Socially Responsible Investing through ESG Funds - Expert Edition Episode 12 (Classic Episode)
In this episode, me and my guest, Marie Thomasson of Modern Assets is back to discuss how to invest socially responsibly through ESG funds, and how other topics we’ve covered can help impact change for your retirement investment. We cover:
What is an ESG
Returns from ESG vs Mutual Funds now
How to find ESG Funds
Impacting change by asking for your preferred investment fund
Links mentioned in the episode:
CFP Episode 34 - Saving Money Socially Responsibly, The Easy Way
Retirement Plans: Last Week Tonight with John Oliver
Nurses on Fire Episode with Blooom Founder, Chris Costello
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TRANSCRIPT:
Naseema McElroy: [00:00:00] All right, nurses on fire. We are back with Marie Thompson, again, our certified financial planner to talk about socially responsible investing. And this time we're going to talk about , a way to invest socially responsibility, that a little bit more challenging. so what are we going to talk about this week?
Marie Thomasson: [00:00:18] All right. So today the answer is ask for ESG. Like, that's it. and so. I think the first thing we have to address is what is ESG. And I always forget it myself too, but it stands for, environmental, social and governance investing. And, it's just kind of fancy acronym.
Naseema McElroy: [00:00:46] And, but we did talk about it in our first episode together.
Yeah. So you guys can go back to listen to that episode as well when Marie breaks down the history of ESG, so good. One to catch.
Marie Thomasson: [00:00:58] Yes. And so, ESG has involves to the point where there's no financial disincentive to invest in it, right? There's absolutely no reason why you can't invest in an ESG fund or ETF and not get the same returns as a regular, vanilla, conventional mutual fund.
Naseema McElroy: [00:01:23] Yeah. And that was the argument for a long time that ESG investing was more expensive and the returns weren't as great, but that's not the case right now.
Marie Thomasson: [00:01:32] Yeah. And so, like time has shown and, the returns were not as good before. there was a lot of investors who were really committed to the cause and they like committed Hari Karrie.
Right? Like they fell on the sword for that one for the rest of us to be able to go, like to actually now say like, okay, I can do it. And now you can do it. And there's no reason as an investor. And there's no reason as a financial advisor or a 401k provider or any other, like any other reason you can cook up that you shouldn't have access to ESG funds.
Yes,
Naseema McElroy: [00:02:07] yes, yes. And so how do we ask for it? Where are we asking for this? And like, what does, how does that look like? Like who are we talking to?
Marie Thomasson: [00:02:16] Okay. So it depends on your situation. If you have self-directed IRA, whether it's at Vanguard or betterment or Schwab or wherever it is, like just get on the website and, If you're really confused, you just give them a call and ask for ESG, like, Hey, do you have ESG?
It's literally as simple as that, you don't even need to know what the acronym stands for. because it's their job to know what it is and how to help you get into it. And so, that's easy. It gets a little bit harder when you have a 401k, especially when you have a 401k to small company.
Although even honestly, even large companies don't often offer sustainable funds. And so they're not going to offer it until you ask for it.
Naseema McElroy: [00:03:05] A lot of us don't even know that we have the power of task.
Marie Thomasson: [00:03:10] Yeah. And you do like, , these decisions are not made in a complete vacuum. somebody decides to, keep a fund or change a fund.
And you as an employee with, skin in the game, because you've got your money in there, have a right to, to request it. Now, if you're one in a hundred who requests it, then maybe that may or may not make a, a difference. But if you and a number of other employees start asking for it, then they're going to have to respond
Naseema McElroy: [00:03:41] that they, I have to respond.
That's because your, your money is invested in there. You're the customer. So it's not like they can ignore you.
Marie Thomasson: [00:03:49] Exactly. And so, unfortunately, this goes back to, the last call talking about, voting, just if, if maybe we had a little bit different people in power, whatnot, unfortunately, there was some recent regulation that really just.
Hit the sustainable investing landscape tremendously because, it's called the DOL, ruling and department of labor ruling that. there's no, no longer going to be a government mandate to allow sustainable funds and portfolios. So this was going to happen and guess who struck it down, surprise, surprise.
And so, that doesn't mean that it can't change and hopefully it will change in the next administration. but this is why voting is so important, because then you make, then you make system-wide changes, right? Like. You don't have to advocate for yourself quite so hard. At a local personal, community level, if there's just rules in place that, that allow for this, like for an
Naseema McElroy: [00:04:52] example, there are index funds for 401ks that, each employer's mandates to have at least one index fund, which they usually only have just one index fund in their 401k, but that's not mandated for four Oh three BS, which is very interesting because.
people who have four, all three BS are usually our teachers, our nurses, our firefighters.
