By: Jody Lowe; Michael Young; Andy Azinger
More investors are looking for positive ways to make a difference with their pocket books. Michael Young with the US SIF Foundation makes it easy to learn how.
Duration: 31:35
Transcript:
[MUSIC]
Michael Young
I think when you look at most people when it comes to retirement plans, they maybe have strong feelings about fossil fuels and climate change. But I’ve never thought to say to whoever runs their retirement plan or their financial advisor, you know, is there a way that we could fundamentally alter how we’re investing so that we aren’t part of the problem?
Jody Lowe
I love it.
[Intro music]
Andy Azinger
That’s Michael Young, Manager of Education Programs with US SIF: The Forum for Sustainable and Responsible Investment, and he’s here to talk about a new course they’ve designed to help individual investors and advisors to learn how to invest where their values are. I’m Andy Azinger.
Jody Lowe
And I’m Jody Lowe. And this is the LoweDown Podcast.
[music]
Andy Azinger
Hi Jody.
Jody Lowe
Hey, Andy.
Andy Azinger
Well, this is Episode 104, meaning we’re four shows into your first season. Congratulations on that. And this show goes into different territory because it features your first guest, who’s the subject matter expert outside of the Lowe Group.
Jody Lowe
That’s right, Andy, we want to talk with one of our clients, US SIF, about an important new initiative they’ve undertaken. This is an opportunity for us to support the great work they are doing to help educate investors.
Andy Azinger
And what our listeners are going to hear is an interview that you had with Michael about this program., it’s an education program, and you’ve taken this course.
Jody Lowe
Yes. And I did indeed take this course. It’s designed for investors who know a little bit about investing, but are looking to learn about how to invest sustainably. It’s an interactive course that addresses both the why of sustainable investing as well as the how. And you know, frankly, at a time like this, we are seeing a lot of people that are interested in learning more about this. And it’s due to the confluence of things like wildfires and other concerns about protecting our environment and the disparate impacts of COVID-19 on various parts of our population and widespread protests across the country in response to police violence. Many investors are keen to learn more about sustainable investing and how they can align their money in a way that reflects their values.
Andy Azinger
Well, we’re going to roll the first part of this interview between Michael and yourself. You’re going to be discussing all of those things, a lot of the why this course exists and what an investor may take out of it. Get a little bit to know more about Michael himself, and then we’ll catch up after that.
Jody Lowe
That’s great.
[music]
Hey, Michael, thanks for joining us.
Michael Young
Thanks for having me.
Jody Lowe
I’ve been excited to talk more about US SIF’s new course and I’m so glad you could make some time for us.
Michael Young
Thanks so much for having me.
Jody Lowe
Tell us a little bit about the course. What is it?
Michael Young
So, it’s a 30-minute online course that gives a brief overview of sustainable investing, a summary of investment options and strategies available to individual investors, and it has many links to additional resources and ideas for actions individuals can take right away.
Jody Lowe
We’ve been working on this together to get the message out in front of the public but what was the kernel of the idea that made this initiative talking about sustainable investing make sense for US SIF? Why now?
Michael Young
Sure. Great question. So the actual genesis of this free 30-minute course was a meeting in the summer of 2019 that was supported and funded by the Rockefeller Foundation, and they brought together financial professionals from across the industry to talk about how to expand individual investor participation and sustainable investing. And so, what we found during the course of that three-day meeting, was really the biggest barrier for any individual investor to identify what they wanted to do was that they had a lack of basic knowledge about sustainable investing–definitions, there’s quite a bit of terminology, the options that they had and their retirement plans, or potentially the lack thereof, and maybe not even understanding that there was great financial performance to be had. So, the idea of this online course is that in 30 minutes somebody with no background can come out of it and our hope as US SIF is that we’re addressing that gap in knowledge that we identified last year.
Jody Lowe
So I’ve wanted to step back a little bit and talk a little bit about you. And if we can go back a few years, we don’t need to identify how long. I think you graduated from UC Davis, where you studied international relations with a focus on economics and environmental policy. I think that you were a young kid and you decided I’ve got some big things to do. What was going through your mind at that time, and how did you make your way to US SIF?
Michael Young
So the path to US SIF was a long and winding road. I started actually as a professional volleyball player, so took all of that great education from UC Davis and did nothing…
Jody Lowe
[laughs] That’s great.
