Navegó a una página que no está disponible en español en este momento. Seleccione el enlace si desea ver otro contenido en español.

Página principal

Vision, Values and Your Voice Investor Webinar

How to approach investing with a purpose
field sunset

In recent years, we’ve experienced financial crisis, environmental issues, a pandemic and military conflict. Now may be a good time to consider what you value most.  

It's possible today to align your investment portfolio with your values, so you have the potential to achieve positive impact while pursuing your financial objectives. At Wells Fargo Bank, we call this intersection between values and investments, “Vision Investing.”

You’ll walk away with insights on:

  • How can you make your money work for you in different ways?
  • What role does “sustainable investing” play in your portfolio? What could it play?
  • Do you have to sacrifice performance for values-based investing? 
  • What are key trends and opportunities to watch for?

Please join us to hear thoughts and insights on this burgeoning investment approach. 

Moderated by: 

Arne Boudewyn
Head of Family Wealth and Culture Services - Advice and Planning
Wealth & Investment Management 

Featured Speakers:

Darrell Cronk
Chief Investment Officer
Wealth & Investment Management

Michael Liersch
Head of Advice and Planning
Wealth & Investment Management

Patty Loepker
Managing Director – Managed Solutions and Investment Implementation
Wealth & Investment Management


Listen to the replay:

Audio: Vision, values, and your voice investor webinar replay

Transcript: Vision, values, and your voice investor webinar replay

Speaker 1:

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Vision, Values and Your Voice: How to Approach Investing with Purpose webinar. The opinions expressed in this webinar reflect the judgment of the speakers as of April 21st, 2022, and are subject to change without notice. Important disclosure information is included at the end of this webinar. Investment and insurance products are not insured by the FDIC or any federal government agency, are not a deposit or other obligation of, or guaranteed by the bank or any bank affiliate and are subject to investment risks, including possible loss of the principle amount invested. Please be advised that today's conference is being recorded. I would now like to turn the event over to your speaker for today, Arne Boudewyn. Thank you, sir. Please go ahead.

Arne Boudewyn:

Hello everyone, and thank you for joining us today. My name is Arne Boudewyn, and I'm the head of Family Wealth and Culture Services in Advice and Planning for Wealth & Investment Management.

Hello everyone. Thank you for joining our conversation today on vision investing. I'm going to turn shortly to introducing our three speakers for today. Before I do, I wanted to ask all of you to reflect on a couple of things that have happened over the past few years and just to think about recent events. So think about volatility in the markets and supply chain issues; think about the pandemic and healthcare developments; think about social justice and civil unrest; other things that have happened that popped up in the last couple of years, climate change, energy prices; and certainly more recently, the war in Ukraine and human rights violations.

Now, you might be asking yourself, "Okay, how might these issues affect my investment portfolio? And what can I do about it?" You may or may not have strong beliefs about some of these issues too, but if you look at your portfolio, what story does it tell. Does your portfolio reflect your values? Have you questioned whether or not your investments are contrary in some way to your own interests or belief? Or are there missed opportunities or non-financial risks in your portfolio that maybe you haven't considered or weren't even aware of?

Some people care about these questions greatly, as we know, and they're very involved in taking an integrated approach across investment decisions that really aligns with their values. There are many others who are wondering if they should care about vision investing, despite potential benefits to all of the many people on the call today. Whether you're an institutional investor, a family office leader, heading a family business enterprise, whether you're a corporate executive, or just see yourself as a philanthropist, or maybe you're a close advisor to clients, these are important questions that'll be a answered today. And we're really excited to have our three speakers today.

I wanted to add to that list of constituents around vision investing and to add family leaders. We know that family leaders are regularly seeking to engage in interest next-generation family members in financial planning, but also in wealth decisions by aligning shared values and an integrated approach to investing. And so with that, I really want to point out there's an abundance of research that shows the benefits of this type of engagement around values, as younger generations apply a values lens to everything.

Today we're also going to hear about myths about the pros and cons of a values-integrated approach. One of those myths is that vision investing is akin to a light switch that you either turn on or off. In other words, you either adopt an integrated values-informed approach to investing, or you don't. And we know that light switch is actually more like a dimer switch or a dial rather than an on-off switch. And the beauty of that is, it allows investors to titrate and adjust their investment strategies according to their specific values, specific interests, and specific goals. And so we're going to hear today what vision investing is all about, how it allows you to bring together your values, your voice to actively invest in causes you care about, and also to intentionally avoid investments that you don't want in your portfolio because they don't align with your values.