Marie Thomasson: [00:05:16] Yeah, absolutely. And so I made the whole landscape of financial services, frankly, is just deplorable. Like it's awful and a lot needs to change. And there's a lot that I can say about financial service providers generally.
that's probably not too favorable, but be the squeaky wheel, like ask, and then ask again, ask until they get so tired of you, that they just give you what you want. like that's how changes happen. And so, they can say anything they want, but at the end of the day, there is options available that have the exact same financial, risk return profile.
As a lot of these other, regular mutual funds or ETFs.
Naseema McElroy: [00:06:01] The other thing, the big thing that we were talking about is just like you can ask for those specific funds, if you feel like the investment company that is servicing your employer, has high fees or, doesn't have the selection of funds that you want to invest in.
you can also ask for them to be totally replaced by another company, too.
Marie Thomasson: [00:06:24] You sure. Can't so did you ever see the John Oliver show about this?
Naseema McElroy: [00:06:28] No.
Marie Thomasson: [00:06:29] Okay. So John Oliver did a whole episode on 401k providers and it was fantastic because I think he actually used their own 401k provider for the John Oliver show employees, which they ended up replacing because they found out about it.
The high fees. Right. And so, you have to remember that not always, are your interests as an employee aligned with that of your employer. And it's easy for them to, like get sold to, and so. Absolutely ask about the fees. Like, what are you getting for, for what you're paying for, if you're, if this is your best and only way to save for retirement, then it matters and you should ask and watch the John Oliver episode.
Naseema McElroy: [00:07:15] That was about to say I just Googled it. So I'm definitely going to put the link in the show notes for this episode. Yeah, that's awesome. Yeah, people just don't know that they can do that. and, but then a lot of people just don't know in general, like an easy way to see what fees they're paying in their retirement accounts and their IRAs.
And so I always liked to point people to a free tool that I use. And it's a company called bloom actually had, the CEO of bloom on the podcast a couple of weeks ago. He's an amazing guy and it's a really good company. so. If you don't know what fees you're paying are, what you're invested in and how that works specifically for you, or if it's benefiting you specifically?
I would highly recommend everyone do a free bloom analysis in bloom his belt with three L's, like, that's the hardest part of bloom. I asked him, I was like, why is bloom spell with Realty? He was like, Because Bloomberg who I was, was taken. So that's, there's that, so you'll never forget that it has three hours, but yeah, that's a good way, but yeah, definitely, definitely.
As for ESG, Oh, you should always have a pulse on how your money is being spent, especially if it's supposed to be, benefiting you, making sure that it truly is and not lining the pockets of. These rich investment firms.
Marie Thomasson: [00:08:33] So almost all robo advisors have ESG funds and a lot of them have like a really simple option.
So when you emailed me about, recently was betterment ESG, right? And so you don't even have to do any work, like even if, You don't have a financial advisor, you don't work with anyone. You don't even have to really like do the research anymore. You can just, get the sustainable fund.
Like it's really simple, like
Naseema McElroy: [00:09:02] easier that has ever been. And this is really recent stuff like in the last couple of years that it's gotten this easy.
Marie Thomasson: [00:09:09] Yeah, if not the last year, like it's never been this easy to, to invest in ESG funds. And that's not to say that there's not more, that can be done, but this kind of now is like, this is the, bar that you can just kind of like kind of skip right over.
if you want to invest sustainably and you have no idea where to start and you still like listened to the first show and this one is still don't know what ESG means. it's like the best of the available options for investing sustainably, that takes the least amount of effort and has, literally no financial, like I said, disincentive, right.
To invest in it. Yep.
Naseema McElroy: [00:09:53] And it's easy because all you have to do is ask whoever is servicing your 401k or your IRA to include ESG funds in your account, or to just move your money over into ESG funds. So that's pretty easy. You just have to remember the acronym. Yep. Yeah,
Marie Thomasson: [00:10:14] that's
Naseema McElroy: [00:10:15] it. Okay. So what are we talking about next week?
Marie Thomasson: [00:10:19] impact investing. Yes.
Naseema McElroy: [00:10:22] Fun stuff. All right. So join us next week as we is that the last
Marie Thomasson: [00:10:28] one it is for the series.
Naseema McElroy: [00:10:34] We have to do a bonus. We have to do a bonus, but okay. So next week is going to be, on impact investing. All
right.
Hey there I’m Naseema
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