ESG Investing and Why it Makes Investing in What You Believe in Simple - Expert Edition Episode 43 (Classic Episode)
We're back with another hard-hitting episode diving deep into the world of socially responsible investing with our Certified Financial Planner, Marie Thomasson. Ever heard of the acronym ESG? We dissect the meaning behind Environmental, Social, and Governance investing, and the best part? There's no financial disincentive in doing so! Tune in to learn how ESG investing has evolved, why it's not as expensive as some make it out to be, and how you, yes YOU, have the power to demand it in your investment portfolios. Plus, we sprinkle in some insights about the importance of being informed about the fees in your retirement accounts.
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
About Our Guest:
Marie Thomasson, CFP® is a financial advisor for progressive women. Marie started her journey with a prestigious internship in asset management after studying Applied Mathematics at UCLA. It turned into 13 long years, overseeing over six billion dollars in bonds for pension funds, institutions, and banks. The experience left her with a deep skillset, and a deeper longing to be free of an industry saturated in privilege, misogyny, and self-interest.
https://modernassetsla.com/
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TRANSCRIPT:
[00:00:00] Naseema McElroy: All right. Nurses on fire. We are back with Marie Thomasson 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 responsibly that a little bit more challenging. So what are we going to talk about this week, Miss Marie?
[00:00:18] Marie Thomasson: All right. So today the answer is ask for ESG. 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.
[00:00:44] Naseema McElroy: 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.
[00:00:56] Marie Thomasson: Exactly. Yes. And ESG has evolved 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.
Yeah.
[00:01:21] Naseema McElroy: 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
[00:01:29] Marie Thomasson: now. Yeah. And like time has shown and, 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 Kari, 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 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 401k provider or any other, like any other reason you can cook up that you shouldn't have access to ESG funds.
[00:02:04] Naseema McElroy: Yes, yes, yes. And so how do we ask for it? Where are we asking for this? And what is, how does that look like? Who are we talking to? Okay,
[00:02:14] Marie Thomasson: so it depends on your situation. If you have a self directed IRA whether it's at Vanguard or Betterment or Schwab or wherever it is, just get on the website and, If you're really confused, you just give them a call and ask for ESG.
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, to know what it is and how to help you get into it. And that's easy. It gets a little bit harder when you have a 401k, especially when you have a 401k at a 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.
[00:03:01] Naseema McElroy: A lot of us don't even know that we have the power to ask.
[00:03:05] Marie Thomasson: Yeah, and you do. 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 you know, maybe that may or may not make it, a difference. But if you and a number of other employees start asking for it, then they're going to have to respond. That
[00:03:36] Naseema McElroy: they 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.
[00:03:44] Marie Thomasson: And exactly. And unfortunately, and this goes back to, the last call talking about, voting just, if maybe we had Okay. 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 now no longer going to be a government mandate to, to allow.
Sustainable funds and portfolios. So this was going to happen and guess who struck it down, surprise, surprise. And 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 system wide changes, right?
You don't have to advocate for yourself quite so hard. At a local personal, community level, if, if there's just rules in place that allow for this. Yeah,
[00:04:44] Naseema McElroy: like for an example, there are index funds for 401ks that each employers mandates to have at least one index fund, which they usually only have just one index fund in there for 401ks, but that's not mandated for 403bs, which is very interesting because people who have 403b's are usually our teachers, our nurses, our firefighters, which is pretty sad.
[00:05:09] Marie Thomasson: Yeah. Absolutely. And I mean, the whole landscape of financial services, frankly, is, 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 ask, and then ask again, ask until they get so tired of you that they just give you what you want, that's how changes happen.
And 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, regular mutual funds or ETFs.
[00:05:52] Naseema McElroy: The other thing, the big thing that we were talking about is just 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
[00:06:14] Marie Thomasson: too. You sure can. So did you ever see the John Oliver show about this?
No. 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 the high fees. Right. And 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, get sold too. And absolutely, ask about the fees 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
[00:07:02] Naseema McElroy: episode.
Now I 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. And 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 like 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 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 or 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 and Bloom is spelled with.
Three O's. That's the hardest part of bloom. Ask them. I was like, why is bloom spell with three O's? He was like, because bloom with two O's was taken. So that's, there's that. So you'll never forget that it has three O's, but yeah, that's a good way. But yeah, definitely, definitely ask for ESG has an, 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.
[00:08:21] Marie Thomasson: So almost all robo advisors have ESG funds and a lot of them have a really simple option. So one that 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 do the research anymore. You can just. Get the sustainable fund. Like it's really simple, like
[00:08:50] Naseema McElroy: easier than it's ever been. And this is really recent stuff, like in the last couple of years that it's gotten this easy.
[00:08:57] Marie Thomasson: Yeah. If not the last year, like it's never been this easy 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 this is the bar that you can just kind of skip right over if you want to invest sustainably, and you have no idea where to start, and you still listen to the first show, and this one, and you still don't know what ESG means it, it's like, It's like the 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, to invest in it.
Yep. And
[00:09:39] Naseema McElroy: 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. That's it. Okay. So what are we talking about next week?
[00:10:06] Marie Thomasson: Impact investing. Yes.
[00:10:09] Naseema McElroy: Fun stuff. All right. So join us next week as we, is that the last one?
[00:10:16] Marie Thomasson: It is for the series.
[00:10:21] Naseema McElroy: 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
[00:10:28] Marie Thomasson: right.
Hey there I’m Naseema
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