Michael Young
…with it. But I did enter financial services after moving back to the US in 1999. And got started with Merrill Lynch and then spent nearly a decade with IMG Investment Management. And at both firms there was really no content when it came to sustainable investment, although there were certainly the occasional firms that we would work with like Calvert, but it was not what I would consider mainstream, and it didn’t really fit what I had been hoping to do, both in terms of product design, and things that I wanted to bring to the public. So I had a great opportunity to join a firm called Advisor Shares and in joining them built the first actively managed fossil fuel free ETF, and what was really exciting about that is I ended up meeting quite a few experts in the field of sustainable investment. And we had a great relationship with firms that still today I spend time with at US SIF and during the course of the five years that I was with Advisor Shares, when we had built out this ETF and started connecting with the sustainable investment space, I got to know US SIF and our CEO Lisa Woll. And in the summer of 2016, was looking to do something to make a bigger personal impact in the field. What I found in all of my conversations, even with investment professionals, was that the lack of knowledge was really the inhibitor for an interested investor to actually get sustainable investment options. And it wasn’t that their financial advisors or that the financial professionals that were building the funds didn’t have interest—it’s that they really had no background at all and we just did not see enough products and enough education, both for individual investors and for financial professionals to, I think, make a big shift. Now, all of that being said, that was my personal perspective. There was growth in the field. There were people that had been doing this and much more for decades and decades, and we saw a huge jump in assets in sustainable investment, which US SIF puts out a report every two years, by the way, and the next one will publish in the Fall of this year. So probably mid-November, we’re going to see the 2020 Trends report come out and tell us where we stand. But when I joined US SIF we were just in the throes of putting together the 2016 publication, and at that time, about one in five dollars invested professionally was in sustainable investment. But if you talk to individual investors, or you talked with financial advisors who had what I would call the average client, there was very little activity in this space. And the big gap was education. So there was an opportunity to join US SIF and bring my knowledge of at that point, closing in on 17 years of working in mutual funds and ETFs, with financial advisors, both in the United States and outside of it, to help bring my background and hopefully start to build out more of what was already in place in the educational resources of US SIF.
Jody Lowe
That’s great, Michael. I, we’re going to get to talking a little bit more about the course and why individual investors should take it. But I want to talk a little bit more about what you’re doing there on the education front. You know, you mentioned the trends report and how you know, I think now it’s one in four dollars are invested sustainably and…
Michael Young
That’s right.
Jody Lowe
…It’s mainly happening amongst sophisticated institutional investors, not so much like you said, among individuals. So, you know, you’re focusing now on helping, you know, individuals directly teach themselves about it. But you also spend a fair amount of time trying to help advisors learn about this. You are responsible for the sustainable investing course and you’ve been responsible working with the College for Financial Planning for launching a designation for advisors. Can you talk a little bit about your work with advisors right now to help them learn more about responsible investing and helping them to better serve individuals in this way?
Michael Young
Definitely. So I should preface all of what I said earlier with that our primary focus at US SIF is the professional investor space, so whether that is financial advisors, asset owners, those that are managing the portfolios at asset management firms, they are our primary focus. And when I joined in the Fall of 2016, one of the first goals was to see how we could take what US SIF already had with our three hour professional training for financial professionals which is qualified for CE credits with IWI and the CFP board, and you can take it online or you can come to live training sessions when those occur here–during the pandemic era that that means virtual zooms-style offerings, but one of the first initiatives was to see if we could take, take it to the next step, create a professional designation. And so, we found a great partner in the College for Financial Planning. And that now exists–it’s essentially a graduate level education process that, you know, self-directed, highly motivated student could probably knock it out in eight weeks. But we’re talking about many, many hours of study and reading and work. So, where we’ve got this three-hour overview course called the Fundamentals of Sustainable and Impact Investment, that you can go to our website, take in three hours, get your CE credits and move on. If you said, Hey, this is something that I really want to specialize in, but there’s no way to make up for 20 years of experience, we hope that this designation is a way to really accelerate somebody who wants to become an expert, so, you know, whether that’s 90 hours or 135 hours depending on how fast you read. You can now go to the College for Financial Planning and earn the first professional designation in the United States, which is the Chartered SRI Counselor, and it’s got an acronym, CSRIC. And I have already heard from the first couple hundred folks that have earned it that the lingo they’re using is “sisric” as their way of pronouncing that, that acronym.
Jody Lowe
I love it.
