When it comes to conscious investing, Sarah Hamilton, a financial adviser at Hamilton Walker Advisers, decided to jump in with both feet.
As if being a Certified Financial Planner and holding an MBA and M.S. in Financial Analysis and Investment Management wasn’t enough, she also opted to add Chartered SRI Counselor to her list of credentials.
The Chartered SRI Counselor, or CSRIC, trains financial professionals in all aspects of sustainable, responsible, and impact (SRI) investments. This is also known as environmental, social, and governance, or ESG, investing.
Based in San Francisco, Hamilton Walker Advisers strive to align clients’ values with their investment portfolios in addition to running a traditional financial advisor business.
“ESG is certainly a growing area of interest for clients,” she said. However, she points out, clients lack context for ESG: “They’re interested in aligning their values with their portfolio, but they pick snippets from media or things that they’ve read such as ‘oh, the portfolio is not going to perform well’ or ‘that sounds like some hippie nonsense.’ So, I’ve had the full gamut of feedback.”
Along with the firm’s core financial advice offering, she decided to add ESG investing. And she follows a specific process to achieve this.
After building a detailed financial plan, if the client is interested in investment management, Hamilton starts with understanding the client’s investing experience, what their goals are and if there’s anything they would like to do differently. She said some clients will bring up ESG proactively, while others do not know it is an option for them.
“At this stage, we know enough about the client to fine-tune whether or not ESG may be appropriate for them,” she noted. “It’s important to have a detailed conversation with clients around what their values are and what this ESG and sustainable and responsible investing mean to them.”
To that effect, her company uses a questionnaire by YourStake to assess their values.
“They help advisors and clients alike figure out what’s important for them,” she said. “They have a great questionnaire and series of no more than 12 questions about what is your value set: do you care more about environment, governance, board structure, the treatment of employees and factory workers, or do you care about it all?”
She said this is a good starting point: “Based on how you answered these questions, here’s what we think might be important to you.”
Hamilton then provides specific education around how to invest in ESG: What is ESG integration? What are the main components that investment managers are looking for? What is shareholder advocacy and is there an opportunity for them to support businesses in their communities that are investing in components of ESG in their own way?
While creating a model portfolio, she will use visual aids to help clients understand the real-world impact of a particular investment.
“YourStake will even break it down to say ‘if you invest in this portfolio for 10 years, you’re taking this many cars off the road, you’re keeping this many bottles out of the ocean’ – so they have all of the data to back that,” she explained. “We’ve leveraged them a lot.”
To create the model portfolio, she makes use of Morningstar along with Sustainanalytics ESG ratings. She prefers active ESG investments to avoid greenwashing that can occur in index-based or passive strategies.
Her firm also holds quarterly ESG webinars to bring clients up to date with various ESG issues. These webinars further assist Hamilton Walker clients in making the best decisions on ESG investing for their current portfolios.