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In this short series (see the Introduction), I lay out the four key categories of work that we do on behalf of our investment management clients — four kinds of activities that are difficult for folks without our training and experience to do for themselves. I hope that this series will help explain what we do for our clients, why we do those things, and how we think that these things help explain the fees we charge. As always, if you have questions about these posts, let us know!




The first part of a relationship with a potential client is to learn everything we can about them: who they are, what their financial goals might be, what they care deeply about. This discovery process is vital, if we’re to serve the client well. In a similar way — and before we can begin making investment recommendations to our new clients — we need to know an awful lot about the opportunities we could present to them. We spend a significant amount of time doing research to learn about all sorts of investments, “doing our due diligence”.

This is a big, big, big job. Our primary research database, provided by Morningstar, currently has listings for more than 23,000 stocks listed on US exchanges, and another 121,000 in the rest of the world. A large proportion of our clients are not invested in individual stocks or bonds, but rather in mutual funds and ETFs; there are more than 28,000 of these available to US investors. Many of the clients who do own individual securities have portfolios managed by “sub-advisors”, third-party managers who trade stocks and bonds on a variety of platforms; there are nearly 10,000 of those registered with Morningstar, and many more which aren’t. And there are an enormous number of additional potential investments: local small businesses looking for special funding, private equity & debt deals, venture capital, community development organizations in need of investment, all sorts of interesting options. How do we begin to winnow down these thousands of opportunities to build portfolios for our clients?

Because we are fiduciary advisors, we start with financial criteria — we need to act in the financial best interest of our clients, after all. We start with the ratings from services like Morningstar or ValueLine, and look at information from journalists at Forbes and Kiplinger. One of the most important sources of information for mutual funds and ETFs is the “Fiduciary Score®”, a “transparent and objective rating system” for pooled investments based on the prudent practice processes endorsed by Fi360, one of the leaders in the financial fiduciary industry.

And because we are SRI advisors, we follow our research into financial criteria with a deep dive into each potential investment’s impact on social justice and environmental sustainability grounds. Morningstar has recently begun rating mutual funds using data and criteria supplied by Sustainalytics, creating a “Globe Rating” system to parallel their financial “Star Ratings”. Our friends at Natural Investments have been doing an excellent job of rating mutual funds since 1992; their “Heart Rating” system is an important part of our research. Additional information is available from sources such as EnSoGo Analytics, Institutional Shareholder Services’ ISS ESG platform (formerly IW Financial), As You Sow’s various fund screening tools, and a variety of others.

One interesting source of information on both financial performance and portfolio impact for the mutual funds, ETFs, and sub-advisors we can work with is personal contact. Because we have been part of the community for a couple of decades (each), and the universe of managers who explicitly take SRI or ESG criteria into account is still relatively small, we can often arrange for personal meetings with portfolio management and social impact teams to discuss our questions. This is unusual — there are not very many traditional advisors who could place a call to one of the giant mutual fund companies with portfolio questions and expect a personal response.

All of this research gives us a good idea of which investments we can recommend to what sort of clients — we wouldn’t necessarily want to use the same funds and managers for our Zero Carbon Energy portfolios as we would for our High Social Impact portfolios, for example. Knowing what our options are is the first step to building prudent portfolios for our clients: next week, we’ll discuss DIVERSIFICATION, the process of putting together these building blocks into structures that can weather turbulent markets.