Michael Young
But so, you know, financial professionals at the heart of it are what make US SIF what it is, both our membership and the, and all the input we get from them for the work that our organization does. And then, of course, making sure that we turn it back around to help expand the field. It’s a primary focus for us. There is nobody else in the US that is looking at all asset classes in investment vehicles and trying to enhance education for all parties included. And so, for us, you know, that will range from individual trainings, private consulting for firms that are taking their very first steps. But what we found across all of these different financial professionals was they still wanted more baseline knowledge for the clients they serve. And that was the genesis for this new course that we launched last month.
Jody Lowe
Great. Let’s, we’re gonna segue to talking about the course. I do want to mention that in addition to the great training that Michael has been doing, both with advisors and now with individuals, the US SIF website at www.ussif.org has some great educational resources on responsible investing topics and there’s white papers for 401k plan sponsors about building a, you know, responsible 401k plan. There’s articles about gender lens investing, and there’s a really recent article about passive ETFs in the responsible investing space. So, there’s really some great detailed information, both for individuals and for advisors on the US SIF website that can be, you know, used in any number of ways and certainly as enhancing people’s knowledge of responsible investing. But let’s take a little break right now. And then we’ll return and talk a little bit more about the course.
Michael Young
Sounds good.
[music]
Andy Azinger
Jody, we’re gonna take a little break to let some of these ideas sink in. But it really just sounds like quite the journey and not just for Michael, but for the whole, sustainable investing space, and all for good, investing for good. And I was really surprised to hear in this first part of the interview, that one in four dollars are invested in the sustainable category.
Jody Lowe
Yeah, that’s true. US SIF’s focus in the past has been on its members, these big institutional investors and advisory firms who practice sustainable investing where this one in four dollars are invested. So, this is an important pivot for US SIF to focus its attention on individual investors now, not their members, but the people who are the beneficiaries of these investment funds, or potential investors in the funds. So, it’s an important new initiative for them.
Andy Azinger
Well, let’s take that brief break, let all these ideas sink in, and then we’ll just we’ll just jump right back into the rest of your conversation with Michael talking about, you know, those individual investors and who is an ideal participant in this course and the like. So, we’ll be right back.
Jody Lowe
Sounds good.
[Mid-roll break]
Jody Lowe
So, Michael, why is now the time you think that investors should look into adopting sustainable investing?
Michael Young
I think what we have seen over the last 15 and 20 years is that we’ve seen an increased civic engagement particularly this year with how people vote and getting involved in their communities, whether that’s in organizing to help with local food banks in times of crisis when with neighbors in need, to preparing to vote this fall. We have seen over the past 10, 15 years consumer decisions really change, you know, what sort of products people buy, what they want to eat, you know, whether that ranges from organic produce and, and protein to the types of chemicals or lack thereof they use in their cleaning products at home for the safety of children in their house or pets. And one area where I think people for a long time haven’t really thought they had the capability to take the same sort of action is how they invest. And so when you look at most people when it comes to retirement plans, they maybe have strong feelings about fossil fuels and climate change, but have never thought to say to whoever runs their retirement plan or their financial advisor, hey, you know, is there a way that we could fundamentally alter how we’re investing so that we aren’t part of the problem? You probably saw on the news this week that Exxon Mobil is removed from the Dow. I don’t know if that’s a harbinger of the future and Chevron is next, but a lot of people were pleased to see it depending on what commentary you saw yesterday, there were a lot of people that said, hey, these indices should be about the future, what long term investor would want to buy something that doesn’t have much of a future? And so I think it directly relates to where people stand today. Why would you want to do this now? Well, there’s no time like the present. There are so many issues that people want to address and investment, professional investment, whether it’s through mutual funds, or ETFs, or any in all of the above, through your retirement plans, how you bank, all of these things affect gender equity, social justice, whether or not we see the sort of fair society that most of us want our kids to grow up in. And with a simple course 30 minutes, you can learn the basics of all of these areas, find links to resources that will help you become a little bit more knowledgeable, or potentially take a full deep dive depending on what really piques your interest. And, and there’s no time like the present. I mean, we see it with climate issues like the storms that are going to hit Texas, probably later this week, to the wildfires fires in California, to the drought in the upper Midwest to, you know, you name the challenge that we already face in the United States, rising sea levels in Florida and the Eastern shore. We’ve got it goes without saying, quite a bit of frustration in the country, deep-seated, long frustration with how different communities have different access to capital. And some of these things haven’t even been addressed in the 10 years since the financial crisis. Well, you can do it. Everyone can do this as an individual investor. Every dollar makes a difference. You can, you can change how you bank. You can change how you make contributions to retirement plans. You can make your own choices as an individual investor. And, by the way, individual investors have great influence. If you’ve got a financial advisor, or if any of your friends and neighbors and family have financial advisors, if you teach your friends and family, and they talk about this, and everybody’s talking to their financial advisors, even financial advisors and investment professionals that don’t maybe have particular expertise or interest in sustainable investment, are going to find that they want they’ll want to get some to address client need and remain on the cutting edge of financial services.