A warm welcome to all of you joining us today. With that, I'm really privileged to introduce our three panelists, who you'll hear from shortly. Darrell Cronk is chief investment officer for Wealth & Investment Management. Michael Liersch is head of Advice and Planning for Wealth & Investment management. And Patty Loepker is managing director of Managed Solutions and Investment Implementation for Wealth & Investment Management. Welcome to all three of you.

Let's get our conversation going, and I'd really like to turn to Michael Liersch first today. Michael, you head Advice and Planning for WIM, or Wealth & Investment Management, and you happen to have a background as a cognitive psychologist too. So maybe from both perspectives, Michael, why is it important for people to think about incorporating their values into financial decisions?

Michael Liersch:

Well, Arne, before we go there, I just want to highlight to everyone, not only am I a psychologist, you're a psychologist too. So I just want people to know what your role in all of this too, Arne, if I may. So for those who are listening, I'm a cognitive psychologist. And all that means is, I look at large data sets of how human beings at Wells Fargo, not at Wells Fargo, connect money and meaning, and how that impacts their financial decision-making so that we can create tools, technologies, products, solutions that help people better align what they actually want, to your point, Arne, on values and integration of values, and what they're actually doing with their money. So are they actually then exhibiting those values in their strategy?

I'll answer your question with that lens in just a second, but what I'm going to do after I do that, Arne, is I'm going to turn it back to you, and you as a clinical psychologist. I just want everyone to know you head our Family Wealth and Culture Services. So each and every day, you, your team, you work with clients to really unpack what's on their minds, especially when it comes to their wealth and their money, Arne, and I know you do such a good job of this, and how you look at that, not just with an individual, but with a collection of human beings that are collaborating together around their money. So I'd love you to opine on this question too of how to get started.

Arne Boudewyn:

Thanks, Michael.

Michael Liersch:

So when we think of this notion of values, integrating your values in your strategy, what I'd like to highlight, Arne, from a cognitive standpoint or data-driven standpoint, what we see is that many people just aren't aware that they can reflect what matters most to them, to your point, whether it's in the economy, in just the general social environment, whether it's about the environment specifically itself, or just policies. They don't realize they can integrate that in the strategy they're employing for their own personal finances, for their own family finances. They feel like that's more of an idea around community-based giving, or allocating money to other people.

I just want everyone to know that that's a very clear disconnect from what's possible and what people believe that they can do. I think that's critical to highlight, Arne, because the data also suggests, when we actually make those connections, so to your point, when we see clients who say, "Well, actually, I want to make sure that I live a sustainable lifestyle. I want to make sure my family's well taken care of. I want to, for example, give money to the community," when they actually look at those strategies and they say, "Well, I'm going to incorporate whether it's through positive or negative screens, or through a specific investment strategy," in approach, that reflects those preferences, those values, that vision they have for what matters most to them. It actually keeps them more aligned with that lifestyle goal and that strategy. It keeps them more aligned with the strategy they're employing to actually support their family.

So I just want everyone to really think about that when you look at how you are strategizing around making the most of your money. Have you thought about how you're doing that with respect to the specific investments that you have? And we're going to get into that a bit more, Arne. And then also both sides of the balance sheet. What are you doing to make sure that you feel confident that how you are living your life and what matters most to you is aligned with how you're executing that strategy to get to where you want to go with your money.

So when we think about how to get started, and then I'll turn it to you, Arne, to maybe share some of your perspectives on how you're helping families in this domain, I want everyone to ask themselves, what do you value most? What's most important to you? And when you think about what's most important to you, think about whether those things are reflected in the way in which you're investing, or not. And then think about, well, how can you make an incremental step, to your point, Arne, toward something that's more aligned with what matters most to you in your investment strategy? And then that's going to allow you to think about, "Well, what would be my options to make that incremental next best step?" And then you can go work with the professional that you are strategizing with to employ those next best actions to better align what matters most to you with the strategy that you're employing, to get the jobs done you need to with your money.

So Arne, I'd love to bring you into the conversation and reflect on this as well. When you're working with families, individuals to make these connections, what are you saying?

Arne Boudewyn:

Yeah, absolutely, Michael, and thank you for answering that first question. I was going to say, it sounds like our work with families every day. Family Wealth and Culture Services, which you referenced, is a national consulting team of advice professionals, and they collaborate closely with our clients. Many of those clients are multi-generational families, but also, we work with individuals of couples. And it's really about strategies for addressing the interdependence of complex personal financial considerations and familial ones that often accompany wealth. But also, that interdependence often determines the impact of wealth. Right?

