ECFI:
Let me ask if you can just give us a sort of summary description of how you broach faith-based or faithful investing to folks who are not believers.
Loran Graham:
Our method is to discuss it in the very first meeting. I think it’s really important because they’re trying to decide whether to hire us or not, and they need to know what we’re all about. So, the first three quarters of the meeting is just learning about the prospective client and what they’re all about and their needs and goals and everything. But I always reserve time toward the end just to share what we’re about so they know what they’re getting into if they choose us. The way I describe it is that they’re trying to decide if it’s a good fit to work with us. And so, they need to understand our mission statement. The mission of our company is simply this: we want to guide our clients in making wise choices that work toward financial freedom and spiritual growth by providing biblically-based wealth management services with excellence.
And after I say that I kind of pause for a minute, and I look at them—it’s a lot to process. And then I say, “I’d really like to just walk you through what some of those keywords mean.” When we talk about wisdom, it’s not my experiential wisdom or even Wall Street conventional wisdom, but what we do is we seek to integrate that timeless biblical wisdom into the financial decision-making process in pursuit of better outcomes. And then, I’ll walk them through what financial freedom means to us, answering the question, “How much is enough to meet their family’s needs?”
I quote Psalm 24. I say, “Everything under the heavens is the Lord’s” and that what we believe is that God owns it all, and our responsibility is to be good stewards or managers of whatever’s entrusted to us. So, in the stewarding of the assets entrusted to you, we’re going to aim for the best returns that we can with the different categories of risk for each individual’s needs and objectives, but, at the same time, we will invest in such a way that reflects faith values and makes a positive impact in the world.
So, upfront, they know that all the advice that I give flows from a biblical worldview. And once I’ve gone into all those descriptions, at the very end, I say, “Does that sound like the type of company you’re looking for to help you steward this wealth?” And every time, even if they’re not believers per se, they’ll say, “Yeah, absolutely. That sounds great.” And I’m not asking them to sign up with me in that moment. I’m just checking in. Does this sound okay to you? Does that sound attractive to you? And I always get a yes. It’s interesting.
ECFI:
So, when you’ve got investment decisions, whether those are asset manager portfolio decisions or maybe, in some cases, even individual companies, how does all this play out in practice and sort of make your job as a faithful investing advisor different than it would be if you were just a conventional advisor?
Loran Graham:
So, in that initial meeting, we are not going to have a proposal or an investment solution presented in any way. That would be our follow-up meeting. If they’re feeling good about the first meeting, then we’ll start developing a proposal. But, in terms of how we do that, we work with model portfolios. So, there are about six different models from aggressive growth to ultra-conservative and everything in between. We try to make sure that in any new relationship, they go through our due diligence process, asking them questions and making sure we understand their situation thoroughly so that we match them up with the appropriate level of risk. But what that means is that we’re managing these models that are composed primarily of mutual fund managers that entirely, by prospectus, are screening the investments for these faith-based concepts.
So, that shrinks our universe of available funds. There are over 16,000 mutual funds on the exchanges and, within our universe, there’s a growing number certainly, but it is a smaller universe of funds. So, we’ll work within that universe to try to build a diversified portfolio in each of those risk categories, and then manage it that way.
The fund managers that we work with are looking for great investment ideas, certainly great companies to invest in, but also applying a form of quality control. Are the company’s products and services contributing to human flourishing? Are they making the world a better place by meeting solutions for humanity, or are they causing harm or preying on the weakness and addictions of others? So, we’re trusting the fund managers to do that company-level analysis and then just putting the funds together in a way that is meeting the current best practices for diversification.
ECFI:
Our investing can be in companies whose business models are aligned with and help further God’s purposes in the world, or they can be invested in companies whose business models are at odds with God’s purposes in the world. Put that if you would in your own words, in terms of how that shapes your own thinking about the investing that you and your clients need to do.
Loran Graham:
It starts with the motivations. I always like to point out that really the purpose of investing in alignment with these faith values is not out of a form of a legalistic obligation that would make someone feel guilty if they don’t invest this way. I think that had been some of the early messaging to try to attract people to faith-based investing. But the greatest commandment is to love God and love others. So, how we pursue our relationships and loving others, how we’re tithing and spending money, all that is really intended to honor God or follow His principles.
When it comes down to it, it’s a form of worship. We’re seeking to honor God with what he’s entrusted to us—our relationships, our finances—because of the work that He’s done on the cross. What Christ accomplished on the cross was securing our righteousness. So, when we pursue investing from that perspective, from a personal faith standpoint, we can apply that same heart of worship to how we approach our investments. We can, because we want to love others, invest in companies that are doing good toward others and not causing harm toward others. It’s actually, in a way, a love-your-neighbor approach to investing. So, that’s how it can be part of our personal faith. It’s a form of worship in the same way that we offer our tithes in the offering plate or make other life choices.