investors, and specifically wealth creators, to align their social views and values with their investment assets.  In essence, it’s an opportunity to reward those companies that contribute to your definition of where society should be headed.

The umbrella of SRI covers many topics and strategies for investing, just as each individual expresses his or her social agenda in a different way. 

In general, there are three broad strategies for participating in SRI:

1. Screening – seeking or excluding companies based on specific, social criteria
   • Positive screening is searching only among socially responsible corporations when looking for investment opportunities
   • Negative screening is excluding companies that are socially irresponsible, but not necessarily socially neutral
2. Activism – voting proxies and lobbying corporations on specific social issues
3. Direct – providing funds to community-level projects and companies

SRI is a broad subject with many different ways to become involved.  As social awareness and social activism increase – and markets respond – SRI appears poised to play an increasing role in how wealth creators invest their money. 

In sum, your money can reflect more than just profit motives – it can express your social conscience too.

 (I planned to release this post about a month ago, and for a variety of reasons it didn’t happen.  Even though the Olympics have passed, the message is still just as important.)

2010 Vancouver Winter Olympics

 Going for gold in the Olympics or in life requires preparation, planning, vision, dedication, and focus.  And just like in the Olympics, in life nothing is guaranteed.  The favorites don’t always win.  The unexpected happens.  All of that is natural; in fact, it’s so natural that instead of saying “the unexpected happens” it may be better to say “life happens.”  The important part is getting back on track and continuing to forge ahead.

Did you notice that curious, man-like, rock structure logo for the Vancouver Olympics? That man-like mascot is called an Inukshuk, which native peoples used for navigation, or as waypoints, and markers.

Waypoints and markers are excellent tools for clarifying choices and helping to refocus you on your path. 

I have talked frequently about setting up waypoints or markers in life to allow for reflection, adjustment, and confidence on your journey.  However, these markers won’t mean anything unless you know your destination.

We work with clients to clarify their destinations and then help them on this journey by building Inukshuks along the path.  These aren’t guarantees of success, instead they are guiding lights.  These signposts influence decisions and provide confidence in the ability to reach the ultimate destination – to achieve the ideal outcomes.    

What markers have you built in your life to give you confidence you’re on the right path?

A client recently asked for my opinion on Mint.com as a budgeting tool for a relative.  I realized you’d likely also like to learn more about the tool.

 Mint.com is an organizer that gathers all of your financial accounts into one place to paint a consolidated picture of your situation.  By linking your accounts, Mint.com retrieves the data and presents it in a simple and easy to understand format (such as pie charts shown below ).  The site uses the same encryption technology as online banking sites so it is secure.

Ultimately, Mint.com is a useful resource for someone who has limited financial management needs.  For people with greater sophistication and complexity in their financial lives having a wealth manager is a more appropriate solution.  The evidence of complexity would include illiquid investments, stock options, charitable entities, and complicated income sources to name a few.

For people who are just getting started, sites such as Mint.com provide a useful introduction to personal finance before moving to more advanced management practices. 

Are there other tools you’d like me to evaluate?