Hear the personal journey of James Brewer, head of Envision Wealth, as he came to the socially responsible investing movement. And listen to stories of navigating sustainable and values based investing with his wealth management practice clients.
James Brewer
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Gabe Rissman: Hello everyone. And welcome to another episode of your Stake, your story of video series, focused on highlighting best practices of financial advisors within the ESG space. Today I'm really excited to have James Brewer here. And James has a pretty good resume. James is an MBA, a CFA CFS LA, a CFP who empowers people to make smarter money choices aligned with their values, goals, and passions, a certified financial planner.
He has been named to the 20 best financial advisors in Chicago by expertise and 20 17, 20 18, 20 21. And now 2022, his, but he many designations include a chartered retirement planning, counselor, charter, divorce, financial analyst, and chartered funding and student loan advisor. So James, I'm really excited to have you on and thanks for joining today.
Thanks
James Brewer: for having me.
Gabe Rissman: So James, I just have to say cause I've got my poster behind me when we first met this poster was something that we immediately bonded over. It's a as miles Davis for anyone that might be listening to the audio only. And I would love to hear, just to begin with, if you have any particular stories or things that you want to share about music or miles in particular before we dive into a fit to some of the nitty-gritty on your, your practice.
James Brewer: Well, I he probably was one of the early folks that kind of turned me on to jazz on a drummer, turned into a percussionist later. So I just enjoy people who are quite talented and he's one of the best. And just enjoy knowing that I'm not the only one who appreciates.[00:02:00]
Gabe Rissman: So now you're an ESU focused financial advisor, like we talked about. And I, what, I'd love to start with this a little bit of your story.
What brought you into financial advice and what brought you into ESG? Did those happen at the same time? It would be great to hear.
James Brewer: Well it's an interesting story that I went to a national black MBA association meeting that gentlemen spoke at. And I thought, man, this is really amazing.
I really need to go and get an advisor for myself. Meanwhile, my wife and I were kind of recently married. I was reading up on some things and told this one advisor that was the advisor for her set plan that we wanted to embed. And companies that would actually hire me as an MIT, MIT, Sloan MBA.
I had beliefs that I never have a problem getting hired, and yet that wasn't my experience posts post Sloan and a couple of weeks later, he goes, Hey, look, we've got this great portfolio for you and well, you know and then you can give to charity, you're gonna make a lot of money and you can give to charity later on.
And I'm like, wow, dude, you're looking at me. And you're saying that I am a charity and that, you know, me wanting to simply invest in companies that had better diversity practices. So I felt like he didn't hear me at all. So meanwhile, we did hire the other gentleman who happened to be black. And after a couple of meetings, he said, I'd never really had anybody take to this the way that you have.
I do ever consider to getting to the industry. So I had been working for an employer. Things didn't work out well there, and I was trying to figure out what my next move was going to be. So I said, oh, well, maybe my undergrad in finance. And, you know, the, some of the classes that I had at Sloan could work well as being a.
Financial advisor slash wealth advisor. And actually [00:04:00] oddly at Sloan is the first time I'd ever heard of what the phrase wealth management. And I'm like, oh, okay, good. Because nobody ever explained what wealth management was. I dunno why we struggle with, or yeah, we have been struggling and explain what that is.
And that kind of launched me in to the career, started early with Ameriprise. And I was the guy that wanted to, you know, look and find the companies that were actually doing. ESG investing and kind of became Mr. ESG at the office that I was at and people would come to me if they ever had anyone who asks them about ESG, but nobody ever cared to really understand the details I did.
And fortunately the regional vice president from Calvert at the time took a liking to me because of my interest and did some actually some promotion and I got the opportunity to be quoted in one of Ameriprise's magazines because one of the few people I'm like, wow, of all the people in the country, I'm relatively due to the industry and they find me to talk about the topic.
Gabe Rissman: That's amazing. I want to actually touch on a quick thing that you brought up or a little earlier on. You said that what inspired you and motivated you was someone saying, why would you care about ESG? Have the most financial performance and then donate to charity. Is that something that you're still running into?
Are people still saying that, how do you think about and deal with that type of question?
James Brewer: Well I generally am attracting people through my presentation and my, and my marketing that you're going to hear something about their values. So, you know, one of the things I tell people is I help them make smarter money moves that are aligned with their values.
So like from day one. And what does that mean? So I'm really starting the conversation around. So some people will bring up, well, no, what does it kind of cost me that? And I'm like, well, you know, some of the people catch themselves and say, well, [00:06:00] but shouldn't, I be principally minded, you know, but what about my returns?
And I'm like, well, what if you found out that while you were getting good returns, whatever those are, you could get better returns. So, you know, in the modeling that I started doing you know, we are actually getting better returns than some popular, I'm going to be careful in this podcast, but some, you know, popular off the shelf publicly traded company mutual funds and their asset allocation funds, which I use that as a benchmark for us internally that we're actually getting better returns than those are, are getting.
So. If I were I'm tangibly showing you're getting better returns. Why would you? So I have even some people that, you know, would say, well, I really want to make returns, but I don't think they really understand as much Mike. But what if I told you that every company incorporates some way to determine of all the stocks and bonds they have, how, which ones we're going to invest in and use it.
That secret sauce is never given out. Right? I mean, that's kind of a trade secret, but what if they actually were. And that's how they, that was their secret sauce. It's just that they weren't telling you that was their secret sauce. So it's weird to me that sometimes when people hear well, what if I told you that part of my secret sauce is actually integrating those values?
And it would just only make sense that well companies who would get sued a lot and have lots of PR issues around not hiring women or, you know, every so often the, you know, racist video that seems to show up and, you know, the stock takes a hit for a little bit, you know, so it takes it. So I don't know why people, like, if you explain it that way and so you might not even care, but what you care is the shareholder value.
So companies that tend to care about those things, and we could argue that governance, the G because often when we hear ESG, I think we are hearing E S and we're not hearing the G you know, to me that really is the G part of things. [00:08:00] And maybe G leads you over into.
Gabe Rissman: Cool. So it sounds like what your case is, is a finished performance case that there's, it's a false trade-off between ESG and charity.
That ESG is going to help you with performance. And also, oh, by the way, you're going to get this great performance. Why not also align your investment with your values? It contributes that way too. I, I love that. That makes sense. So I want to jump back to your story a little bit, too. We left off at a Ameriprise.
How'd you go from Ameriprise to envision? What was that transition? Like? What was that journey? Like? Why did you make the decision and how's it been.
James Brewer: Man, I love that question. Okay. So so I I'll, this is public disclosure anyway, so I kind of got recruited to a place called BC Ziegler which was a regional broker dealer.
But you know, my desire to actually do financial planning. I've always been a fan of financial planning. And really, we should say, if you're going on vacation, do you just like go to the airport and figure it out or get on a train or get up? No, usually you're like, well, where do I want to go and taking a car or if I'm going to drive or if I'm going to go, right.
Like instead that's not like how we think with money. Well, just invest. So just put gas in the car and go. And if that leads you to the airport, I guess that's okay. Anyway. So like, no, like let's do financial planning and you know, the logo behind me has something to do with. Philosophy that we use in financial planning.
So I go to a place and they're not like really embracing financial planning and the way that I wanted to. And eventually I'm like, you know, this isn't really the right place for me. So I discover LPL financial largest independence. So I go there and at the time I was really thinking that I wanted to do more with retirement plans and help people through their 401k 4 0 3 B 4 57 plan.
And I felt that they had a a [00:10:00] program there that I could qualify for and that I would get the support in being able to do that. Plus I wasn't limited in terms of what I could get in terms of my ESG type investments. So, you know, a lot of people don't realize that. I really say there's open architecture and limited architecture and even open art are open architecture, probably asked some limits, but a lot of advisors don't even know.
I went to a conference where the advisor said, well, the only thing we have on our platform is this Calvert fund or a couple of Calvert funds. I'm like, well, there's a universe, much larger than that out there. So depending upon the firm or they'll, they'll sometimes with one company, I remember, you know, they said they had dimensional fund advisors, but they had one fund.
So they might list like at which marketing-wise seems like, oh, you have the full constellation, but you only have one fund. Right. So then if the advisor goes and looks and says, well see these aren't good investments. Well, they only showed you. So the only, so one how in the heck? Right. So anyway so I go to LPL, have more things going on, but I really was trying to go down that road as, as well.
I got an article that I wrote about incorporating values into 401k menu selection using the accredited investment fiduciary framework. So, you know, I've been doing this in a fiduciary because, oh, geez, y'all want to add these ESG funds in there because then you won't make money again, if you're going to make more money
so I can make a case that it says, well, if I didn't tell you that, that was the reason for my selection and just put it on. And you said, oh, that's amazing. But if I say. Oh, but that's an age old. God, Mike. Well, wait, you know, like [00:12:00] maybe so, you know, if you sort this thing, right. So, so anyway, so I think I can go and dispel a bunch of stuff.
So eventually you know, with LPL, I felt in my case that I wanted to forward this new category called subscription-based financial planning and at where I finally got to, I didn't feel as though that their support of that. Was as awesome as I could potentially go and do it on my own. And there were other ways and other ways I could get access to that.
So I felt that that would be helpful. And as well, I, at some point decided that I didn't like the idea of dual registration. I just want it to be an investment advisor representative and the investments that I could get access to were great. Without needing that dual registration and I didn't really want the kinds of clients that are required more of a, a brokerage kind of a.
