Although the average age of Marlo Stil’s clients is 65, many of those in retirement are becoming interested in environmental, social and corporate governance investing, which is often considered the purview mostly of millennials.
Stil, an adviser and managing partner in the Rancho Mirage, Calif., office of Wealth Consulting Group, which is based in Las Vegas, reports surprising success when helping retired clients measure and evaluate how to make their long-term investments make the world a better place for their grandchildren by using the tools of ESG or socially responsible portfolios.
“By the time clients are comfortable [enough] to retire, if they have advisers, they have already gone beyond the accumulation stage,” she says. “They have begun thinking about something bigger than themselves, and they’ve experienced a lot of changes on this planet, so they are a lot more open to this than many advisers think.”
The recent growth in measurement tools for ESG investing has eased the way for Stil to show retired clients precisely how to shape their portfolios for such objectives and still maintain returns.
She points specifically to Morningstar, as the ratings company this year began scoring mutual funds based on ESG metrics.
Through a partnership with ESG-researcher Sustainalytics, Morningstar launched the program with scores for 20,000 funds to rank them on socially responsibility factors. Morningstar applies such scores at both the fund and category levels.
Jackie VanderBrug, a senior vice president and investment strategist at U.S. Trust in the portfolio analytics, consulting and institutional group, Bank of America Private Wealth Management in Boston, who is responsible for developing the firm’s value-based investing strategy, says that the measurements related to socially responsible investing have gained heft in recent years.
She points to the individuals leading the Sustainability Accounting Standards Board, which was started in 2011 by Harvard University researchers to develop and test a methodology for determining industry-specific measures.
The board includes Michael Bloomberg, founder of Bloomberg LP, a financier and former New York mayor; Ken Mehlman, an executive at Kohlberg Kravis & Roberts and former chairman of the Republican National Committee; and Mary Schapiro, former chairwoman of the Securities and Exchange Commission.
That kind of brainpower helps persuade clients who are retired and prone to thinking about their investment consequences for their grandchildren’s future that ESG investing deserves a second look.
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