So our passion as a team really is along these same lines. It's helping clients, Michael, to integrate core values into wealth planning and decision making, to really translate vision and mission statements into actionable plans and solutions, and then really to help families implement successful, I would say, communication and transition strategies. And doing that by taking an integrated approach that considers individual values, but also shared family values, core values, and using that as a connection point to guide the family multi-generationally. And ultimately, our goal, Michael, is helping families align their values and goals across the domains of family enterprise, philanthropy, investments, entrepreneurship, and the next gen, but also in support of effective communication and education about money. This is particularly important when you think about, again, how to engage and prepare the next generation of family members and future family leaders. So thank you for that opportunity.

Darrell, let's bring in your perspective on this straight away as chief investment officer for WIM. It may be surprising to some of our audience on the call, Darrell, but investing with values in mind has actually been around for many years, with many different names though, I must say. From socially responsible investing to sustainable investing to impact investing to environmental, social, governance, or ESG investing, Darrell, how has this evolved over the years from your view as our CIO?

Darrell Cronk:

Yeah, it's a great point, Arne, and there's been a lot of evolution over the years. Each one of those names or nomenclature that you mentioned have different meanings. Aligning personal ethics and beliefs with investing has been around for decades, quite frankly. Just to give you a couple good examples from values-based investing, which basically focused on the exclusion of objectionable companies or industries from your investment plan, going back even to early 20th century, the Quakers avoided investments in weapons manufacturers, for example. In the early 1980s, there was a worldwide divestment from South Africa during apartheid. So there's a lot of great historical examples. And watching the evolution, a lot of people think this is a recent trend, and it just simply is not. I think the way I tend to think about this, Arne, is that when you think about kind of the old way we used to think about ESG or social responsible investing-

PART 1 OF 4 ENDS [00:13:04]

Darrell Cronk:

To think about ESG or social responsible investing, it was usually about what the company did. So, did they manufacture firearms or tobacco or something like that? Modern ESG is more about how the company operates in its business ecosystem. So, firms that do a poor job with customers, employees, and communities are likely to be disadvantaged in the future, which can affect returns and prices. Until relatively recently many investors had been skeptical about the idea of aligning values with investments. They often thought charity is charity, investing is investing and the two shall not cross over or come together. However, the evolving social landscape and growing number of investment options that I know we'll talk about later, focusing on both profits and personal principles, adoption has really accelerated in the last couple decades.

Arne Boudewyn:

It's a really interesting historical note on how we got to where we are today, and I'm interested to hear more from you and Patty and Michael, in fact, Patty, why don't I bring you in maybe, and then Darrell you as well, to really talk about what is vision investing. So, Patty happens to oversee investment implementation across [inaudible 00:14:19]. And Patty, it seems this type of investing kind of combined with rethinking broader financial decisions is a natural progression to what we're now calling vision investing, along the lines that Darrell just introduced. Can you describe for our listeners today our vision investing approach?

Patty:

Sorry. The best thing about vision investing is that it is a personal approach. Vision investing is different for every person, because it's that specific, individual's unique look at what is important to me as a person. And then, do I want those values then reflected in my investments? And we, at Wells Fargo, have coined this phrase, vision investing, to really talk about that process of determining what's important. And then, do I want that reflected in my investments. And we have many strategies and services to help clients connect those two dots for them. And Michael's already talked about making that connection. Darrell's talked about making that connection. That's exactly what vision investing is.

Arne Boudewyn:

Darrell what would you add?

Darrell Cronk:

Well, I would agree completely with Patty. Quite simply it's something that, at least here at Wells Fargo, has been in our ethos for a long time. Our central mantra is really to help clients thrive in communities to prosper. And to do that we all believe we should focus on sustainability. So, Wells Fargo vision investing could include a number of things, a comprehensive assessment of your environmental, social, and governance risk factors that can be integrated into the investment management process. It could include strategies that align investment portfolios with client values, which rely on the aforementioned exclusion of objectionable companies or industries, and finally the newest, but perhaps the fastest growing segment involves active ownership practices, such as corporate engagement, proxy voting, which aim to achieve impact in a direct and indirect way by how you influence how a company deals with its stakeholders.

Arne Boudewyn:

Yeah, and we see, obviously see lots in the media about those companies and about corporate engagement and proxy voting every day. Thank you for that, Darrell. Darrell, you also talked about the growing interest in this approach to investing, and I'd just like to dig into this a little bit more, for those who've joined our call today. What industry trends are you actually seeing?

Darrell Cronk:

Yeah, I think this flies under the radar that a lot of people don't realize how strong and persistent the growth has been. It really started probably first in its evolution on the continent of Europe and took hold there, particularly in the institutional space, grew into the consumer space. And then I would say in the last decade or so, it's really washed ashore to the United States. Most prominently probably through the 2010's, post financial crisis, where, before the financial crisis of 2008, 2009, it was really considered a niche segment of the market. But after steady increase through the 2010's, we've seen nothing short of parabolic or exponential growth in recent years, particularly during the COVID pandemic that we saw the last couple years, in fact, assets have grown nearly 30 fold in environmental social governance strategies over the last 10 to 12 years.