Or I should say a stockbroker registered representative. So I said, let's take the plunge and become a registered investment advisory firm. So, you know, I did that in 2018 and really haven't looked back much since then there's a lot easier to do marketing than have the extra layer that I used to have.
So, you know, doing this podcast, for example, I don't have to go and check with LPLs marketing team and I happened to write articles for Forbes now. And someone recently actually did read the one that I wrote about private prisons being in your investments. And so there's things I can say and do now where I don't have somebody else asking me or questioning or telling me no, there were times when LPL would say no, when I felt there was no risk.
Gabe Rissman: And that Forbes article I loved by the way. And I'll, I'll be happy to put that in the description or share that in as part of the content with the podcast, because it was a really good article. And I, I definitely read that. And that was that was really cool. I have [00:14:00] two big questions now on a follow-up from what you just said about starting envision in 2018, the first one is when you started envision, did you start from the beginning, marketing it as an ESG focused firm?
Or was it, Hey, let's take care of your financial planning needs and you're able to have the SG conversation with anyone. Like how much did that feed into your marketing and your branding and your core from the start?
James Brewer: Well, I like to use the phrase values based financial life planning as a encompassing term.
So in some ways like lead certification, right. For a building. So. Not to already go to the investing side. So if you said, I want to give X amount of money per year to something, if I want to advocate if I want to work for whatever that is with the person, and then trying to figure out, like, how do we infuse their values and every aspect of their life.
Like I have always said it to do a March on Saturday to do, you know, maybe a monthly contribution to some charity. And Monday through Friday trading time, you're doing the exact opposite of those things. It just doesn't seem to make sense. So I would want to say. Let, let me help you. If you want to give more money to something, if you want to give more time.
And then if you want to, Monday through Friday during trading hours, also make sure that your investments are as closely aligned because I really don't think that like the guy said, well, you'll make a lot of money and then give it to charity. Well, you know, but it was king and I'm going to misquote it.
You know, that the very reason that the charity exists is because of the thing that you're doing Monday through Friday. Right. Then it doesn't clean it up. So that's, that's my belief. And, you know, I'm pretty overt with clients and you know, that, that thinking and just [00:16:00] try to encourage them because, you know, often they're hearing noise in the side.
I did have somebody who said, well, yeah, How much will my, you know, I don't know, $500 a month investment change things. Right. And I'm like, but if you're 500 times a million people. You know, like we have a lot of things in life where it's small transactions multiplied by a lot of people, you know, you go buy a happy meal.
That's not too much money. Right. But Hey, they sell a lot of, a lot of happy meals and next thing you know, you're making some money. Right. But, but, but sometimes I don't know, like the world makes people think that I really can't go make a difference. You know, everyone's not going to be the kind of person who's going to be the one who gets into a protest and marches.
Right. Or writes letters and all that stuff I said, but you could be the kind of person who does that through your investing. And I'm even trying to encourage those other people who are doing the protesting and stuff with sometimes I year ago. But you know, like I'm a Vanguard person or I'm a whatever, but if you're with yourself and I'm like, okay, so do you know that Vanguard has choices?
And usually they. Like they only heard that spiel about low cost investing, which often came out of, well, I don't trust an advisor as opposed to, is that the real best thing for you? Right? Like, I don't really trust you. So fixing the trust issue that allows me then to say, you know, really this portfolio allocation, stuff's a lot more complicated.
And if you've never had any classes, you know, in academia or seeking the certified financial planner designation, and even that, if you don't do it really for a living, right? Like how did I stumble upon YourStake? How did I stumble upon Morningstar advisor workstation? We know that the people saying you can do it yourself, don't have those tools.
So how in the world could they actually do better than me? Because not only do I have the tools, but I have, you know, spent time. To even know that I should have a tool like this to then spend [00:18:00] time to know how to use the tool. So, you know ideally through, you know, telling them different things than they've probably heard before trying to build up the trust that then says yes, be encouraged to, to follow your, your values.
And we're never going to be perfect. We're doing the best that we can, but we're going to continue pursue being better.
Gabe Rissman: I love that. And I would also love to dive in a little bit more to what you're saying in terms of the tools and the actual functioning of this. So I think you nailed the, the messaging that makes a lot of sense to me.
I'm sure it's really compelling as you're talking to people when you're starting your ESG practice. Can you tell me more about what had to go into that and what challenges you ran into? For example, do you just pick a couple of ESG funds and now ESG. Do you need a mission statement or what are all the things that went into actually running an ESG practice instead of financial planning practice that maybe has an ESG fund or to
James Brewer: let me give you some history to say how we got where we're at today.
Perfect. So in a way I first got into the industry, you know Calvert was the one that threw a mirror prize. That was a biggie. So I learned a few things about what they had, but it, to me, it was always about the portfolio, but I, which I often call these days investment recipe you know, I'm a big cook.
So, you know, the first thing is you want the superior recipe and then the superior recipe, you know, even if I have cheap ingredients or I have the most expensive ingredients, sometimes I don't know that I can discern the tastes of the most expensive. The other is put together well, right. And the incremental costs and all that stuff.
Just take that analogy. So over time on my, but you know, there's a bigger set out there. Well, you know, if you are limited, you might not be able to do fee-based accounts. And at one point you couldn't do the fee-based accounts with the didn't have the letters the, the, the selling letters in place, dah, right.
So you got that [00:20:00] well for awhile, I'm like, you know, should I really be pursuing financial planning more so than investing. So I looked for a couple of partners that could help me do that. And I can outsource to them. Well, eventually with, I started kind of snooping around a little bit more. I mean, we can do really good job with marketing and discovered that one of them, I questioned that they would invest in private prisons.
So they went to their upstream, if you will, mutual fund company. And they said, well, we won't make, we hadn't decided that we won't. We currently aren't probably won't, but we won't for sure. Say that we won't. Oh, along the way, I had a company that says that they're biblically responsible. I happen to be a Christian, so they were Christian and they said they were good with herself.
Oh, okay. Well, I asked them questions about private prisons. You know, Jesus actually said, go visit those in prison. Not go money, make money. I didn't take that as going make money. So, so they said, well, we don't have prison operators, but we have. Prison real estate holdings. And I thought, I'm like, well, I don't want to go tell Gabe who's my client who says, I don't want to be in private prisons.
They go, well, what do you think about real estate versus operators? You know, like it's, it's like, it's the, the mental construct is just way too much, right? So I'm like, no, I'm not. So I that's the reason I didn't do business with that one firm. And when the other told me there, weren't going to do it, I'm like, well, I can't handle that personally.
So I started looking around, well, I. Direct indexing and kind of try to leave out some company names, but one of the companies was all good and then they got purchased by another company. So then I was kind of [00:22:00] lucked out and it was kind of an ugly thing, but it was who acquired them, I think, made it ugly and made them get out of the holdings for many adviser.
And I'm like, well, geez, I wasn't very ESG of you anyway. And the way they do handle loss. So then that made me go and rethink and said, you know, like with all of this going on, what if I just control the whole thing? And like, it's just, it's getting too crazy. So you know, I did my own research discovered that I needed to change the investment recipe a bit, but I kind of blended a few others.
I worked with another well-known person and gave him the idea. And he then created a version of his, that was ESG. And I'm like, okay, I'm glad I did that. So I took all that stuff and then realized, wow, I could actually do this and get returns that most of the time are beating the comparable passive and comparable active by 200 basis points or so like it, and include my feet.
Like that's the part that was blowing or has blown some people's mind. They were like, but that can't be because you add a fee, I'm like, well, why can't it be? And you know, we even did some research. It's kinda crazy. So like in in Morningstar, it's something like this, that the highest Return mutual fund.
I think for the last, it was either last year or last three years was like 60% for large, like for S and P 500 tracking. But then there were a couple that were negative. Right. So I'm just saying, so that disparity, but if you ask most people, they would not believe that the disparity between, you know, mutual funds could be that wide.
So when I tell people like, it's just cause they keep thinking on average, right? Like that, that 10% average return on the S and P 500. And I'm like, but don't you remember 2008 and it was [00:24:00] down negative 50 plus. So why do you keep staring at the 10%? What it was down negative 50? I don't understand. Right.
So, so that's why I encourage people to actually look at what we're doing. So now that, you know, I just decided to take it over and that now I can, you know, question directly to mutual funds or exchange traded fund providers. Why is. You know, you said you were going to do this, or I can go check in, does it say that they can't be in private prisons ever or like I can go in and kind of check the quality more?
So, so you know where before I was kind of believing others. So sometimes when you believe others again, they're kind of good. And I'm not saying it's necessarily always greenwashing, but sometimes you know, your idea of maybe like games idea in my idea may not be the same idea. So one of the beautiful things about your tool is I can encourage people to tell me what is important to them.
So if you tell me you're a health defendant and a planet protector, and somebody else is a gender empower, and that's the thing, the only thing they care about, then their idea. It's two different ideas. So sometimes, you know, we like to just make a circle around everything and say, call it ESG. But you know, what matters to me doesn't necessarily matter to you.
So now, you know, in certain situations I can more tweak to what they wants their idea rather than what my standard idea is. For the,
Gabe Rissman: I love that I have a few followups from that the first I'd love to dive in to, I think a lot of people have a conception that ESG is ESG is ESG. It's one size fits all.
