Author Archive

Andy Loving

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.

Good Cop, Bad Cop and Shareholder Engagement

Did you know that “good cop/bad cop” situations can be found in the social investing world? “Good cops” are those that listen, cultivate understanding, and develop relationships in order to resolve a situation. “Bad cops” work to resolve the same situation through confrontation and pressure. They aren’t bad in the conventional use of the word; they just aren’t necessarily nice. They draw harder lines. Good cops and bad cops can both get the job done. And when working toward the same goal, they make a powerful impact.

In social investing, both approaches are useful in pursing the goals of shareholder engagement. The good cop meets corporate officers at the table where policy decisions are made. The bad cop may instead call for divestment or separation from offending corporations. Both are educating, leading, and moving us toward an economy that is sustainable and just.

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Bigger SRI tent holds problems along with possibilities

This article from NI’s Andy Loving was originally published in the February 2015 edition of the Green Money Journal.  It offers some much-needed perspective on the recent surge of mainstream investment interest in ESG measures, which is often celebrated as being synonymous with SRI and its historic goals.  Andy begs to differ.

I have spent my 20-year career as a financial advisor working with people who want their faith and their values to be reflected in their use and investment of their money. From the beginning, I have been a socially responsible investing advisor to organize money for social change, while serving the needs and commitments of my clients.

But today’s social investing marketplace is increasingly driven by ESG (Environmental, Social, Governance) investments. The social investing “tent” has indeed gotten much bigger and, in the process, many strongly held values that my clients and I have seen as so important now seem unimportant, or at least less important, to many in the industry. Growth often results in increasing diversity, which can be a good thing. But in the changes in the social investing industry, certain values and priorities have been de-emphasized to the point that the character of the industry is significantly changed.

Information in the recently published 10th edition of the US SIF Trends Report on SRI documents concerns. The headline news of the Trends Report is, of course, the 76 percent increase over two years of U.S.-domiciled assets under management using SRI strategies. The jump from $3.74 trillion in 2012 to $6.57 trillion in 2014 was startling, encouraging and almost unbelievable. But of that more recent number, $6.2 trillion were assets where ESG factors only were being incorporated into investment decisions. There was no involvement in shareholder activism and community/impact investing.

These numbers indicate that many mainline money managers now believe ESG factors can and do influence the financial bottom line, making ESG material to profit maximization. The mainline Wall Street firms are finally believing what the SRI industry has been saying for decades.

The report also contains information about two other important areas of activity – shareholder advocacy and community investing/impact investing – where the news is not quite so encouraging.

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What is a Just Return?

The question isn’t, “What is the maximum return?” but “What is the just return?”  It’s time to reflect on what is, for you, a “just return.”  Can you let a larger chunk of your portfolio do more dramatic social change work, without needing it to grow at the same pace as the rest of your portfolio?  This is another variation on the global themes spurred by climate change and resource depletion: how much is enough?

In my “previous life,” working with the United Farmworkers as a young adult, then co-founding a magazine focused on hunger and economic justice, and later being a minister to the homeless, I liked to say that my work was organizing people. When social investing emerged, it seemed a natural extension of this work, and now I see myself as organizing money on behalf of social change.

Yet even within the world of sustainable and socially responsible investing (SRI), there has been a tendency to become trapped in the box of typical investment-think.For so long, we’ve focused on being able to say that screened investments match the returns of unscreened investments. But in focusing so predominantly on this aspect of SRI, we’ve adopted the priorities and goals of mainstream investing.

We can’t let ourselves lose sight of the core purpose of our choice to bring our values to bear in our financial decisions: to foster positive change. Returns matter, of course, but we want to achieve those returns in a way that supports our vision for a healthy, sustainable, equitable world. Put another way: we want to make a living, not a killing.

 

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Behind the scenes services of NI advisors

By Andy Loving

Over the past year or so, NI advisors have been working together on a project that will save many of our clients—that means many of you reading this newsletter—a substantial amount of money. This project is only one of the several “quiet,” behind-the-scenes services that your advisor may be providing you that you may not be aware of. So let’s look together at a few of those quiet services.

NI advisors have been building institutional shares into many client portfolios. With significantly lower management fees and expenses, institutional shares are usually reserved for large institutions that can buy large blocks of shares. At Charles Schwab, NI can now aggregate the purchases of all 12 advisors to meet those high minimums and buy the institutional shares that carry lower expenses. The institutional shares of about 16 mutual funds (probably more to come) that NI advisors use carry expense ratios that run 19% to 54% lower than retail shares. In a period of lower returns, these lower expenses are even more important. NI’s largest institutional share position of almost $7 million is in the affordable housing bond fund, CRA Qualified fund. Both Calvert Funds and Pax World Funds have three funds each in the group of sixteen.

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Andy Loving named a notable “influencer”

Andy Loving has once again received national recognition for his compelling approach to investing and investment advising.  This time, the kudos came from Financial Planning magazine, which just named the winners of its second annual Influencer Awards. The editors of Financial Planning chose Influencers in four categories, and, as they note, “we felt compelled to name several notables alongside the winners given how strong some nominees were.”

Andy was named the Notable advisor for the Practice Management Influencer Award, based on “his work incorporating community impact investments in portfolios.”  As you may know, Andy’s been recognized for years for his work with issues of justice, money, and faith; last spring he was featured in a USA Today column on Christianity and capitalism.

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