And in fact, just simply last calendar year, one in every $3 of new money that was invested, what we call fund flows going into the industry, was put into some type of professionally managed US ESG strategy within the principles of that investment process. So, the financial services industry has also responded to the meteoric growth. We've seen a fivefold increase in the number of products, particularly utilizing ESG assessments. And there was an interesting report out by the US SIF foundation report talking about upwards of $120 billion now is rolling into some form of ESG strategy, which basically more than doubled the prior threshold of 51 billion at the end of 2020. So, you can see how fast, Arno, it's growing and I don't expect that trend to slow anytime soon.

Arne Boudewyn:

Thanks Darrell. Patty, what would you add?

Patty:

We've had fringes of conversations on this topic during my entire career at our firm, but only in the last 10 or so years has it really started to ramp up. And certainly we've been watching it offshore, grow and grow and become the standard. And we are close to that and closing in on that from a domestic perspective. And we certainly, at Wells Fargo, have ramped up our products and selections that we have available. And we know we are hearing a much, much higher number of inquiries from advisors and clients who want to learn more and want to make this connection for themselves.

Arne Boudewyn:

Interesting trend. Thanks Patty. I actually have a question for all three of you now. And so, I'm going to ask Darrell first and then Patty, maybe if you could respond and then we'll go to Michael. And the question is this, what's driving interest in this type of investing. Why? And if you could speak to that question first Darrell, I think our listeners would be really interested.

Darrell Cronk:

Yeah. I would highlight two areas. There's probably a plethora of things I could go through, a list of 10, 15 items, but we just don't have time. Let me just highlight two. One I spoke to just a minute ago. Many companies are feeling pressure from stakeholders and stakeholders could be customers, could be shareholders, could be the communities they operate in, on adopting more sustainable policies. Something called shareholder activism is shedding a light on many of the issues ranging from environmental supply chain, labor issues. We've seen far more activity, as I said before, in proxy voting, many investors have just become more involved in corporate engagement and governance activities. And I think that trend is here to stay as well. And companies are candidly and rightfully responding.

The second thing I would say that's drawn in interest. and this surprises a lot of people, but when you look at ESG factors, they can often have more outsized benefit on downside risks than upside risks in markets. So, when markets are volatile, when things are going down, it's interesting if you go back and test into this, almost all asset prices took a beating during the initial phase of the coronavirus pandemic in February, March. ESG did far better than most. And even Morning Star's looked at some of this in the past where they've looked at 66% of ESG funds ranked in the top half of their categories through down markets. So, it's also a good way to add quality to your portfolio when things get volatile or tough.

Arne Boudewyn:

Thank you. Patty, what is your answer to that question about what's driving these trends and why?

Patty:

Usually we frequently hear the comment that this is something that the younger generation is involved with and sustainability is only important to the younger generation, but saying that this is just a millennial thing would just be inaccurate. There was a recent Gallup survey that said that 25% of investors have heard of sustainable investment and several investing. And half of them have said, once you explained it to them, I'm either likely or very likely to be actually interested investing in that manner. I think also interesting that same Gallup poll said that 91% of people are changing their behavior based on their values. And then 78% said, well, I'm actually donating money, that is a reflection of what I value. And then two thirds say, I'm either likely or somewhat likely to want to invest in tune with what I value.

Arne Boudewyn:

So, really some interesting changes. We're going to talk about myth busting in a few minutes, Patty, but thank you for sharing this. Michael, how about your take on this? What's driving these trends and what do you see from your perspective?

Michael Liersch:

Arne, you and I, we're with clients each and every day and families each and every day. And Patty, what's fun is, taking the data that you just went through and you see it in action, right, Patty? With clients, in all those, let's say engagements we have helping our clients unpack what matters most to them, and then connect it to their strategies. So, to some of your highlights there, one of the ones that I think really stands out to me, Patty, and Arno what I'm seeing, and I alluded to this in the beginning is that human beings really are starting to understand that to avoid, and Darrell, we've talked a lot about this, that the tendency to follow market, let's say ups and downs, as a tracker for whether you stay invested or you pull out of investments, a lot of people understand that can actually lead to some unfortunate ... not market outcomes, but for outcomes for them as an investor.