There's a score. That's what the score is. And then that's, that's what it is. But you're saying that that's not the case that it seems like personalization is where people are going. Can you talk more about maybe problems you've run into with a one size fits all approach or, and [00:26:00] how do you have those conversations to figure out what people care about?
And then what do you do with that information when you realize that people do care about.
James Brewer: A few years ago, a friend of mine who was in the nonprofit world, but his firm did consulting, but we're having some Indian food, this nice in your restaurant here in Chicago, and this idea came up. So they were kind of like you would think of ESG company.
Well, by the way, none of their 401k stuff was screened. And when I kind of brought it up, it got poo-pooed a little bit because some of the people have this idea of like, well, but isn't cap all capitalism, you know, like it's bad some kind of way, but we kind of deal with it because we're not pro I'm like, no, no, no, no, no.
Well, we got deeper into the conversation and it was very clear amongst four people who were quite vocal that they all did not share the common view of what ESG. Well, and that was very eyeopening for me to the extent of the dissension for people who already worked in the company, but they are, the central was really crazy.
So I'm like, well, okay. But then we didn't really have the tools to necessarily parse it out. So we had companies more kind of giving you an idea, but we didn't have like, let's go deeper insert into certain categories. So one of the things I like about your stuff is that it goes in highlights categories.
We recently had someone who actually ropes in the comments section of the, of the score, wanting to focus on ESG. His other answers, I'm like, well, why did you you're like five categories? Why did you highlight one? I don't know if he fully got it. So we'll be investing his money this week, by the way.
So thank you, Gabe. And into all of the things that he said mattered to him. So I said, you don't have to necessarily choose. And I said, but you know, we do have an investment that if you want to be [00:28:00] well, what do I used to call it more? More more environmentally focused. We can add this one, which you'll just be more to that versus if we don't add that.
And then, and then I then showing you, but if we don't do that, this other one's pretty good at that. And you're going to get better return. So it's up to you. Would you want to be more purest knowing that you're going to give up? I think about 1% in our model still beating the other models. I'm telling you, we benchmark ourselves against.
Gabe Rissman: Sure. I understand. You're saying that this person came in and they said they want to focus on the environment, but then they took the questionnaire and there were also all these other issues that showed up as important. And you're saying, Hey, yeah, we can focus on the environment for you, but we can also do those, all this other stuff you care about racial justice and gender equality.
We can do that for you too. And that was something that they didn't even realize was possible.
James Brewer: Yup. Yup. And sometimes it's interesting that people will fill out a survey and what they would have said their score doesn't come back saying the same thing. Their score says something else was more important.
And I think that it's a lot of it, you know, like, Hey, the reason I called you, I read that article on private prisons. You know it and they lose that really got me. Okay. Now I could dive into the pool of private prisons or what we do is no, by sent people through the survey. Okay. So I'm gonna send you through the survey because it might highlight other things.
And I don't want us to be down the road and saying, well, I didn't know you did that. I'm like, no. So that's why we're going to send you through the process, get it all out right now and then say, okay, this portfolio now we had one situation where It's it's a large nonprofit and they're really about like racial justice.
So we took it and we then went heavy to racial [00:30:00] justice and it still gets some of the other in the way that we're investing still gets some of the other things like climate, but it's underneath, like the climate is an issue that is a racial justice issue as opposed to it's climate out front and races back.
So, so I'd say so depending upon your investible amount, we can do different things, but again, fill out the survey so we can have a better idea of what the compensation is. So, so I've enjoyed, you know, kind of a. When I decided that I could take it over, but what I decided I could take it over, you know, I hadn't had my relationship with YourStake.
I hadn't had my relationship with Morningstar and, you know, John Hale, who's been a long time buddy of mine. I you know, hadn't bounced some of the other resources online that are there because I've written another article that talks about some others. So when you discover all these tools, you're like, oh, well, man, I wonder if those other portfolio managers and how they're coming to the screening, but you know, once you understand to me, like, you know, I even tell people, Vanguard has a couple of choices, what percentages you should use.
They don't tell you. But all they did was go find somebody Index and said, we're going to replicate the index. They didn't personally decide. We really care about this. Potentially demand said we should have a couple of choices. I met somebody who worked at burger king and they talked about knockouts.
So, you know, the reason they have certain things on the menu is so well, if Gabe says I want a salad and they [00:32:00] don't have a salad, then you know, the family might not go to that restaurant. So they have some things on there. So they won't get knocked out. Although that's not what they're ever going to say.
We're not the salad place where we do burgers. That's what we do. But we don't even have purpose per se. We do fast food and it's a knockout, right? So our mutual fund company. Kind of doing, you know, is it their heart? So I said, the heart of my company was built from me getting in the industry with my own problem in 2006.
And the reason I've been passionate about this right, has been because I have been one of the effected populations for the very thing. And I said, I think if you're not one of the affected populations, you may not be potentially as passionate. Not to say that you can't be, but you know, it what's driving.
So often people have a personal story of some sort, they go, that story led me into where I'm at today.
Gabe Rissman: Wow. That knockouts idea that really clicked for me, it makes so much sense. And I think that correct me if if you're seeing something different, but it seems like a lot of fund managers today have that knockout approach, they need to have some sort of ESG fund so that they don't get taken out of the running for people that are looking for some sort of solution.
But that means that while you're talking about before the due diligence, to make sure that this is legit, and this is credible, and they're taking a thoughtful approach, I love that you have this passion and knowledge about prisons and can really dive into deep conversations and press people on it. But for other issues where you're maybe not as much of an expert or for people that aren't experts on some of the social and environmental issues, how do you do that diligence?
How do you find out if the fund manager is doing really thoughtful, good work on these, on these values without knowing everything about the issue? Do you have any strategies? [00:34:00]
James Brewer: Well I guess I've approached it a couple of ways. So I have talked to. Well, you know, often the approach I'm going to just contrast.
So often the approach would be, you know, pull up your morning star and search for something and put in your portfolio. I've talked to every company that I have, my client's money invested in. So I've had a conversation. Yeah. I can't say that I can rattle off their approach perfectly because it's their approach.
They should be better than me. Right. Like, but I'm the recipe, dude. Like I said, come to me for the recipes. Right. So I'm the recipe guy. And in fact, the first time on, on audio video we're calling our portfolio. Envisioned justice series. So, you know, envisions in the name and we're saying envision justice.
So that's what I'm trying to build. And I've got to go and say, so the recipe, you know, needs ingredients. So if I need a large cap, I need an international, I need a bond, then that's your role subcontractor. If you switch them now just a little bit subcontractor your that's your role to go do that. So however you do your thing, I need to understand that enough that I go, okay.
I feel good about it. Like the one I told you where they told me, well, it could be a real estate, but not an operator. I'm like, okay, I'm glad that we had that conversation because I didn't want to get blind I'm blind side. You know, so anyway, so, so I've had enough conference, so I I've, so people, if.
Some issue comes up and did you need to learn [00:36:00] more or the Y I'm willing to bring them, you know, to a broker, a conversation. I intend to, at some point to bring some of them into my own webinars or podcast to let them talk about their particular elements. So people can get a better sense because, you know, I talked to somebody even this week and she's like, you know, I was looking at my accounts and, you know, the returns were pretty good last and was another one, said the same thing.
And if you knew them both, they are they're in the, you know, they're in a world where they're experts in say racial justice and inequality. So. For them to pause. I was kind of shocked. Like they pause and said, but I'm getting good returns. And I said, don't get framed out of what you told me. So once said to me, well, okay, I guess principal's over returns.
I said, what? You don't even know the returns you could have had with me. You just know the returns that you had as opposed to the returns you could have had with me, by the way, there's the whole volatility argument. So, you know, we're using you know, modern portfolio theory and all those things and that genre of, of, of investing.
So it's not just because, you know, people love to tell you when their S and P is up, but they don't want to tell you about their 50% down. Right. And then they get out and then I said, you never get the return you expect because you don't stay up. So so to, to that, I really just got to say, you know, here is.
Here as you on your values. And at some point, you know, look at any short run period a day, a week, the corner, whatever who knows that, that outperforms, I said, but over time, you know, the consistency and there's just more and more data about, you know, [00:38:00] companies who get the bad press releases and all the other stuff, you know you know, we, we, again, we just love to talk about when stuff's up and not necessarily when stuff's down, generally, I don't have those have those conversations because once people are in it you know, they're at least reminded that their, their values aligned.
I've also started highlighting to them. Like I had a friend of mine once who was concerned that these were nonprofit. Right. I'm just saying like, the ESG has so much education, but if we go to most people have no idea what they're invested in. But early in my career, a woman didn't know a stock from a bond yet.
She was invested in our TIAA Cref account, had no idea stock from a bond. So to bring up ESG and add some more unfamiliar terminology and she doesn't know stock and bond, right. A bit crazy. So I said, so we start to tell people and explain. So I started taking the fact sheets and said, so here's the top 10 holdings.
So if it's apple or DocuSign or zoom or whatever it is now, like, oh, Yeah. Cause see, you see that number 7% minus two, minus 25, whatever the number is. That's what you're seeing. I want you to see it as it's here are the companies. So if you tell me that you think apple is bad, then maybe we have a different conversation.
So for him, the, the, the, the friend I'm like, no, and then I showed him. So like, there was one where you could show like every fund, it was crazy. Like how many thousands it was Mike, you can look at this whole thing, but I'm just giving you an idea of what you're invested in. And I said, cause you didn't know, you were only thinking you heard ESG.
