HCR Wealth Advisors Offers Its Views on Socially Responsible Investing

The field of socially responsible investing is gaining in importance among investors, but there are no easy definitions and some confusion in a rapidly evolving environment. HCR Wealth Advisors employs a personalized approach to help its clients interested in SRI.

An investment is considered to be socially responsible based on the nature of the business. The initial assessment excludes companies with businesses in certain areas, especially connected to vices (alcohol, gambling, and tobacco). Instead, investments in socially responsible businesses can be chosen, covering activities in social justice, or sustainable and alternative energy sources. In addition, SRI can focus on companies with strong Economic, Social and Governance (ESG) standards, meaning that they are good corporate citizens.

The investing space has transformed over the past decade, and what used to be just a buzzword has quickly become more prominent in the investment community, explained Michelle Katzen, CFP®, Senior Portfolio Manager at HCR Wealth Advisors. As part of its advisory activity, HCR Wealth Advisors is dedicated to staying on top of this newly emergent area so that it can better serve clients who are interested in this space and perhaps looking to incorporate these concepts into their portfolio.

It is possible to invest in companies with high ESG standards, either through mutual funds, or ETFs. HCR Wealth Advisors has taken note that in the last few years, more and more opportunities are now available to engage in SRI through such investment vehicles.

Although the emergence of SRI has recently started allowing for greater investment opportunities, those opportunities should be vetted in a detailed manner by a registered investment advisory firm. Katzen points out that some SRI opportunities may have a feel-good factor and provide psychic benefit, but are not, in fact, generating the type of return that a client is expecting.

HCR Wealth Advisors has noted that there are mutual funds and ETFs who hold themselves out to be engaged in SRI but do not actually focus on socially responsible or high ESG companies. However, they often use the acronym to simply encourage investment in or purchase of their products. For its clients, a registered investment advisory firm like HCR Wealth Advisors should aim to help clients find SRI opportunities for those clients that are interested in this type of investing.

“The SRI space is still so new, with an influx of funds/companies, but more work needs to be done on the investment side to make sure clients know what they are getting into,” cautions Katzen. “It is important to focus on both SRI and strong returns.

As a firm, HCR Wealth Advisors provides its investment advice in a manner that is closely connected to each client’s vision and needs. The same rule applies to SRI advice. For instance, if a client has an interest in water projects, an HCR professional will perform research to see if there are suitable projects in that field for a client to invest in.

For clients who want to engage in SRI, there is an abundance of opportunities because there are a number of companies that are willing to transform themselves to improve their governance and social responsibility.

HCR Wealth Advisors uses its strong relationships with clients to present the best and suitable SRI opportunities. HCR Wealth Advisors is prepared to help each of its clients a strategy to reach their financial goals whatever they may be and regardless of their financial situation.

Because opportunities for SRI have expanded in the past few years, firms that offer mutual funds or ETFs in that sphere have seen their customer base expand. Historically, investors in mutual funds and ETFs do not often move their assets (they are “sticky”), so those investors need to be vigilant to ensure that they not only obtain the social benefits they are looking for, but also the returns they are looking for.

If a client of HCR Wealth Advisors selects a company, mutual fund, or ETF to invest in, the firm will help its clients ensure that the company or the underlying companies in the fund is suitable for the client and reasonably likely to perform in the manner the client expects. This aligns with the values of HCR Wealth Advisors to always operate with a long-term view and potential in mind. This approach is a part of the commitment of HCR to help each of its clients reach their financial goals.

HCR Wealth Advisors offers trust and service in several key areas, including financial services and wealth management, consulting, business and insurance services. The paths for various clients involve an effort to educate clients on investment strategy and create a personalized package to preserve wealth within and beyond generations.

For a client willing to expand their portfolio in socially responsible businesses, there are three chief takeaways:

  1. Understand the nature of SRI companies, and be aware of their business.
  2. Be aware of the social and governance issues of the chosen company, but also of the expected performance on the investment.
  3. Be prepared to switch investments if a mutual fund or an ETF based on socially responsible companies fail to meet your financial goals.

*This article is for informational purposes only and should not be considered investment advice.