Because when, right, Arno? The markets go up, people have a tendency to want to chase those things. So, they tend to buy high. Then when markets go down, they tend to sell it a low point. So, Patty, to your point on the data, human beings in general are starting to get that and say, well, what's going to keep me invested in a different kind of way? And it's really that purpose driven orientation. So, if I'm connected specifically to what I'm invested in, because it matters to me, it's just another factor that's going to really keep me not just literally invested, but invested in the approach that I've taken, because it's going to matter to me on a more multidimensional level. And to the point, Patty, you made on not just a rising generation idea, it actually is something that brings, and Arno, we've seen this, the whole family together so that when maybe you're tempted to change course unnecessarily, you all remember, well, actually we did this for multiple reasons.

Not only is it going to get us to where we want to go, it's really reflective of what matters most to us too, in terms of how we've gotten to where we want to go. So, Arno, I think that's what I'm seeing is the top factor that's really getting people across all, Patty, to your point, wealth levels, all age groups to really want to understand, well, what are my options. And Arno, that's so exciting, because then to some of the things I know you do around financial education and learning across families, everyone starts to feel like they're a part of the process, rather than it just being one or two family members.

Arne Boudewyn:

Yeah. It's a great point, Michael. And I thought about almost as you spoke, that values work, which sometimes we consider to be upstream work from action, and yet it doesn't need to be disconnected, but that can really become a blueprint, almost a map for the family. And as you pointed out, when things go well, or if things don't, during a period of time, the family can go back to that. How did we arrive at these decisions? Let's look at the work we did around core or shared values. And let's use that in whatever domain or context we wish, whether it's in a-

PART 2 OF 4 ENDS [00:26:04]

Arne Boudewyn:

... Use that in whatever domain or context we wish, whether it's in a business as a family investing office, whether it's just to start new entrepreneurial efforts or just to stay connected as a multi-generational family. And so I definitely have seen that play out in our work with families, Michael, as you have. The other thing I've come across are many myths that you have to give up a lot with vision investing. I mentioned at the outset of our call today this sort of notion of a light switch that gets turned off on and off, there seems to be a recurring myth, and Darrell, maybe I'll go to you first around how we might address these myths, but Darrell, this myth that you have to give up performance in order to do something that aligns with your values. Could you address that?

Darrell Cronk:

Yeah, it's a great point, Arna. It that's a longstanding myth, you called urban myth, that's existed since sustainable investing has been around. The reality is it just simply isn't true. I think it started in this idea that anytime you take an investible universe and you constrain it some way, meaning you limit choice on what you can put into a portfolio or use in a portfolio, then by its very nature, you're going to somehow limit the returns or the opportunity set.

And I think that is a tenet of investment theory that does hold some water in certain cases but it doesn't pertain as widely and nearly as strongly in ESG. In fact, quite the opposite you'll find. As I mentioned before, ESG tends to do well during tough periods of markets. So it tends to be a counterbalance to the portfolio, in some ways a good diversifier. And I think over long periods of time, you'll see that it's just simply not true when you look at the data that you have to give up anything. So in other words, the old saying about in order to do well, you have to perform poorly is just an urban myth. There's no other way to say it.

Arne Boudewyn:

Thank you. Thank you for that. Patty, what would you add as we're in the topic of myth-busting? And Michael, I'll ask you as well after Patty.

Patty:

I mean, it's certainly been around for a very long time. We know that, we've seen the results. It has started in the institutional market, endowments and foundations have been very happy with it. It's transitioned to individuals now being very happy with their performance. And I think in many ways, especially for individuals because they've incorporated their values, they're even happier with the results.

Arne Boudewyn:

That's great to know. Michael, let's turn to you.

Michael Liersch:

So in terms of just general myth-busting, one thing that I would want to highlight here is... Of course, I agree with where Darrell and petty are coming from. What I would want to highlight is this notion that we have to... And I know this is going to sound kind of challenging to bifurcate but we have to separate somehow the giving strategies from the investment strategies that we have. And what I mean by that, Arna, is a lot of families parts will. I have a family foundation, a donor-advised fund, things like that, that's my giving strategy. When I give money, that's when I'm contributing to the community in a way that's aligned with my values. And what human beings generally don't necessarily address is, well, what actually what's within that foundation, what's within that donor-advised fund that's actually contributing to that ability to give. And Darrell, this gets to some of the points you made, and Patty, at some points you made.

Well, so you definitely want performance return, those kinds of things so you can continue that strategy, but you kind of double down on this ability to actually reflect your values by thinking through those holdings as a way to also support what you're trying to support from that giving strategy. So, Arna, I think it's really interesting to think of it in that way. You have two opportunities to actually make an impact. And I think a lot of times from a myth-busting standpoint, a lot of people... And maybe it's not just such a myth but they don't necessarily consider the underlying holdings as a way to accomplish that. Does that make sense, Arna?