Oh, scary. You turn. You know, so people sometimes get scared about terms. They're even scared. Well, but they put me in a target date fund. [00:40:00] Yeah. And I said, but I did a risk tolerance. Your risk tolerance says you're conservative. And currently you're a target date. Has you integrated. Well, I guess if it's got me an aggressive, maybe that's what I'm supposed to be.
I said, no, that's just what somebody else made a decision when you did make one on your own. I said, but it is considered malpractice. If I don't ask you, like, how did that happen? I can, I can, don't ask them if they're in a 401k, but if they come to me individually, I'm supposed to ask them, then I got to educate them towards what would be right for them.
I said, but maybe if you're really conservative, you just rather save more money instead of seeing it go up and down. And I said, because there are plenty of people that when they see their target date go down, they, they go into cash to. So, you know, so I said, so if we, if we include, I think that ESG is just part of the investing conversation.
So, you know, I started using the phrasing risk, adjusted return, enhanced values, integrated portfolios. I know it's a long phrase, but we like to say it's rare. VIP gave you look like a rare VIP to me. Okay. But, but, but so, but I wanted to say that the risk adjusted return enhanced that is that solid, modern portfolio theory, efficient frontier at all.
That's behavioral, all that stuff into there. That's what that is. And then now let's go and start talking about values and to the extent that I've been able to find out how to take the values inside of the. And actually get even better returns is a plus, but I just don't go with it's about your values and I'm just going to get you into values.
I want people to understand that, you know, it's based upon a solid foundation of academic research and empirical [00:42:00] evidence when all I'm doing is just deciding that, you know, instead of let's say Morton salt, we're using gray salt, you know, it's just like different types of ingredients. I try to find simple analogies for people, right.
So, you know, what kind of tomato sauce or what kind of, whatever you're putting in that you like, and in this case, you said you liked when the values came in birth versus no values at all.
Gabe Rissman: Yeah. I want to dig into something that you said sometimes your clients hear ESG or think about ESG and they get a little bit of a shock reaction.
Is it, do you think it's the term ESG, are you using different terms? Do you just say values and do you not mention ESG or is that something that is working well? How do you choose your vocabulary to be able to keep people's peace of mind and not dive into things that maybe their preconceptions or myths?
Can you talk about how you navigate that?
James Brewer: Yes. So I like to just go with values but, okay. So if I take someone who I meet through whatever introduction, it's easy for me to go balance. As opposed to someone who by Google me, right. By find the Forbes article and come because I read your ESG article or I read your, this article or I read about, cause you know, you remember the days it was socially responsible investment, right.
It was Sri. Okay. And then, you know some people are calling it justice and I have another client she's calls it, ethical investing. So there's lots of terms. So like in the article again on Forbes, I throw out all the terms. Right. And my new marketing person is looking at well, what's the SEO, right.
For each one of those. So I'm like, I can kind of think that the people looking for ESG, they're kind of the different type, maybe more, [00:44:00] a little. More educated about the topic in the first place. Maybe do know a little bit more about investing. I think maybe the ad asina is social justice folk. It was justice.
I like justice. I want justice. Right. And maybe they don't know so much about investing. I'm not saying that they do or do or don't, but I'm just trying to visualize, like, where are these people? And then there are the people who say, you know, TB, I'm really concerned that I'm not going to be able to retire because I just don't have enough money.
Yeah. And how much do I need to save it? It's so confusing. And I'm just tossing and turning. And you know, I've been working at XYZ company for 20 or 30 years and I got this, I got that over there. And I say, oh, I get you. I said, but let's start you from the beginning and help me understand your values. Oh, by the way, take my, YourStake survey.
I a, for anyone who thinks I'm plugging, this is truly how we're doing it now. So, so, so take the, YourStake service. Oh, that was interesting questions. We didn't know about that. And I'll say, but I'm going to tell you how this gets integrated into our investments and how we're going to deliver value to you.
Because at the time they didn't specifically come about investing. They came for the problem of a goal that they didn't think that they were going to reach. So depending upon how the angle of the conversation comes, but you know, the gentleman that I told you about earlier that said he was more, he, you know, again, he wrote in on more about climate and I want my investments to align with climate.
You know, he already came in with this notion, the lady who said, I want ethical investment. She already came, you know, because she knew about it. That's what you want to do, but they weren't so focused on any specific goals. So like it wasn't about financial planning. It was more about investing and I'm already [00:46:00] got some capital.
Either I inherited it or I got it some kind of way, and I just want that align. And, and so, so it kind of depends on the audience, but the one to me that gets them all is your values. Because to me that encompasses no matter which other terminology they most or re related to.
Gabe Rissman: Yeah. That, that makes a ton of sense.
We're seeing a very similar thing we try to on our site, never say the words ESG. It's funny, just in our own marketing. A lot of times we're using ESG because that's a buzzword that people are looking for, but it does also turn people off. And every advisor has a client that is afraid of the word ESG. So I do think talking about values.
I mean, everyone has values when you see the surveys about how many people are looking for. The survey question is, do you want to align your investments with your values? Not do you want to invest in ESG? So I think that's really clever as a, and just a good idea to not put ideas in people's heads before they express what they really care about.
James Brewer: And I think a challenge with the ESG terms. So, you know, if I, if you said, do you believe that companies should have good corporate governance? Yeah. Right. But we don't say that we say he has G and some people wouldn't even know what that is. And you say, do you think that the boards of directors of publicly traded companies should be their frat brothers?
Right. Okay. Do you think that boards of directors should be diversified and have minorities and women, you know, represented? So that's a G now the environmental, some people think that means that I'm going to be in an environmental company. They may not think that that actually means, well, am I driving a Tesla?
I may invest in a Tesla or, you know, what is the building that the corporate offices of this company, you know, they, they they've made it lead platinum. Right. So, [00:48:00] so I think the more we could talk or like private prisons instead of S right. So I think ESG is this term, which is like, you know, one day I realized, what is Tia?
We call it TIAA-CREF who was for the greater good, well, it's the teacher's insurance and annuity association of America. I believe they there's a third day that they don't even have. Right. And I said, so then, you know, well, what if people actually do you're in an annuity for a lot of people that go, I hate annuities, Ken Fisher.
I hate annuities. Well, TIAA it's in the name, but they don't say they don't give you the name. They give you the initials. Right. So I said, maybe we lost something by. You know what Tia get offended. If I say insurance and annuity, you know, are we offended when we say environmental, social and governance, and then maybe a backup is, are you familiar with those terms?
And maybe the person isn't right. So often the things that we don't know, we reject, we, you know, we'd go to a foreign country. We go with know people that we don't know, they don't look like us. We start to reject things that we're just unfamiliar with. So I think that sometimes we have to help the conversation for people and then assessment and maybe, you know, you know, Run in with ESG, like, you know, holding a poster, you know, you walk and, you know, start a conversation and say, you know, like, so what kind of things are you?
What's your philosophy? Which so, oh yeah. Okay. And then, you know, are you familiar again, I've had conversations with people like on Vanguard and said to a guy, well, you know, I just don't have that much money, blah, blah, blah, whatever Solomon. I said, well, and I said, well, you know who I am? And I said, so are you familiar with their, you know KLD investment?
I mean, it was like, of course he didn't right. And I said, well, if I said, I'm going to give you [00:50:00] this one and say, even if you, cause he was a pastor right away. And I said, even if you don't invest with me, I said, at least if you're going to say, because he was not only was he a pastor, he was doing some other kind of social stuff.
And I said, because otherwise you are the. You know, Monday through Friday, I'm supporting the system and Friday night and Saturday, and what Sunday morning, I'm doing something different, but you're investing in the system. That's creating the need for what the work you're doing on Friday, Saturday, and Sunday morning.
But I just, you know, but some of the people, they were afraid, you know, we're afraid of change. Right. I'll never heard of it. Like, I'm like, well, you know, I think it's 248 or something like that, investments that that Vanguard has. And I said, when I hear indexing, well, which one? Like which one they got a lot.
Well, you know, the S and P 500. So I'll use it as one. Like the people that want to act like, oh, I'm so smart. It doesn't beat by one of my, well, you know, there's a lot more than the S and P 500. And why would Vanguard do more than the S and P 500 if that's all there is. And so this, the familiar term that you hear at night, another person, I would say, do you ever hear about the bond returns.
What was the bond index today? No, that's the NASDAQ, the S and P. And I said, I don't really know anybody who invest in the NASDAQ, but they give you the number. And I said, I could even tell you like which one they give by the one that only has 30 with 35 companies, the one that's got, you know, a hundred, the one that I can tell you, which one's going to show the most volatility, but they generally are giving you the volatility.
They're not telling you about, you know, man, the bonds, nobody's excited about bonds. So why aren't we telling anybody about it? I said, but you got bonds in your portfolio. In this case, he had 60% bonds, 40% stock. And he was freaked out over his investments. And I said, so if people are freaked out about investments, even bring it ESG, it terms, I'm not familiar with [00:52:00] Sri terms.
I'm not familiar with right. Socially responsible, like, well, geez, this isn't again, like my friend who bought non-profits like when you can't, she can't investment in our private. But that's what he in and he owns a business. So, you know, you might think, of course he would know, like we have to do these. No, the people don't know they're really coming to us for our expertise.
