At Highlander, we have always taken pride in building unique and robust investment strategies to help our clients achieve their investing and life goals.
For our first ten years or so, we viewed this mainly as a mandate to have great investment options which we could put to work in such a way that they served our clients goals for their life, outside of their investments. Investments as a support to life, that was the story. This is certainly still our view, but it is no longer the whole story.
In 2008 we transitioned our firm from a strategy shop with an institutional client focus to a strategy shop with an individual client focus. When we did this, a wonderful thing happened: we got to talk to a lot more people about their values. Our clients are great teachers. Every question they ask, all the aspirations they make, and each unique thought they share, lead us to be better investors and advisors. One of the greatest things we learned since shifting our focus was that we could go beyond providing investments to support life. The opportunity was to build portfolios for clients that would reflect their values and even help accomplish their goals!
Our clients are great teachers. Every question they ask, all the aspirations they make, and each unique thought they share, lead us to be better investors and advisors.
We call investing in a way that reflects values and accomplishes goals Values Aligned Investment (VAI). We are very grateful to our clients for leading us to this powerful idea. We have spent a great deal of energy researching and thinking about how to invest in the most responsible ways to support a good world. However, we hadn’t quite taken the leap in understanding to see that we could be even more helpful to clients. We see now that when we get requests for some values in a portfolio we can go beyond showing ways to invest in a “socially responsible” way; or to make “impact investments”; or any other version of someone else’s idea. Instead, we can help our clients discover ways to invest that match their own values and interests, in a way that is robust and responsible to their personal life needs and goals.
The difference between having values in how we invest and working to reflect client values in their portfolios may sound thin. This is not the case. It is both much more labor intensive, and much more rewarding to have the openness to incorporate new values and ideas into each client portfolio. It is common for us to find ourselves searching for something new; something we haven’t had a chance to research and include as an investment previously.
Interestingly, often the process is equally as important as the results in VAI. This is not because result expectations always have to be tempered in VAI. However, for the most strident VAI investor, accomplishment of goals is more important than financial returns. We don’t know many of these folks, but they are often inspiring people. This view has been a little tough for us to get our minds around. With the advantage of some perspective, it is clear that it is both a strength and a weakness to view every investment simply by the monetary returns produced.
The process of moving to a VAI portfolio is educational and often involves some form of compromise to achieve a complex set of goals.
The good news is that in our experience we don’t typically need to sacrifice much, if any, potential return to incorporate a VAI investment philosophy. It’s not that all of a sudden there’s some kind of perfection in the portfolio and all wishes are met. The process of moving to a VAI portfolio is educational and often involves some form of compromise to achieve a complex set of goals. One of the best things about this process is that everyone involved learns things about themselves and the ever changing financial world we live in.
In short VAI could be summed up as: “we are here to serve”. Call it bespoke, craft, tailored or whatever. The point for us is that we believe the world will be a better place if capital flows to the places that reflect investor values. Importantly, those values are personal to each investor and not subject to external judgment. Currently many societal structures (think 401k’s etc.) encourage complacency on the part of investors. We can see an alternative to this, and want to facilitate a VAI culture.
Please contact us if you have an interest in VAI investing. Also, please provide comments and suggestions to us, we are far from having this all figured out. We continue to learn new things as often as possible and hope you will help us.
Sol is president of Highlander Financial. He has over 20 years of experience in financial markets and managing businesses.