Arne Boudewyn:

It does. And I think you're really underscoring the benefits of taking an integrated approach, going to kind of stepping up a little bit and looking at the entire portfolio, the entire investment strategy, and all the component parts of that, from beginning to end. So thank you for that, Michael. And I was just going to say we heard a little bit earlier from Darrell around just the many different names and phrases that are used to talk about things like vision and investing. And Patty, I just wanted to follow up on that maybe with you first and then Darrell for your comments as well. There's so many new options, Patty, for clients in this space. Is there any risk that clients may be investing in products which are marketed as sustainable or ESG, but those products aren't walking the walk, or so to speak. What's the danger or risk there, Patty, from your perspective?

Patty:

Absolutely. A really good point to talk through. It's called greenwashing. It's something we're hearing more and more about in the financial services media, the regulators are very focused on it. And it's where an asset management firm or an investment company takes an investment or creates a new investment, puts a label on it like sustainable or ESG, but that strategy really doesn't merit that label in any way. And it's really an important factor for clients to consider as they're reviewing the investments they're going to make. And I know we provide some help in that regard. So maybe I'll just hand it over to Darrell to talk about that.

Darrell Cronk:

Yeah, I think Arna and Patty, it's an excellent point as we talked about one out of every $3 last year going into some form of ESG product. Obviously, that has appealed to it, and firms are chasing those assets. And so, therefore, there's a temptation to not always hold the line on analytical rigor and strict work to make sure that they're adhering to the investment strategy they do. We have an ESG analysis framework that's been launched for several years where we categorize our entire collective universe of mutual funds, ETFs managers on the platform through separately-managed accounts that are incorporating ESG principles or say they are, and making sure that we're holding their feet to the fire that they, in fact, are doing what they say they're going to do and not just using it as a labeling or marketing strategy.

So it's really important when you have any kind of high-growth area that you do your homework here and you understand what you own. And I think that's the value where we can bring the full breadth of the team and the great analytical rigor and work they do to make sure that you are getting what you believe you're getting.

Arne Boudewyn:

Thanks, Darrell. And I'm just going to call out for those on the call today. What you mentioned is called the ESG analysis framework. So thank you for sharing that. Well, it seems like this all comes around full circle and we've got people who are starting to think more about how they view their wealth from really a 360-degree perspective, what they want their money to do, for example, for them, finding ways to make it happen, how deep can one actually go though to reflect their values and their investments? So I know that's a question that many people have. And Patty, why don't we turn the mic over to you? First, answer that question. And Michael, then let's turn to you, we'll get your perspective on this too.

Patty:

As we talked about, this is really a personal approach. So there's no wrong answer here. There are lots of optionality in the way that a client can approach it. You can approach it from sort of a big perspective, big categories. I care about the environment. I want to focus on animal welfare. I want to have my investments reflect my religious values, or as a client, you can narrow down and be more sectors-focused, or you can think about I want to invest in something very specifically. So I am interested in real estate investment trust, but now, I only want real estate investment trust that score very well from an environmental, social, and governance perspective. Or I want to exclude some things. Going back to your earliest comments about what's going on right now, I want to see what kind of Russian exposure do I have in my portfolio, or do I have investments that are attached to military weapons? So, I have the flexibility to make this either sort of very big picture or really down in the weeds on specific areas and sectors.

Arne Boudewyn:

Thanks, Patty. And I think great examples on some of the questions and conversations that are happening now between our advisors and their clients. So Michael, let's bring in your perspective on this question of how deep one can go to reflect values and investments.

Michael Liersch:

So Patty, I just love how you've framed that up because it just highlights how many options one has to reflect their values and their investment strategy. And so, Arna, if we kind of take a step back and everyone who's listening, they want to start from, let's say, the beginning to assess, Patty to your point, whether what they values aligned with actually how they're getting things done. I would just encourage everyone to take a simple three-step process. The first is just to understand yourself. What do I value most? But also within that context, what am I trying to accomplish? And Patty, you gave a couple examples there, but even if it is even broader than that, which is what are the jobs I want to get done with my money? Is it about my lifestyle? Is it about my family?

Is it about the community? You can lay those things out and then just connect it with what you're actually doing, actually specifically the accounts, what's within those accounts, Patty, to your point, that's funding let's say that job to be done or that goal and say well, within those holdings, Patty to your point, are my values reflected? And that three-step process, understanding yourself, unpacking those jobs to be done, and then looking specifically at those accounts and what's in them, Arna, can be a great first step to really drawing out all the wonderful opportunities that Patty and Darrell have highlighted today.