And sometimes like with my friend, who's a strong Catholic, we went, I'm not a Catholic, but I went to Catholic school for 13 years. I'm like, dude, you can't not do this at firstly, you just reject it. You're the one on your Facebook page talking about, you know, your school and like, and you're not again. So we some, but I think often advisors, sometimes we're afraid and, or either try to take the path of least resistance.
But you know, when you have people invest in their values, when volatility does occur and inevitably he's going. You can at least point to the fact that, you know, when we first started this conversation, you add that portfolio that was invested in all these things that you told me you were against. Yeah.
The market's down, but you know, you're also still invested in companies that you actually care about. And by the way, they generally are the ones who don't have those negative press releases because of bad governance.
Gabe Rissman: Great. Excellent. So first I love what you're saying, that the examples of people that don't really understand ESG could that be nonprofits and w what's actually going on one of the biggest. Feedback and things that we hear from advisors is they show a client an impact report they start talking about. Yeah. What ESG means the E stands for environment companies are releasing toxic air pollution, including the water. Are you aware of that? And let's see how the companies in your portfolio are doing on those issues.
And, and that's just something that's mind [00:54:00] blowing that they can actually look at issues that impact their daily lives that they think about. And that's tied to their investments too. Holy cow. It's, it's such a cool thing to see people have that aha moment and realize, oh man, now they're now they're awakened.
And they, they started thinking about this. Do you, do you have any stories of that as well?
James Brewer: W I have a few where, you know, the person, like, kind of just didn't know. Finally, after a few years said, okay. Here, take a look at my portfolio and you know, it first it's a bad portfolio.
Like it has an S&P Vanguard fund S and P 500 and a bit of fidelity as a beat 505. It just give you the extent of bad, but then it has other 18 other investment for like, what would the heck came up with this? So, you know, after a while you kind of know like, well, I saw those two investments already knew that you were going to get some bad outcomes, but, but, you know, I think that it's still, the challenge becomes is the person is still looking for return.
So that's why I think it's take sometimes take return backwards. Right? If you have the portfolio and then go, okay, I'm going to show you a portfolio that according to what you've told me, It's got this return and here's the return of your portfolio. If you have that story and like what? And I said, so did you ever know what was in it?
So you probably related to, again, it said S and P 500 and some other names, do you, can, I know how many it, right. I've always thought about, like, let's go to a bar before anybody started drinking and say, let's take 10 people and see how many of the S and P 500 we can name. And if they got a hundred, I'd be surprised with 10 people.
Right. I'd be [00:56:00] surprised. So when you have people, then it's like, oh
Gabe Rissman: yeah.
James Brewer: Right. So people can't do that to say, do you understand volatility? So the us national. It was a financial capability study where most people can't get three out of five. Right. None of all the ask, what is ESG, right. And, and if we ask them, can you make more money or less, you know, will you make less money because of it or whatever it is.
Right. I said, they have no idea. Right. So they're looking at their friends. So often people are going to their friends for portfolios or, you know, their family members. Well, this is what I do. Am I okay? Just because they do it, that means that's right. So, you know, behavioral finance people do the wrong things at the wrong times.
And some people do it wrong, even when they know what right is. So, you know, I just think like putting it in front of them, You know, sometimes they still have to sit back and go, like, I didn't know. But then even after that, some of them still slipped back into, but didn't, they tell me I'm supposed to get the most return.
So one of my questions to, you know, folks is, do you know how much you need to say? And what rate of return for how long to reach your retirement income goal? No one has ever answered. Yes. That was truthful. I caught one who said, and they said, well, yeah, 27 other questions. I just didn't want to answer no, on the first one, I said, okay, you know, so this, just to let you, they were uncomfortable with the truth, but I said, you don't know.
Okay. So when the process of planning and when we say, okay, at some point, what up and down movement are you willing to deal with? As long with your savings rate, then I'm just trying to get you [00:58:00] that portfolio. It no longer should be about which one made more or less. Now that is the technically correct financial planning answer, but it's not usually what most people are thinking even when they get to the rate, but shouldn't, I try to get the most money I can is kind of what I said, but you don't do this on a daily basis.
I try to have quarterly meetings with people. And the answer is no, because invariably more return. Most of the time means you took on more risks. People love crypto and Bitcoin when it's up, they don't even know, you know, they're not calculating down as a, as a possible risk at the time they're talking about it.
Right. So, but that's what we're trying to do. So I think we just have to have, you know, continue to reinforce the message with those who do come in. We come in contact and continue to reinforce the message to help them with those two.
Gabe Rissman: James, loved having you on. Thank you so much.
Do you have any, any final things that you want to share?
James Brewer: No. I think you have been one of the best interviewers I've ever had. Oh my
Gabe Rissman: God. Too kind. And I, well, I'll, I'll spill the beans. I you're the first person I'm interviewing for this series. So I will let you know how you stack up when I've gotten, just passing, but I thought, yeah, those are some great stories.
Really, really loved talking to you. So this is a ton of fun. All right, thanks. Cool. Have a good one, James.
James Brewer: All right. You too.
James Brewer
[00:00:00]
Gabe Rissman: Hello everyone. And welcome to another episode of your Stake, your story of video series, focused on highlighting best practices of financial advisors within the ESG space. Today I'm really excited to have James Brewer here. And James has a pretty good resume. James is an MBA, a CFA CFS LA, a CFP who empowers people to make smarter money choices aligned with their values, goals, and passions, a certified financial planner.
He has been named to the 20 best financial advisors in Chicago by expertise and 20 17, 20 18, 20 21. And now 2022, his, but he many designations include a chartered retirement planning, counselor, charter, divorce, financial analyst, and chartered funding and student loan advisor. So James, I'm really excited to have you on and thanks for joining today.
Thanks
James Brewer: for having me.
Gabe Rissman: So James, I just have to say cause I've got my poster behind me when we first met this poster was something that we immediately bonded over. It's a as miles Davis for anyone that might be listening to the audio only. And I would love to hear, just to begin with, if you have any particular stories or things that you want to share about music or miles in particular before we dive into a fit to some of the nitty-gritty on your, your practice.
James Brewer: Well, I he probably was one of the early folks that kind of turned me on to jazz on a drummer, turned into a percussionist later. So I just enjoy people who are quite talented and he's one of the best. And just enjoy knowing that I'm not the only one who appreciates.[00:02:00]
Gabe Rissman: So now you're an ESU focused financial advisor, like we talked about. And I, what, I'd love to start with this a little bit of your story.
What brought you into financial advice and what brought you into ESG? Did those happen at the same time? It would be great to hear.
James Brewer: Well it's an interesting story that I went to a national black MBA association meeting that gentlemen spoke at. And I thought, man, this is really amazing.
I really need to go and get an advisor for myself. Meanwhile, my wife and I were kind of recently married. I was reading up on some things and told this one advisor that was the advisor for her set plan that we wanted to embed. And companies that would actually hire me as an MIT, MIT, Sloan MBA.
I had beliefs that I never have a problem getting hired, and yet that wasn't my experience posts post Sloan and a couple of weeks later, he goes, Hey, look, we've got this great portfolio for you and well, you know and then you can give to charity, you're gonna make a lot of money and you can give to charity later on.
And I'm like, wow, dude, you're looking at me. And you're saying that I am a charity and that, you know, me wanting to simply invest in companies that had better diversity practices. So I felt like he didn't hear me at all. So meanwhile, we did hire the other gentleman who happened to be black. And after a couple of meetings, he said, I'd never really had anybody take to this the way that you have.
I do ever consider to getting to the industry. So I had been working for an employer. Things didn't work out well there, and I was trying to figure out what my next move was going to be. So I said, oh, well, maybe my undergrad in finance. And, you know, the, some of the classes that I had at Sloan could work well as being a.
Financial advisor slash wealth advisor. And actually [00:04:00] oddly at Sloan is the first time I'd ever heard of what the phrase wealth management. And I'm like, oh, okay, good. Because nobody ever explained what wealth management was. I dunno why we struggle with, or yeah, we have been struggling and explain what that is.
And that kind of launched me in to the career, started early with Ameriprise. And I was the guy that wanted to, you know, look and find the companies that were actually doing. ESG investing and kind of became Mr. ESG at the office that I was at and people would come to me if they ever had anyone who asks them about ESG, but nobody ever cared to really understand the details I did.
And fortunately the regional vice president from Calvert at the time took a liking to me because of my interest and did some actually some promotion and I got the opportunity to be quoted in one of Ameriprise's magazines because one of the few people I'm like, wow, of all the people in the country, I'm relatively due to the industry and they find me to talk about the topic.
Gabe Rissman: That's amazing. I want to actually touch on a quick thing that you brought up or a little earlier on. You said that what inspired you and motivated you was someone saying, why would you care about ESG? Have the most financial performance and then donate to charity. Is that something that you're still running into?
Are people still saying that, how do you think about and deal with that type of question?
James Brewer: Well I generally am attracting people through my presentation and my, and my marketing that you're going to hear something about their values. So, you know, one of the things I tell people is I help them make smarter money moves that are aligned with their values.
So like from day one. And what does that mean? So I'm really starting the conversation around. So some people will bring up, well, no, what does it kind of cost me that? And I'm like, well, you know, some of the people catch themselves and say, well, [00:06:00] but shouldn't, I be principally minded, you know, but what about my returns?
And I'm like, well, what if you found out that while you were getting good returns, whatever those are, you could get better returns. So, you know, in the modeling that I started doing you know, we are actually getting better returns than some popular, I'm going to be careful in this podcast, but some, you know, popular off the shelf publicly traded company mutual funds and their asset allocation funds, which I use that as a benchmark for us internally that we're actually getting better returns than those are, are getting.
