As more consumers embrace social responsibility, it creates an opportunity for advisors. But it also poses a problem.
Many advisors weave sustainability into their brand. They convey their commitment to the environment, social justice and making money while making the world a better place. These themes resonate with all ages. For advisors seeking to woo younger clients, an emphasis on ethical investing tends to matter even more.
Yet not everyone prioritizes an advisor who's vocal about such causes or principles. Some investors simply want their advisor to make them money. That makes branding a delicate dance. On one hand, advisors want to signal their support for impact investing. But they may not want to drive away individuals who don't care whether their stocks earn high ESG (environmental, social and governance) scores.
How do advisors lace their brand with messages related to values-based investing and social responsibility? They often strike a balance. They craft a brand that welcomes clients with a range of beliefs.
"I recommend to advisors that they think about not just the clients they want to serve, but the type of services they want to provide," said Stephanie Sager, advisor marketing lead at Orion Advisor Solutions in Omaha, Neb. Focusing on services enables advisors to build a brand that's inclusive and satisfies different audiences.
When launching a firm, advisors often compose a list of core values. One or more of these values might address some aspect of social responsibility. Others include integrity, respect and transparency.
"The core values of your firm are like the morals of your business," Sager said. "They're like the morals of a person," and they can venture well beyond sustainability to encompass other admirable attitudes, actions and beliefs.
Go Green, But Don't Overdo It
Advisors may want to align their brand identity with a commitment to ESG investing. But there's a risk that it might stoke confusion among consumers. The whole concept of social responsibility in investing remains loosely defined. It's easily misunderstood.
"Some folks might not know that's even an option where they can pick (sectors) where they want to invest," Sager said. She adds that it's only in recent years that sustainability ratings and other ESG metrics have gained traction and attracted investors' interest.
As a result, advisors tend to proceed with care in opting for green messaging to build their brand. Going overboard in hyping sustainability can trigger skepticism. It might also lead some prospects to look elsewhere for what they deem a more traditional advisory firm.
"Maybe the best thing to do is make it known without going crazy," Sager said. "It can be a line in your company description, and you can invite folks to ask you about it if they want to know more."
Strike a balance on your firm's website. You might say, "We support social responsibility in investing" and cite three ways you do that. Or you can write, "Some of our clients want their advisor to align their investments with their values, and we provide that service."
Choose A Brand Image That Subtly Integrates Social Responsibility
Some advisors integrate ESG investing into their overall brand. They do this by creating a catchall term that hints at social responsibility without getting preachy. Their goal is to attract clients who care about values-based investing without alienating others.
Mitchell Kraus, a certified financial planner at Capital Intelligence Associates in Santa Monica, Calif., trademarked the phrase, "Because It's Your Legacy." It appears on the homepage of his firm's website.
"We mention ESG on our website among all the other legacy issues that you may like to discuss with us," he said.
Over his nearly 30 years in the business, Kraus has found that some clients show little interest in social responsibility in investing. But given his passion for values-based investing, he might discuss ESG options with these individuals.
"With the recent outperformance of ESG funds (in past years), some of these clients have become more open to diversifying their holdings," he said.
Amy Jo Lauber shows the benefits of impact investing without overdoing it. On her firm's website, she writes, "… there is a social element to your financial decisions." And also: "I believe that money is a tool to help us live lives that reflect our deepest values and beliefs."
"Everyone defines socially conscious investing differently," said Lauber, a certified financial planner at Lauber Financial Planning in West Seneca, N.Y. "So I don't brand myself as a socially responsible investment advisor. But I include it in my marketing."
