Offering Faith-Based Investment Strategies: Advisor Q&A

If you want to help your advisory business grow, it never hurts to have a little faith – as in faith-based strategies. While clearly a niche product, Frontier Asset Management has found that our faith-based investment strategies can play an important role for advisors – helping them connect with clients on a deeper level, giving them a way to stand out and rise above cookie-cutter advisors, and giving investors a way to express themselves that they can’t easily find elsewhere.

First, a definition: Our faith-based investment strategies at Frontier are designed to reflect common values found not just in Christian religions, but other faiths as well – values like respecting and improving human life and well-being, operating with integrity, and trying not to harm others. In our case, we are not tied to a specific denomination, but try to reflect common values both by excluding investment in certain firms and also promoting investment in entities that make positive contributions to the world.

But what does it look like at the advisor level to actually offer faith-based investment strategies and what effect does it have on business?

To find out, I had a Q&A session with B. Don Snyder, MBA, CFP®, CKA of SFG Wealth Advisors out of Tampa, Florida. Don has offered Frontier’s Faith-Based Strategies for years, and the insights he shares will be of interest to advisors anywhere looking for another edge for their business.

Tracy Billings: Some advisors worry about how to start the conversation about faith-based investing with clients. How do you approach the topic?

B. Don Snyder: I may ask them, “If you had an opportunity to invest your money with a values-based approach, is that something you would consider?” There may also be questions centered around what is important to them and their values in general. The other question would be, are there any types of investments you would like to avoid as a matter of principle? We then explain further based on their response.

Billings: How would you answer the question, “What difference does it make how I invest?”

Snyder: One of the few ways you can influence businesses is with your dollars, not only directly when making retail purchases, but through ownership as an investor. Also, as a shareholder, you have an opportunity to engage in shareholder meetings, votes, etc. if you are willing to take the time to do so.

Billings: How do you (or your clients) look at investing differently when you think of it in terms of investing in individual businesses as opposed to investing in “the market”?

Snyder: Often investors may tend to gloss over what they actually own and not understand that they are stakeholders in companies that have a long-term impact on society and the economy. By supporting companies that can have a positive impact on their customers, employees, and communities, investors find a sense of purpose in how they may be invested.

Billings: Which do you think would have more of an impact and appeal to clients: “Do no harm” (negative screening) or “Do good” (positive screening)?

Snyder: I believe positive screening can provide a sense of excitement and purpose for clients. While we do want to avoid what is harmful to others, a focus on positive change can help an investor see how their decisions improve the lives of others and promote greater engagement for the investor and advisor. There may be a personal connection, for example, if the client’s family member was impacted positively by a new drug research breakthrough. Negative screening can provide peace of mind – some investors feel more at ease when they are deliberate about not owning businesses that operate in areas outside of their own values.

Billings: How do you tactfully address any potential divisive issues (e.g., political or religious) that come up when discussing faith-based investing with clients?

Snyder: We explain that faith-based investing does have different facets to it, and that it is not meant to be a perfect process, but rather an opportunity to set a framework for the basis for how companies may be selected. We may present specific examples of companies that may be embraced, avoided, or engaged for positive change. And I offer to provide additional education or discussions with some of the great faith-based funds and firms in the marketplace to better understand the approach taken.

Billings: How does faith-based investing help you reframe your performance review meetings?

Snyder: It does help when returns are not the only metric for success. In our research, faith-based investing can be competitive, and clients who are comfortable knowing they are aligned with what they own will not necessarily make performance their one and only criteria for satisfaction. When investing with conviction and purpose, clients are often able to see beyond short-term volatility and focus on the impact of their portfolio.

Don’s experience shows that faith-based investing might not be for everyone – but it may be for more people than you think. One point I would emphasize is the many facets that can be highlighted. If a topic is near and dear to a client’s heart, addressing that issue is what matters – the goal isn’t to find a 100% match between a client and their investments but to ensure that their main pain points are addressed.

Being responsive in this way is one way Don and others like him are using faith-based strategies to win and keep clients. In this competitive market, having a little edge like that can make a big difference.