So. If I were I'm tangibly showing you're getting better returns. Why would you? So I have even some people that, you know, would say, well, I really want to make returns, but I don't think they really understand as much Mike. But what if I told you that every company incorporates some way to determine of all the stocks and bonds they have, how, which ones we're going to invest in and use it.
That secret sauce is never given out. Right? I mean, that's kind of a trade secret, but what if they actually were. And that's how they, that was their secret sauce. It's just that they weren't telling you that was their secret sauce. So it's weird to me that sometimes when people hear well, what if I told you that part of my secret sauce is actually integrating those values?
And it would just only make sense that well companies who would get sued a lot and have lots of PR issues around not hiring women or, you know, every so often the, you know, racist video that seems to show up and, you know, the stock takes a hit for a little bit, you know, so it takes it. So I don't know why people, like, if you explain it that way and so you might not even care, but what you care is the shareholder value.
So companies that tend to care about those things, and we could argue that governance, the G because often when we hear ESG, I think we are hearing E S and we're not hearing the G you know, to me that really is the G part of things. [00:08:00] And maybe G leads you over into.
Gabe Rissman: Cool. So it sounds like what your case is, is a finished performance case that there's, it's a false trade-off between ESG and charity.
That ESG is going to help you with performance. And also, oh, by the way, you're going to get this great performance. Why not also align your investment with your values? It contributes that way too. I, I love that. That makes sense. So I want to jump back to your story a little bit, too. We left off at a Ameriprise.
How'd you go from Ameriprise to envision? What was that transition? Like? What was that journey? Like? Why did you make the decision and how's it been.
James Brewer: Man, I love that question. Okay. So so I I'll, this is public disclosure anyway, so I kind of got recruited to a place called BC Ziegler which was a regional broker dealer.
But you know, my desire to actually do financial planning. I've always been a fan of financial planning. And really, we should say, if you're going on vacation, do you just like go to the airport and figure it out or get on a train or get up? No, usually you're like, well, where do I want to go and taking a car or if I'm going to drive or if I'm going to go, right.
Like instead that's not like how we think with money. Well, just invest. So just put gas in the car and go. And if that leads you to the airport, I guess that's okay. Anyway. So like, no, like let's do financial planning and you know, the logo behind me has something to do with. Philosophy that we use in financial planning.
So I go to a place and they're not like really embracing financial planning and the way that I wanted to. And eventually I'm like, you know, this isn't really the right place for me. So I discover LPL financial largest independence. So I go there and at the time I was really thinking that I wanted to do more with retirement plans and help people through their 401k 4 0 3 B 4 57 plan.
And I felt that they had a a [00:10:00] program there that I could qualify for and that I would get the support in being able to do that. Plus I wasn't limited in terms of what I could get in terms of my ESG type investments. So, you know, a lot of people don't realize that. I really say there's open architecture and limited architecture and even open art are open architecture, probably asked some limits, but a lot of advisors don't even know.
I went to a conference where the advisor said, well, the only thing we have on our platform is this Calvert fund or a couple of Calvert funds. I'm like, well, there's a universe, much larger than that out there. So depending upon the firm or they'll, they'll sometimes with one company, I remember, you know, they said they had dimensional fund advisors, but they had one fund.
So they might list like at which marketing-wise seems like, oh, you have the full constellation, but you only have one fund. Right. So then if the advisor goes and looks and says, well see these aren't good investments. Well, they only showed you. So the only, so one how in the heck? Right. So anyway so I go to LPL, have more things going on, but I really was trying to go down that road as, as well.
I got an article that I wrote about incorporating values into 401k menu selection using the accredited investment fiduciary framework. So, you know, I've been doing this in a fiduciary because, oh, geez, y'all want to add these ESG funds in there because then you won't make money again, if you're going to make more money
so I can make a case that it says, well, if I didn't tell you that, that was the reason for my selection and just put it on. And you said, oh, that's amazing. But if I say. Oh, but that's an age old. God, Mike. Well, wait, you know, like [00:12:00] maybe so, you know, if you sort this thing, right. So, so anyway, so I think I can go and dispel a bunch of stuff.
So eventually you know, with LPL, I felt in my case that I wanted to forward this new category called subscription-based financial planning and at where I finally got to, I didn't feel as though that their support of that. Was as awesome as I could potentially go and do it on my own. And there were other ways and other ways I could get access to that.
So I felt that that would be helpful. And as well, I, at some point decided that I didn't like the idea of dual registration. I just want it to be an investment advisor representative and the investments that I could get access to were great. Without needing that dual registration and I didn't really want the kinds of clients that are required more of a, a brokerage kind of a.
Or I should say a stockbroker registered representative. So I said, let's take the plunge and become a registered investment advisory firm. So, you know, I did that in 2018 and really haven't looked back much since then there's a lot easier to do marketing than have the extra layer that I used to have.
So, you know, doing this podcast, for example, I don't have to go and check with LPLs marketing team and I happened to write articles for Forbes now. And someone recently actually did read the one that I wrote about private prisons being in your investments. And so there's things I can say and do now where I don't have somebody else asking me or questioning or telling me no, there were times when LPL would say no, when I felt there was no risk.
Gabe Rissman: And that Forbes article I loved by the way. And I'll, I'll be happy to put that in the description or share that in as part of the content with the podcast, because it was a really good article. And I, I definitely read that. And that was that was really cool. I have [00:14:00] two big questions now on a follow-up from what you just said about starting envision in 2018, the first one is when you started envision, did you start from the beginning, marketing it as an ESG focused firm?
Or was it, Hey, let's take care of your financial planning needs and you're able to have the SG conversation with anyone. Like how much did that feed into your marketing and your branding and your core from the start?
James Brewer: Well, I like to use the phrase values based financial life planning as a encompassing term.
So in some ways like lead certification, right. For a building. So. Not to already go to the investing side. So if you said, I want to give X amount of money per year to something, if I want to advocate if I want to work for whatever that is with the person, and then trying to figure out, like, how do we infuse their values and every aspect of their life.
Like I have always said it to do a March on Saturday to do, you know, maybe a monthly contribution to some charity. And Monday through Friday trading time, you're doing the exact opposite of those things. It just doesn't seem to make sense. So I would want to say. Let, let me help you. If you want to give more money to something, if you want to give more time.
And then if you want to, Monday through Friday during trading hours, also make sure that your investments are as closely aligned because I really don't think that like the guy said, well, you'll make a lot of money and then give it to charity. Well, you know, but it was king and I'm going to misquote it.
You know, that the very reason that the charity exists is because of the thing that you're doing Monday through Friday. Right. Then it doesn't clean it up. So that's, that's my belief. And, you know, I'm pretty overt with clients and you know, that, that thinking and just [00:16:00] try to encourage them because, you know, often they're hearing noise in the side.
I did have somebody who said, well, yeah, How much will my, you know, I don't know, $500 a month investment change things. Right. And I'm like, but if you're 500 times a million people. You know, like we have a lot of things in life where it's small transactions multiplied by a lot of people, you know, you go buy a happy meal.
That's not too much money. Right. But Hey, they sell a lot of, a lot of happy meals and next thing you know, you're making some money. Right. But, but, but sometimes I don't know, like the world makes people think that I really can't go make a difference. You know, everyone's not going to be the kind of person who's going to be the one who gets into a protest and marches.
Right. Or writes letters and all that stuff I said, but you could be the kind of person who does that through your investing. And I'm even trying to encourage those other people who are doing the protesting and stuff with sometimes I year ago. But you know, like I'm a Vanguard person or I'm a whatever, but if you're with yourself and I'm like, okay, so do you know that Vanguard has choices?
And usually they. Like they only heard that spiel about low cost investing, which often came out of, well, I don't trust an advisor as opposed to, is that the real best thing for you? Right? Like, I don't really trust you. So fixing the trust issue that allows me then to say, you know, really this portfolio allocation, stuff's a lot more complicated.
And if you've never had any classes, you know, in academia or seeking the certified financial planner designation, and even that, if you don't do it really for a living, right? Like how did I stumble upon YourStake? How did I stumble upon Morningstar advisor workstation? We know that the people saying you can do it yourself, don't have those tools.
So how in the world could they actually do better than me? Because not only do I have the tools, but I have, you know, spent time. To even know that I should have a tool like this to then spend [00:18:00] time to know how to use the tool. So, you know ideally through, you know, telling them different things than they've probably heard before trying to build up the trust that then says yes, be encouraged to, to follow your, your values.
And we're never going to be perfect. We're doing the best that we can, but we're going to continue pursue being better.
Gabe Rissman: I love that. And I would also love to dive in a little bit more to what you're saying in terms of the tools and the actual functioning of this. So I think you nailed the, the messaging that makes a lot of sense to me.
I'm sure it's really compelling as you're talking to people when you're starting your ESG practice. Can you tell me more about what had to go into that and what challenges you ran into? For example, do you just pick a couple of ESG funds and now ESG. Do you need a mission statement or what are all the things that went into actually running an ESG practice instead of financial planning practice that maybe has an ESG fund or to
James Brewer: let me give you some history to say how we got where we're at today.
Perfect. So in a way I first got into the industry, you know Calvert was the one that threw a mirror prize. That was a biggie. So I learned a few things about what they had, but it, to me, it was always about the portfolio, but I, which I often call these days investment recipe you know, I'm a big cook.