Arne Boudewyn:

Thank you both Patty and Michael for sharing your perspective there. It sounds like there's really some very easy opportunities to begin these conversations if folks on our call today are not having them already. Let's focus... We've talked about ESG. And I want to talk about ESG integration a little bit, Darrell and Michael, and Patty. So we just discussed the evolution of this type of investing from a values-oriented approach to what we now often call ESG. Can you explain what ESG is and why this has become such an important part of the investment process? And Darrell, why don't I go to you first? And then Michael, let's hear from you as well.

Darrell Cronk:

Okay. We probably should have tackled this right upfront, but integrating ESG, which ESG stands for environmental, social, and governance is really a tool in the investment decision-making process. It's a way for research analysts to look at non-financial factors. So all the numbers we would normally look at in our fundamental work, this actually takes it to a broader lens to determine if there's additional risks or opportunities that a company can face. So these ESG factors provide great insight around risk and opportunity profiles for longer-term performance.

I think the important thing I would say here, Arna... And I think sometimes people go back to your light switch analogy of you're either all in or all out. The way we typically work with these types of tools is what we call an overlay strategy, which really is you can dial it up or dial it down. It's highly likely that your existing portfolio today has a lot of these core fundamental tenets already embedded in it. So it doesn't require substantial change. It's simply a way to kind of re-look at it and understand does it reflect my priorities, my principles, and my values.

Arne Boudewyn:

Thank you. And the analogy there is like the dimmer switch or turning the dial a little bit. So thank you. Michael, what's your perspective?

Michael Liersch:

So this is really what I just laid out, Arna. We're really getting that understanding mapped out what...

PART 3 OF 4 ENDS [00:39:04]

Michael Liersch:

Anna, right. We're really getting that understanding mapped out, what you're trying to get done, what you value most in that context, and then looking Darrell to your point at what you're actually doing. And I think within that context Anna, I think it's really critical and Darrel you make some really important approach ideas here, which is since investors do have such a broad range of interests in [inaudible 00:39:30] light switch analogy, I just would say, really try to see how you can reflect as many interests as you can within your strategy, because Darrel that's another form of diversification as well. And it gives you just a lot of opportunity to not just get the benefits of that from a financial perspective, but get the benefits of that from a purpose driven perspective too.

Arne Boudewyn:

Great point, and really appreciate the focus on purpose driven, which obviously is a key part of the work that we do with families, but Germain for investments is what we're hearing today. Patty, any final words on ESG after hearing from Darrell and Michael?

Patty:

I will just add that we have a tool that if clients are interested in an assessment of their overall investments and how they stack up from an environmental, social and governance perspective, we can do that analysis for you and get you that information. And in particular, a lot of clients these days are asking about what kind of impact are my investments having from a carbon footprint standpoint and our information can deliver that for you.

Arne Boudewyn:

That's that's a great point you just made Patty. That this is actually available now to any clients who are listening in today. If you really want to dig into this a little bit more, please see your advisor and they can help you with this. Thanks for sharing that Patty. Well, as we come to a few minutes from our close, Darrell, Patty, Michael, just a couple of comments that I would make Vision Investing, obviously a holistic way for clients to look at their financial situation and also to consider some new possibilities about how to approach their wealth. And at the beginning of the webinar, I did mention that we would leave our audience with three takeaways. And so starting with you Darrell, what would be the one thing you would suggest our audience do to get started? And after Darrell answers, Patty, why don't I go to you for that same question and Michael for your thoughts as well?

Darrell Cronk:

So Anna, what I'd say is ESG trends are here to stay. Much of the industry believes that we could exceed 50 trillion in assets in ESG over the next two decades. And three out of every four adults have expressed in many surveys, some kind of interest in this. So this is not some investment fad that's going to come and go. The trends driving the need for sustainable business practices are here for the long-term. And embracing investments in these forthcoming trends is really a way of readying your portfolio for the coming changes in the global economy. There are many obvious long-term themes and some not so obvious ones like for example, using artificial intelligence and new technology to help care for an aging population, just as one example. So the important theme here is you can benefit from these trends and it allows you to future proof your portfolio in some way. So understand it, learn about it, use the tools that we have here at Wells Fargo to help you make better decisions with your portfolio.

Arne Boudewyn:

Thank you Darrell. Patty.

Patty:

I would say that vision investing is a personal process. It's about what is important to you, and then let us help you connect what's important to help you meet your financial goals and push forth that value proposition that you have for yourself all at the same time.

Arne Boudewyn:

Thanks Patty. Michael.

Michael Liersch:

To bring that all together, we actually have a tactical thing that those listening can actually engage in. We have a questionnaire called What's Important To You? And we want everyone to have the opportunity to understand what's important to them. That said, Ana, that's not going to be my pure tactical ask here of everyone who's listening. What I'd like is to combine what Patty and Darrell said. And as a family unit, how do you each fill out that questionnaire, compare your answers, so you find out as a family, what's the same and what's different in terms of what's important to you, and then connect the dots. Darrell, to your point, maybe on some opportunities you never even thought of and considered.

