Reconnecting with Our Values

I’ve spent many years observing how people feel about their money, and it’s all-too rare that I meet someone who has a sane relationship with wealth. It’s unusual to find someone who feels secure about their future.

People are fearful, frustrated or fed up. They worry about risk and volatility. They’re frustrated with lackluster performance and mistrustful of stock brokers and the markets in general. Almost half of Americans (a record low) aren’t investing money in the market at all. Following a decade of economic turmoil, they are unwilling to risk their limited resources on something they feel uncertain and uneducated about.

Our relationship has become so dysfunctional that wealth seems like nothing more than a display of status. A fancy watch, an expensive car. Designer clothing. A luxurious lifestyle. Maybe those things make us feel important, or successful — at least for a moment. But we’re missing the point.

The real potential of wealth

Wealth is more than a calculation of dollar value, or a list of possessions. It’s based on a long history of influence and legacy. In my native Italian, the word for wealth — patrimonio — means heritage. In ancient times, wealth was connected to a cultural responsibility and knowledge. Wealth was managed, generation after generation, to benefit an entire family. It was about passing down a way of living, not just an asset. It was a cultural possession, not a personal one.

Of course, wealth is about material resources, assets and ownership. But it is also about passing down the knowledge of how to manage those things. It is about securing your own future, but it is also about the heritage you leave behind. The way you grow your wealth today can have an impact long into the future. Wealth can be much more profound than a fleeting moment of status.

If we want to realize the full potential of wealth, we need to reconnect with the reasons we desire it in the first place. Here’s a little secret from my life as a financial advisor — when people have an emotional value connected to their financial goals, they’re more capable of sticking to their plans. Financial advice is just now catching up with what psychology, coaches and self-help gurus have preached for years. We need to have skin in the game. Connecting our wealth with our goals and values helps us go from meeting basic needs to fulfilling higher purpose.

How does it feel?

In our daily lives, it’s easy to feel our impact on the world that our children and grandchildren will inherit. Your values probably guide many of your decisions — to recycle, or conserve energy, or to support local or small businesses. But it’s tough to have any feeling at all about a brokerage account.

Think about your investments. Do you have a feeling, good or bad, about the companies you invest in? Do you know how they treat their employees, how they source their materials, or how they dispose of their waste? Have you ever done anything to influence their practices? Does your financial advisor or brokerage firm even know what you think is important?

Now imagine how it would feel if you had an avenue to influence those companies. What if you felt a sense of ownership and responsibility for their behavior and impact? What if you could encourage attention to the things you believe in and discourage practices that you think are harmful? It would feel different, wouldn’t it? More personal. More real. More powerful.

Let’s even take it a step further. Imagine that everyone could use their economic power that way. People could come together to support companies with positive impact, and make it valuable for all companies to behave that way. Imagine that our economy could generate social, environmental and financial value. Suddenly, investment feels like part of something bigger. Like we’re investing in our principles, not just our pocketbooks. Like we’re creating wealth that is worth more than a bank account balance.

Getting from here to there

staircase

We’re not so far away from that. In the same way that consumers are asserting their values through purchasing decisions — buying organic, local, eco-friendly, and so on — people can use their wealth to influence our economy. And many investors already are. Socially responsible investing (SRI) now accounts for $1 of every $6 under management in the US. People are learning that financial return and sustainable practices are related.

Only 12 percent of CEOs, however, see investor pressure as a reason to act on sustainability. There is ample opportunity to use the financial markets as an avenue for change. And with more than half of corporate equity ultimately owned by households — individuals should wield significant influence.

But, they need financial services that empower them to understand their wealth and realize its potential. Right now, the world of wealth management is dominated by large institutions. Though US households make up one of the largest ownership groups in the stock market, much of their invested wealth is held in institutional accounts — retirement plans and mutual funds. And the interests of those fund managers inevitably come into play, at best competing with the interests of individuals, and at worst, undermining them.

Time after time, I have found myself listening to friends and clients, asking about this or that investment product. So often they are making choices that don’t make sense — allocating their wealth to trendy derivatives or products that are at odds with their time frame or financial goals or personal aspirations. They seem disconnected from their wealth, or even haphazard in their planning. They don’t mean to invest in things they don’t believe in, but without access to better information, it happens by accident.

That’s why I started Censible. I want to help people understand and connect their wealth to their values and emotions. I want people to have a meaningful relationship with their wealth. I want to create a community of individual investors, with a strong voice to influence companies. I believe that if people come together and invest in their values, we can create significant change. We could help create new value, and wield the power of business and the financial markets to benefit our society at large. We could start a movement that rewards companies for doing good, and squeezes companies that do harm.

At the end of the day, the recent scandals and disasters that have rocked the financial world are a wake-up call. As investors, we have a voice, and it’s time to use it. If we unite to support exceptional businesses, more capital may be directed toward positive impact. We help turn the tide. We help fund projects and products that make the world a better place. It is in our power to do something better and different. It is up to us to engage with our wealth and invest in our values.