So, you know, the first thing is you want the superior recipe and then the superior recipe, you know, even if I have cheap ingredients or I have the most expensive ingredients, sometimes I don't know that I can discern the tastes of the most expensive. The other is put together well, right. And the incremental costs and all that stuff.
Just take that analogy. So over time on my, but you know, there's a bigger set out there. Well, you know, if you are limited, you might not be able to do fee-based accounts. And at one point you couldn't do the fee-based accounts with the didn't have the letters the, the, the selling letters in place, dah, right.
So you got that [00:20:00] well for awhile, I'm like, you know, should I really be pursuing financial planning more so than investing. So I looked for a couple of partners that could help me do that. And I can outsource to them. Well, eventually with, I started kind of snooping around a little bit more. I mean, we can do really good job with marketing and discovered that one of them, I questioned that they would invest in private prisons.
So they went to their upstream, if you will, mutual fund company. And they said, well, we won't make, we hadn't decided that we won't. We currently aren't probably won't, but we won't for sure. Say that we won't. Oh, along the way, I had a company that says that they're biblically responsible. I happen to be a Christian, so they were Christian and they said they were good with herself.
Oh, okay. Well, I asked them questions about private prisons. You know, Jesus actually said, go visit those in prison. Not go money, make money. I didn't take that as going make money. So, so they said, well, we don't have prison operators, but we have. Prison real estate holdings. And I thought, I'm like, well, I don't want to go tell Gabe who's my client who says, I don't want to be in private prisons.
They go, well, what do you think about real estate versus operators? You know, like it's, it's like, it's the, the mental construct is just way too much, right? So I'm like, no, I'm not. So I that's the reason I didn't do business with that one firm. And when the other told me there, weren't going to do it, I'm like, well, I can't handle that personally.
So I started looking around, well, I. Direct indexing and kind of try to leave out some company names, but one of the companies was all good and then they got purchased by another company. So then I was kind of [00:22:00] lucked out and it was kind of an ugly thing, but it was who acquired them, I think, made it ugly and made them get out of the holdings for many adviser.
And I'm like, well, geez, I wasn't very ESG of you anyway. And the way they do handle loss. So then that made me go and rethink and said, you know, like with all of this going on, what if I just control the whole thing? And like, it's just, it's getting too crazy. So you know, I did my own research discovered that I needed to change the investment recipe a bit, but I kind of blended a few others.
I worked with another well-known person and gave him the idea. And he then created a version of his, that was ESG. And I'm like, okay, I'm glad I did that. So I took all that stuff and then realized, wow, I could actually do this and get returns that most of the time are beating the comparable passive and comparable active by 200 basis points or so like it, and include my feet.
Like that's the part that was blowing or has blown some people's mind. They were like, but that can't be because you add a fee, I'm like, well, why can't it be? And you know, we even did some research. It's kinda crazy. So like in in Morningstar, it's something like this, that the highest Return mutual fund.
I think for the last, it was either last year or last three years was like 60% for large, like for S and P 500 tracking. But then there were a couple that were negative. Right. So I'm just saying, so that disparity, but if you ask most people, they would not believe that the disparity between, you know, mutual funds could be that wide.
So when I tell people like, it's just cause they keep thinking on average, right? Like that, that 10% average return on the S and P 500. And I'm like, but don't you remember 2008 and it was [00:24:00] down negative 50 plus. So why do you keep staring at the 10%? What it was down negative 50? I don't understand. Right.
So, so that's why I encourage people to actually look at what we're doing. So now that, you know, I just decided to take it over and that now I can, you know, question directly to mutual funds or exchange traded fund providers. Why is. You know, you said you were going to do this, or I can go check in, does it say that they can't be in private prisons ever or like I can go in and kind of check the quality more?
So, so you know where before I was kind of believing others. So sometimes when you believe others again, they're kind of good. And I'm not saying it's necessarily always greenwashing, but sometimes you know, your idea of maybe like games idea in my idea may not be the same idea. So one of the beautiful things about your tool is I can encourage people to tell me what is important to them.
So if you tell me you're a health defendant and a planet protector, and somebody else is a gender empower, and that's the thing, the only thing they care about, then their idea. It's two different ideas. So sometimes, you know, we like to just make a circle around everything and say, call it ESG. But you know, what matters to me doesn't necessarily matter to you.
So now, you know, in certain situations I can more tweak to what they wants their idea rather than what my standard idea is. For the,
Gabe Rissman: I love that I have a few followups from that the first I'd love to dive in to, I think a lot of people have a conception that ESG is ESG is ESG. It's one size fits all.
There's a score. That's what the score is. And then that's, that's what it is. But you're saying that that's not the case that it seems like personalization is where people are going. Can you talk more about maybe problems you've run into with a one size fits all approach or, and [00:26:00] how do you have those conversations to figure out what people care about?
And then what do you do with that information when you realize that people do care about.
James Brewer: A few years ago, a friend of mine who was in the nonprofit world, but his firm did consulting, but we're having some Indian food, this nice in your restaurant here in Chicago, and this idea came up. So they were kind of like you would think of ESG company.
Well, by the way, none of their 401k stuff was screened. And when I kind of brought it up, it got poo-pooed a little bit because some of the people have this idea of like, well, but isn't cap all capitalism, you know, like it's bad some kind of way, but we kind of deal with it because we're not pro I'm like, no, no, no, no, no.
Well, we got deeper into the conversation and it was very clear amongst four people who were quite vocal that they all did not share the common view of what ESG. Well, and that was very eyeopening for me to the extent of the dissension for people who already worked in the company, but they are, the central was really crazy.
So I'm like, well, okay. But then we didn't really have the tools to necessarily parse it out. So we had companies more kind of giving you an idea, but we didn't have like, let's go deeper insert into certain categories. So one of the things I like about your stuff is that it goes in highlights categories.
We recently had someone who actually ropes in the comments section of the, of the score, wanting to focus on ESG. His other answers, I'm like, well, why did you you're like five categories? Why did you highlight one? I don't know if he fully got it. So we'll be investing his money this week, by the way.
So thank you, Gabe. And into all of the things that he said mattered to him. So I said, you don't have to necessarily choose. And I said, but you know, we do have an investment that if you want to be [00:28:00] well, what do I used to call it more? More more environmentally focused. We can add this one, which you'll just be more to that versus if we don't add that.
And then, and then I then showing you, but if we don't do that, this other one's pretty good at that. And you're going to get better return. So it's up to you. Would you want to be more purest knowing that you're going to give up? I think about 1% in our model still beating the other models. I'm telling you, we benchmark ourselves against.
Gabe Rissman: Sure. I understand. You're saying that this person came in and they said they want to focus on the environment, but then they took the questionnaire and there were also all these other issues that showed up as important. And you're saying, Hey, yeah, we can focus on the environment for you, but we can also do those, all this other stuff you care about racial justice and gender equality.
We can do that for you too. And that was something that they didn't even realize was possible.
James Brewer: Yup. Yup. And sometimes it's interesting that people will fill out a survey and what they would have said their score doesn't come back saying the same thing. Their score says something else was more important.
And I think that it's a lot of it, you know, like, Hey, the reason I called you, I read that article on private prisons. You know it and they lose that really got me. Okay. Now I could dive into the pool of private prisons or what we do is no, by sent people through the survey. Okay. So I'm gonna send you through the survey because it might highlight other things.
And I don't want us to be down the road and saying, well, I didn't know you did that. I'm like, no. So that's why we're going to send you through the process, get it all out right now and then say, okay, this portfolio now we had one situation where It's it's a large nonprofit and they're really about like racial justice.
So we took it and we then went heavy to racial [00:30:00] justice and it still gets some of the other in the way that we're investing still gets some of the other things like climate, but it's underneath, like the climate is an issue that is a racial justice issue as opposed to it's climate out front and races back.
So, so I'd say so depending upon your investible amount, we can do different things, but again, fill out the survey so we can have a better idea of what the compensation is. So, so I've enjoyed, you know, kind of a. When I decided that I could take it over, but what I decided I could take it over, you know, I hadn't had my relationship with YourStake.
I hadn't had my relationship with Morningstar and, you know, John Hale, who's been a long time buddy of mine. I you know, hadn't bounced some of the other resources online that are there because I've written another article that talks about some others. So when you discover all these tools, you're like, oh, well, man, I wonder if those other portfolio managers and how they're coming to the screening, but you know, once you understand to me, like, you know, I even tell people, Vanguard has a couple of choices, what percentages you should use.
They don't tell you. But all they did was go find somebody Index and said, we're going to replicate the index. They didn't personally decide. We really care about this. Potentially demand said we should have a couple of choices. I met somebody who worked at burger king and they talked about knockouts.
So, you know, the reason they have certain things on the menu is so well, if Gabe says I want a salad and they [00:32:00] don't have a salad, then you know, the family might not go to that restaurant. So they have some things on there. So they won't get knocked out. Although that's not what they're ever going to say.
We're not the salad place where we do burgers. That's what we do. But we don't even have purpose per se. We do fast food and it's a knockout, right? So our mutual fund company. Kind of doing, you know, is it their heart? So I said, the heart of my company was built from me getting in the industry with my own problem in 2006.
And the reason I've been passionate about this right, has been because I have been one of the effected populations for the very thing. And I said, I think if you're not one of the affected populations, you may not be potentially as passionate. Not to say that you can't be, but you know, it what's driving.
