Investment advice

My friend Paul Sullivan wrote a timely article for the New York Times today: “Profits? Nice, but for These Investors, Conscience Matters More.” To be sure, he writes the Wealth Matters column and my assets aren’t in the same league as the investors that he writes about. But a conscience is on my investing mind, as well. Socially responsible investment makes up 28% of global assets under management (AUM), according to Business Insider. It’s an important way to vote with your wallet and to participate, if only in a very small way, in the governance of organizations.

Last December, I rotated the holdings of my retirement account into socially conscious mutual funds. Notably, this included moving about half the account from S&P500 index funds to the Vanguard FTSE Social Index Fund, and then layering in thematic funds like the Parnassus Fund, TIAA-CREF Social Choice Bond Fund and a few others. I’m a little nervous – after all, I’m staking my retirement on this decision – but the funds I’ve chosen have proven track records and relatively conservative strategies so I’m pretty confident.

Then there’s a small amount I still have parked in a brokerage account. (Emphasis on “small.”) It’s only 50% invested right now, with a few sector ETFs. Today, I checked out three robo-advisors that offer socially responsible strategies. I’m not that experienced with robo-advisors as I mostly manage my accounts through Charles Schwab’s discount brokerage. (I also checked out Schwab’s Intelligent Portfolio robo-advisor, but it doesn’t offer a socially responsible theme.) I wanted to check out my options and see if I could dip my toe in the water.

First, I checked out Grow, which claims it is “changing the way we invest by focusing on environmentally sustainable, socially responsible companies with good governance.” Sounds great, but unfortunately their website doesn’t tell you anything about what they do. A lot of links to download their app, and a lot of bragging about who’s on their team and how many websites have written about them. I left their website pretty frustrated. Big fail, in my book.

Next, I went to Motif. Motif is a little better at explaining themselves, but still not great. Best I can tell, they’re an online brokerage – one with lower fees than Schwab – that also offers to construct and buy a “motif” portfolio for you. There are built-in motifs around “climate change” and “uphold human rights” and a number of other socially or environmentally responsible themes. Buying a motif means buying shares in the the 20-30 stocks of the portfolio directly. Interesting. But again their website left a lot to be desired. Notably, I couldn’t figure out their pricing or who their custodian is. I’m going to call them on Monday to learn more, but my trust in them isn’t very high right now.

Then, I went to Earthfolio, which was by far the clearest in describing what they do. You open a brokerage account with them, with TD Ameritrade as custodian, they recommend a portfolio, manage the portfolio and automatically rebalance for you. There’s a 50 basis point annual fee; that’s it. But…and it’s a big but…the minimum investment is $25,000. That’s not a level at which I can dip my toe in the water.

We’ll see what Motif tells me on Monday, but I’m not optimistic that my research on socially responsible robo-advisors is going to pay off. On the other hand, there are a number of social responsibility ETFs out there right now. So I’ll buy shares in the iShares MSCI USA ESG Select ETF.

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