Corinne Merriman, Associate Director, Relationship Management, breaks down the value of codifying mission statements during the prospecting phase.

by Corinne Merriman

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Key points: 

• Charitable giving, through donor-advised funds (DAFs) or other periodic donation goals, can be a great first step for advisors defining the values that matter most to their prospects and existing clients and differentiating their offering.
• Codify an investment mission statement early on in the prospecting process. This may lead to more meaningful conversation with the prospect sitting across from them than other advisory firms they are talking to. 
• As clients’ values change over time, so can their mission statements. Monitoring and updating your clients’ mission statements ensures the values they care about most are still reflected in their investments and gives and creates excellent touchpoints for continuing to connect with them.

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“We’re not hearing about an interest in ESG” is a remark we sometimes hear from advisors at the RIAs and multi-family offices we serve nationwide. However, we often then learn that those same clients “are incredibly charitable.” This could point to a gap between understanding financial values alignment and an opportunity to engage more deeply with prospects around personalized and values-aligned investing. 

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Charitable giving is perhaps the most familiar method of aligning financial goals with impact goals. And we’ve spent a lot of time thinking about charitable giving here at Ethic. Just last year, Relationship Manager Morgan du Plessix examined the tax benefits of DAFs in an episode of The Ethic Playbook and explained the tax and charitable-giving incentives associated with these structures. This is an increasingly popular strategy. According to the National Philanthropic Trust, in 2022, $52 billion in assets were managed within a DAF structure in the U.S. It’s worth noting, however, that DAFs are not the only method of pursuing values alignment for clients, so our unique approach to mission statements can be a strong first step for advisors. 

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Although crafting a mission statement may bring to mind “show me the money!” from Jerry Maguire’s manifesto, we’re not quite that theatrical. We do, however, want to help advisors allow their end clients to imagine a future where their money can benefit them and the causes they care about. At Ethic, crafting a mission statement highlights the bespoke issues that matter most to the end client, which differentiates their investments from a traditional passive portfolio. Additionally, we want to define what it means to have impact on each issue the clients prioritize. For example, if an investor elects education as one of the values that matters most to them, their investment mission statement will include a definition of what it means to invest in public companies that seek to create the conditions for safe and healthy education for all ages. 

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While a financial mission statement can be adopted at any time, we’ve worked with advisors whose practices have benefited from establishing them when meeting prospective clients. If an advisor is engaging with a prospect on their values, they’re nearly guaranteed to be having a more meaningful conversation with the prospect sitting across from them than other advisory firms they are talking to. It is also a powerful way to bring in multiple members of a prospective family, especially if some family members feel less financially literate than others. 

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For clients passionate about specific issues or specific charities, it is a perfect opener, even in the first meeting. DAFs are a straight-forward conversation starter, but clients that are charitably inclined with their time or money are often interested in sharing more about their passions. A conversation about philanthropy can lead seamlessly to a conversation about further curating and codifying a mission statement so investments align with values. We call this our “Mission Mapping” approach as it translates an individual’s or family’s values to the issues that public investments can support. 

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Alternatively, if aligning their financial decisions with their values piques an individual’s interest but they feel lost as to what values they want to emphasize or what charities to support, a discussion around values definition can help them communicate their values and ultimately select charitable goals. We recommend doing this through our Values Mapping Exercise, a 5-10 minute questionnaire that helps them explore their values individually or in partnership with their advisor. 

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Ethic’s Mission Mapping Process and Ethic’s Values Mapping Exercise generate a mission statement that can be used to align personal values with charitable giving, DAF-specific investing and donations, equity allocation, and multi-asset exposures. The mission statement can be a signal to a family’s next generation as to what values to maintain or update. 

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At Ethic, we work with many mission-aligned RIAs that create firm strategies aligned with their clients’ values as well as giving clients the option to create their own personalized portfolio. In either scenario, defining the values that make a mission statement for a client’s portfolio is analogous to defining the life goals and legacy dreams that make a client’s financial plan. Having a mission statement for a client’s values is like leaving trail markers along the hike of their life. Many advisors refresh their clients’ mission statements in their annual meetings as well as discuss the impact their portfolio is having; for example, in the education example, the difference in air pollution that a client’s portfolio is making vs. the index. 

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Our clients have found it incredibly meaningful to check in with their clients, whether individuals, families, and nonprofits, on their investment mission statements over time to ensure the mission remains aligned with their personal values. They may periodically update their mission just as they periodically update their financial goals. 

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If clients reveal their interest in charitable giving, be it through DAFs or periodic donations outside of an investment structure, it’s a great signal that some definition and structure around their personal values and mission statement will result in a deeper client relationship and a higher rate of winning new business. 

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