Jody Lowe
So the right investor for this course, I mean, it’s really available for anybody, but you’re assuming a little bit of knowledge of investing, right? The people who come and take this course, they’ve probably owned a mutual fund in the past, or maybe they’ve invested in mutual funds through their 401k. So it does assume a little bit of knowledge, right? Who’s the right person for this course?
Michael Young
Yeah, that’s exactly right. So, it’s somebody who probably has a retirement plan and therefore has some sort of funds within it. It’s somebody who maybe has used an investment app like Robin Hood. Maybe owns an individual stock or potentially owns many individual stocks, depending on how many years they’ve been doing this. But I’ll say, if anyone has a bank account, this course might be up their alley, because we talk about banking as well. And there are resources that come from other organizations. And, by the way, I should say this course that US SIF created links out to many, many resources and organizations around the United States that help people take next steps. So, whether it’s doing research on the mutual funds you own, you might go to a website like AsYouSow.org and look at what sort of exposures you have to let’s say, tobacco, or fossil fuels, or to guns inside of your mutual funds. Or you might go to GreenAmerica.org and do some research on where you bank and what your other possible options are depending on where you live. So, there are resources for all types of Investors including people that don’t invest at all but do have savings and maybe do income investments like CDs or short-term, income-generating, conservative holdings that maybe they’re saving up for a house or saving up to make a big purchase. This course is up that person’s alley, too.
Jody Lowe
So, before we go any further, let me share the address for that course. It’s www.ussif.org/courses_individualinvestors. So, you can probably find it from the home page at www.ussif.org. But the full address again is www.ussif.org/courses_individualinvestors. So, Michael, when I took the course, you know, you’re right, it’s a half hour course, it really doesn’t take very long, but one of the things I found really interesting was that it was fairly interactive, that there was an element of, you know, dragging the answer to a question to, you know, test your knowledge. And so, it was pretty engaging. How did you design it that way? I mean, I think it really worked well, the way the course went very quickly. And it was, you know, colorful, it was well designed. You know, tell me a little bit about how you put that together?
Michael Young
Well, I think at a base level, education has come a long way and throwing somebody a book or a pile of text is not going to cut it anymore. So, when we started to build this, one of the things that we will have to make sure was that it was accessible to anybody on any platform. So, you might have a laptop or a desktop open, and you might be on a tablet, you might be on a smartphone. Whatever platform you’re on, it’ll work. This course will adjust to that platform style. And what we found was while people are more than willing to read some text because we’re seeing quite a bit of financial services media point towards mobile reading, so people are pulling a lot of stuff up on their phones. What people do want to have is something that sticks with them. And so, for us, we thought, well, if it’s just text, some things, some concepts, some ideas might not last ‘til tomorrow. But if part of the course is what I hope is fun interaction where you are clicking through flashcards or dragging and dropping to match answers, the idea is that this isn’t just 30 minutes to address an idea on a Sunday afternoon when you’re motivated to take a look at this, but to remind you that there is a fun way to learn about this field that they can access continually. So, you take it one time, you’re not limited. You can come back anytime you want, and that you remember it, that it’s something fun to share. So, you can say to somebody, hey, you know, you’ve got kids who are in high school age that maybe are tired of what they’ve got with all these zoom classrooms. This is a fun 30-minute interactive course, they’re going to learn something that maybe they know nothing about. I would say it’s the same for…
Jody Lowe
That’s a great idea.
Michael Young
…yeah, same for college students, and then, listen, for financial professionals, there is so much going on in the world right now. But when you’ve got a break, this is a, maybe, a different way to spend your time that when it’s over, you can feel like you’ve accomplished something, because even the most tenured financial services professional is going to learn something from this course. And it’s designed for individual investors, but I promise you, even a tenured investment services professional will come out and say, I didn’t know that.
