June 30, 2015

At the cutting edge of investment advising today is impact investing. Impact investing is the current evolutionary stage in a process of investment change that was begun 30 or so years ago with the rise of the socially responsible investing movement. The evolution that is occurring is the change in investment goals from purely financial return goals to investment goals that mix financial goals with non-financial goals. These non-financial goals include environmental stewardship – fossil fuel free energy, clean water, forest preservation and many more. Other goals in impact investing may be social in nature; such as gender equality, access to healthcare and education, affordable housing, and providing for the needs of underserved populations, just to name a few. The reason we view impact investing as an evolutionary phase is because it grew out of something and we believe it will continue to grow further as the future unfolds. As a brief background, the 1990’s saw the rise of socially responsible investing. Socially responsible investing was characterized by the view that you should try to do good in the world through your investments. The pioneers in this field were pushing the envelope between investing and philanthropy. At the risk of oversimplification, this was not able to become a mainstream movement because there was an overemphasis on the good that was done and a bit of condescension towards the pursuit of financial gain. The lack of balance between social and financial goals spurred the evolution from socially responsible investing into impact investing. In order to grow, it was necessary to put the financial goals on equal footing with the non-financial goals. In short, not many people wanted (or could afford) to invest along the original lines of thought. However, many people wanted to accomplish more than just financial gain in their investing – and, they wanted to do so without sacrificing financial returns. Thus impact investing was born. One motto that is attached to impact investing is: “doing well by doing good”. This motto nicely sums up the new view on how to pursue both financial and non-financial goals through investing. Looking Beyond Impact Investing. Although impact investing is a wave that is just building, we believe it is appropriate to look at the next wave on the horizon as well. Evolution is driven by the shortcomings in the current way of things to serve the needs of the future. Impact investing solutions are filling a vast demand that is not well served at present. This bodes very well for the industry – and hopefully also for human society and the environment! That said, the Mindful Finance view, which we see as the next wave, is that investing should also serve the fulfillment needs of the investor. To fulfill investor needs it is essential to look inside, towards experiences like empowerment, clarity, and peace. In many ways, impact investing is pointing at this kind of fulfillment. However, impact investing is essentially focused outward, and is unable to truly serve the deeper needs of the investor. Simply put, this means noticing and honoring the experiences that come up while working with financial matters. In Mindful Finance, an investor is encouraged to approach their finances in the container of mindfulness. The way to do this is to create a non-judgmental situation where attention is brought into the present moment. Simply put, this means noticing and honoring the experiences that come up while working with financial matters. In this way, emotions, physical sensations, and other experiences (which might be otherwise missed), become sources of information in investment decision making. This allows the creativity, clarity, higher brain functions, and other benefits of mindfulness to be accessed and applied. The result of this approach is that investors make decisions which better match their needs. This brings us to the intersection of Mindful Finance and impact investing. Mindful Finance and impact investing make beautiful bedfellows. For the most part, when an investor approaches their finances from the Mindful Finance perspective they discover some non-financial goals along with clear financial goals. This information becomes the guide for portfolio creation. With this kind of a guide investors not only invest to “do well by doing good”, but they also invest in a way that can fulfill their individual needs as an investor. It is our goal at Highlander to help people feel empowered in their financial lives. It is common to meet investors who are doing their best to be an impact investor, but who do not feel fulfilled or empowered by their investment approach or advisor relationship. In fact, is not uncommon to see even more confusion and conflicted feelings in investors who want to incorporate impact investing into their portfolio than in those that are happy with the old way of doing things. We believe Mindful Finance is the right approach for investors to use to align their view on investing towards fulfilling their personal goals. From there impact investments are often a big part of the path forward. We are always excited to hear your thoughts on the subject matter we work with. Please feel free to reach out to us and share.

Day: June 30, 2015

Impact Investing and Mindful Finance