So you mentioned aging population and how different technologies, artificial intelligence, what it might do to help those populations, and Patty, to your point, it also connects the dots on making sure that you're going through a process of integrating your values and your investments. So I'd really encourage everyone fill that out, fill it out not as a family, the questionnaire together, fill it out separately, compare your answers, talk about what's the same, what's different, and it'll reveal so much in order to help you get to an incrementally better place with your money in terms of aligning what matters most to you and how you're getting that done.

Arne Boudewyn:

Thank you Michael. So I want to just summarize for those on the call today, our guests, what sort of some calls to action that you just heard, Darrell and Patty and Michael articulate for us. Please speak with your advisor first of all, to explore Vision Investing. They are ready, waiting, and very willing and able to be able to work with you and have conversations with you, including using some of these tools. I also wanted to encourage everyone on our call today to read what I think is an excellent Vision Investing digital report that can be found at the link shown here on the screen, sites.wf.com and then Vision Investing. You can find that very easily by just typing in Vision Investing Wells Fargo.

Again, an excellent read. It's a paper that just came out. Michael, mentioned the understanding what's important to you questionnaire, definitely a worthwhile conversation to have after a little bit of self exploration, great way of connecting around shared values, but also individual values that may exist within the same family or for a couple. And last but not least as Patty mentioned and Darrell mentioned as well, we have some excellent tools available to you with regard to ESG.

And please think about if you'd like to have an ESG report for your investment portfolio, talking with your advisor around that. Darrell Cronk, Chief Investment Officer for WHIM, Michael Liersch, Head of Advice and Planning for WHIM and Patty Loepker, Managed Director for Implementation of Investments. I want to thank all three of you for being our speakers today. And I would like to extend an even bigger thanks to all of those guests we have on the call today. We appreciate your time. We hope you heard some valuable information, and that if there are any questions around where we are with regard to the value of this in your portfolio, that many of those questions were answered. Thank you so much, and have a great day.

Speaker 1:
Wealth and investment management offers financial products and services through bank and brokerage affiliates of Wells Fargo and company. Bank products and services are available through Wells Fargo bank NA member FDIC. Brokerage products and services are offered through Wells Fargo advisors, a trade name used by Wells Fargo clearing services, LLC. Member SIPC, separate registered broker dealer and non-bank affiliates of Wells Fargo and company. Global manager research is a division of Wells Fargo Investment Institute Incorporated. WFII is a registered investment advisor and wholly owned subsidiary of Wells Fargo bank NA, a bank affiliate of Wells Fargo and company. Social Impact Investing is a unit of Wells Fargo investment Institute. WFII, is a registered investment advisor and wholly owned subsidiary of Wells Fargo bank NA, a bank affiliate of Wells Fargo and company. Wells Fargo bank NA offers various advisory and fiduciary products and services, including discretionary portfolio management.

Wells Fargo affiliates, including financial advisors of Wells Fargo advisors, a separate non-bank affiliate may be paid an ongoing or one time referral fee in relation to clients referred to the bank. The bank is responsible for the day to day management of the account and for providing investment advice, investment management services and wealth management services to clients. The role of the financial advisor with respect to the bank products and services is limited to referral and relationship management services. Some of the private bank experiences may be available to clients of Wells Fargo advisors without a relationship with Wells Fargo bank NA. All investing involves some degree of risk. Whether it's associated with market volatility, purchasing power or a specific security, there is no assurance any investment strategy will be successful. Asset allocation does not guarantee a profit nor does diversification protect against loss. Sustainable or Social Impact investing focuses on companies that demonstrate adherence to environmental, social, and corporate governance principles among other values.

There is no assurance that Social Impact Investing can be an effective strategy under all market conditions or that a strategy's holdings will exhibit positive or favorable ESG characteristics. Different investment styles tend to shift in and out of favor. In addition, an investment social policy could cause it to forego opportunities to gain exposure to certain industries, companies, sectors, or regions of the economy, which could cause it to underperform similar portfolios that do not have a social policy. Risks associated with investing in ESG related strategies can also include a lack of consistency in approach and a lack of transparency in manager methodologies. In addition, some ESG investments may be dependent on government tax incentives and subsidies and on political support for certain environmental technologies and companies. The ESG sector also may have challenges such as a limited number of issuers and liquidity in the market, including a robust secondary market. There are many factors to consider when choosing an investment portfolio and ESG data is only one component to potentially consider investors should not place undue reliance on ESG principles when selecting an investment.