Jody Lowe
Well, and we’re seeing so many more advisors, offering, you know, impact investing platforms for their clients and they could actually use this course with their clients. If they’ve got clients that are really excited and wanting to learn more about what the advisor is doing with their portfolio, they could share a link to this course to their clients and let the clients learn more, which, you know, helps everybody, the more everybody knows the better, certainly helps you advise better.
Michael Young
Definitely. I hope they do.
Jody Lowe
So, Michael, performance in the space has been comparable, and in some places even better, and it’s really given people reason to pursue investments that are consistent with their values, hasn’t it?
Michael Young
It has. And we’ve heard investors over the years use terminology like responsible investing or socially responsible investing or values-based investing. And more recently, we see a lot more investment professionals use ESG investing, which are the environmental, social and governance criteria that potentially people would use to determine which areas of sustainable investment they want to focus on, if there’s a particular space they want to focus on, but when it comes to performance, you know, we can track this back to 1990. So, the very first sustainable investment index was launched by Domini. It was called the Domini Social Index. It has since been acquired by the data firm MSCI, and so you can look up this index now as the MSCI KLD 400 social index. So, it’s 400 companies in the United States that are meeting certain social and environmental standards. And one of the things that I think will surprise people who maybe haven’t been paying attention to this space is if you’re looking at something like the S&P 500, or the MSCI USA index, so 500, 600 of the largest companies in the United States, you might think, based on some of the preconceptions that well, those must be the best because we have been told for years index investing is easy, and it’s hard to outperform an index or a benchmark, and these are low cost ways to access investing. And in some cases, that is definitely true, but it’ll surprise people to know that since 1990, through today, the MSCI KLD 400 has outperformed both the MSCI USA and the S&P 500, which I think most people use as their benchmark for all investing in stocks in the United States. So, to do this doesn’t mean you’re giving up anything. And in fact, the proof is in the pudding since 1990, it means you actually get more, in addition to, you know, pursuing personal values that you want to see reflected in your investments.
Jody Lowe
On more recent level, too, Morningstar demonstrated that in the most recent market volatility, that ESG funds had better downside control, than more traditional investments, didn’t they?
Michael Young
They did, and in fact, there were a couple of investment professionals who immediately thought, well, this must have to do specifically with a sector like energy or oil because we had a big drop in February in the price of oil. And it turned out that research from Morningstar and John Hale pointed out that no, it was the investment selection, it wasn’t just that there was less of an exposure to a particular industry or type of company, but rather, funds and investment managers that were using ESG criteria to build their portfolios were outperforming because of their investment selections. And, and to me, what that means is, the more data you have, and the better you integrate it, the better your outcomes are.
Jody Lowe
Wow, nailed it. Michael, with this performance in mind, this is a good reason for individual investors to talk this up. This is good for people to do and this course is a good thing for them to take to learn more about it, isn’t it?
Michael Young
I think so. People often are shy about talking about their investments, particularly if it’s an area that is not their professional background. But there’s never been a time like this. We’ve got considerations like climate change, private prisons, weapons manufacturing, that are affecting different people across the United States. You can talk about those things that may, you may want to address systemically, and you can now talk about them with prudent investments.
Jody Lowe
So again, to find the course go to www.ussif.org/courses_individualinvestors. So Michael, thank you so much for taking the time. I’m really excited about this course. And what you’re doing with educating investors, and I really hope you a lot of success.
Michael Young
Thanks so much.
[Close music]
Andy Azinger
Well, Jody, this sort of a show really gets me excited. I mean, it really does. I love learning. I know about sustainable investing. But I’m gonna sign up for Michael’s course too, because I always want to learn something new when I hear it from someone knew.
Jody Lowe
I agree. The course doesn’t take long. It’s really easy to take and fun to do. And it’s worth the time. I hope you enjoy it.
Andy Azinger
And also, you know, Michael was talking about how interactive it was. In fact, you were talking about how interactive it was. Functional hands on experience, you know, putting knowledge to work and kind of knowledge checks along the way, which probably makes it sound like it was kind of fun to do at the same time.
Jody Lowe
Absolutely. There’s little quizzes and things like that, so you can actually measure whether you’re advancing your knowledge or not. And if not, you can go back and rework the section and make sure you’ve got it down.
Andy Azinger
What a fantastic course US SIF has come up with. And we’ll wrap up this show, just reminding investors that they can keep up on the LoweDown, both the podcast and the blog at lowecom.com. Until next time, I’m Andy Azinger.
Jody Lowe
And I’m Jody Lowe. Take care.