So often people have a personal story of some sort, they go, that story led me into where I'm at today.
Gabe Rissman: Wow. That knockouts idea that really clicked for me, it makes so much sense. And I think that correct me if if you're seeing something different, but it seems like a lot of fund managers today have that knockout approach, they need to have some sort of ESG fund so that they don't get taken out of the running for people that are looking for some sort of solution.
But that means that while you're talking about before the due diligence, to make sure that this is legit, and this is credible, and they're taking a thoughtful approach, I love that you have this passion and knowledge about prisons and can really dive into deep conversations and press people on it. But for other issues where you're maybe not as much of an expert or for people that aren't experts on some of the social and environmental issues, how do you do that diligence?
How do you find out if the fund manager is doing really thoughtful, good work on these, on these values without knowing everything about the issue? Do you have any strategies? [00:34:00]
James Brewer: Well I guess I've approached it a couple of ways. So I have talked to. Well, you know, often the approach I'm going to just contrast.
So often the approach would be, you know, pull up your morning star and search for something and put in your portfolio. I've talked to every company that I have, my client's money invested in. So I've had a conversation. Yeah. I can't say that I can rattle off their approach perfectly because it's their approach.
They should be better than me. Right. Like, but I'm the recipe, dude. Like I said, come to me for the recipes. Right. So I'm the recipe guy. And in fact, the first time on, on audio video we're calling our portfolio. Envisioned justice series. So, you know, envisions in the name and we're saying envision justice.
So that's what I'm trying to build. And I've got to go and say, so the recipe, you know, needs ingredients. So if I need a large cap, I need an international, I need a bond, then that's your role subcontractor. If you switch them now just a little bit subcontractor your that's your role to go do that. So however you do your thing, I need to understand that enough that I go, okay.
I feel good about it. Like the one I told you where they told me, well, it could be a real estate, but not an operator. I'm like, okay, I'm glad that we had that conversation because I didn't want to get blind I'm blind side. You know, so anyway, so, so I've had enough conference, so I I've, so people, if.
Some issue comes up and did you need to learn [00:36:00] more or the Y I'm willing to bring them, you know, to a broker, a conversation. I intend to, at some point to bring some of them into my own webinars or podcast to let them talk about their particular elements. So people can get a better sense because, you know, I talked to somebody even this week and she's like, you know, I was looking at my accounts and, you know, the returns were pretty good last and was another one, said the same thing.
And if you knew them both, they are they're in the, you know, they're in a world where they're experts in say racial justice and inequality. So. For them to pause. I was kind of shocked. Like they pause and said, but I'm getting good returns. And I said, don't get framed out of what you told me. So once said to me, well, okay, I guess principal's over returns.
I said, what? You don't even know the returns you could have had with me. You just know the returns that you had as opposed to the returns you could have had with me, by the way, there's the whole volatility argument. So, you know, we're using you know, modern portfolio theory and all those things and that genre of, of, of investing.
So it's not just because, you know, people love to tell you when their S and P is up, but they don't want to tell you about their 50% down. Right. And then they get out and then I said, you never get the return you expect because you don't stay up. So so to, to that, I really just got to say, you know, here is.
Here as you on your values. And at some point, you know, look at any short run period a day, a week, the corner, whatever who knows that, that outperforms, I said, but over time, you know, the consistency and there's just more and more data about, you know, [00:38:00] companies who get the bad press releases and all the other stuff, you know you know, we, we, again, we just love to talk about when stuff's up and not necessarily when stuff's down, generally, I don't have those have those conversations because once people are in it you know, they're at least reminded that their, their values aligned.
I've also started highlighting to them. Like I had a friend of mine once who was concerned that these were nonprofit. Right. I'm just saying like, the ESG has so much education, but if we go to most people have no idea what they're invested in. But early in my career, a woman didn't know a stock from a bond yet.
She was invested in our TIAA Cref account, had no idea stock from a bond. So to bring up ESG and add some more unfamiliar terminology and she doesn't know stock and bond, right. A bit crazy. So I said, so we start to tell people and explain. So I started taking the fact sheets and said, so here's the top 10 holdings.
So if it's apple or DocuSign or zoom or whatever it is now, like, oh, Yeah. Cause see, you see that number 7% minus two, minus 25, whatever the number is. That's what you're seeing. I want you to see it as it's here are the companies. So if you tell me that you think apple is bad, then maybe we have a different conversation.
So for him, the, the, the, the friend I'm like, no, and then I showed him. So like, there was one where you could show like every fund, it was crazy. Like how many thousands it was Mike, you can look at this whole thing, but I'm just giving you an idea of what you're invested in. And I said, cause you didn't know, you were only thinking you heard ESG.
Oh, scary. You turn. You know, so people sometimes get scared about terms. They're even scared. Well, but they put me in a target date fund. [00:40:00] Yeah. And I said, but I did a risk tolerance. Your risk tolerance says you're conservative. And currently you're a target date. Has you integrated. Well, I guess if it's got me an aggressive, maybe that's what I'm supposed to be.
I said, no, that's just what somebody else made a decision when you did make one on your own. I said, but it is considered malpractice. If I don't ask you, like, how did that happen? I can, I can, don't ask them if they're in a 401k, but if they come to me individually, I'm supposed to ask them, then I got to educate them towards what would be right for them.
I said, but maybe if you're really conservative, you just rather save more money instead of seeing it go up and down. And I said, because there are plenty of people that when they see their target date go down, they, they go into cash to. So, you know, so I said, so if we, if we include, I think that ESG is just part of the investing conversation.
So, you know, I started using the phrasing risk, adjusted return, enhanced values, integrated portfolios. I know it's a long phrase, but we like to say it's rare. VIP gave you look like a rare VIP to me. Okay. But, but, but so, but I wanted to say that the risk adjusted return enhanced that is that solid, modern portfolio theory, efficient frontier at all.
That's behavioral, all that stuff into there. That's what that is. And then now let's go and start talking about values and to the extent that I've been able to find out how to take the values inside of the. And actually get even better returns is a plus, but I just don't go with it's about your values and I'm just going to get you into values.
I want people to understand that, you know, it's based upon a solid foundation of academic research and empirical [00:42:00] evidence when all I'm doing is just deciding that, you know, instead of let's say Morton salt, we're using gray salt, you know, it's just like different types of ingredients. I try to find simple analogies for people, right.
So, you know, what kind of tomato sauce or what kind of, whatever you're putting in that you like, and in this case, you said you liked when the values came in birth versus no values at all.
Gabe Rissman: Yeah. I want to dig into something that you said sometimes your clients hear ESG or think about ESG and they get a little bit of a shock reaction.
Is it, do you think it's the term ESG, are you using different terms? Do you just say values and do you not mention ESG or is that something that is working well? How do you choose your vocabulary to be able to keep people's peace of mind and not dive into things that maybe their preconceptions or myths?
Can you talk about how you navigate that?
James Brewer: Yes. So I like to just go with values but, okay. So if I take someone who I meet through whatever introduction, it's easy for me to go balance. As opposed to someone who by Google me, right. By find the Forbes article and come because I read your ESG article or I read your, this article or I read about, cause you know, you remember the days it was socially responsible investment, right.
It was Sri. Okay. And then, you know some people are calling it justice and I have another client she's calls it, ethical investing. So there's lots of terms. So like in the article again on Forbes, I throw out all the terms. Right. And my new marketing person is looking at well, what's the SEO, right.
For each one of those. So I'm like, I can kind of think that the people looking for ESG, they're kind of the different type, maybe more, [00:44:00] a little. More educated about the topic in the first place. Maybe do know a little bit more about investing. I think maybe the ad asina is social justice folk. It was justice.
I like justice. I want justice. Right. And maybe they don't know so much about investing. I'm not saying that they do or do or don't, but I'm just trying to visualize, like, where are these people? And then there are the people who say, you know, TB, I'm really concerned that I'm not going to be able to retire because I just don't have enough money.
Yeah. And how much do I need to save it? It's so confusing. And I'm just tossing and turning. And you know, I've been working at XYZ company for 20 or 30 years and I got this, I got that over there. And I say, oh, I get you. I said, but let's start you from the beginning and help me understand your values. Oh, by the way, take my, YourStake survey.
I a, for anyone who thinks I'm plugging, this is truly how we're doing it now. So, so, so take the, YourStake service. Oh, that was interesting questions. We didn't know about that. And I'll say, but I'm going to tell you how this gets integrated into our investments and how we're going to deliver value to you.
Because at the time they didn't specifically come about investing. They came for the problem of a goal that they didn't think that they were going to reach. So depending upon how the angle of the conversation comes, but you know, the gentleman that I told you about earlier that said he was more, he, you know, again, he wrote in on more about climate and I want my investments to align with climate.
You know, he already came in with this notion, the lady who said, I want ethical investment. She already came, you know, because she knew about it. That's what you want to do, but they weren't so focused on any specific goals. So like it wasn't about financial planning. It was more about investing and I'm already [00:46:00] got some capital.
Either I inherited it or I got it some kind of way, and I just want that align. And, and so, so it kind of depends on the audience, but the one to me that gets them all is your values. Because to me that encompasses no matter which other terminology they most or re related to.
Gabe Rissman: Yeah. That, that makes a ton of sense.
We're seeing a very similar thing we try to on our site, never say the words ESG. It's funny, just in our own marketing. A lot of times we're using ESG because that's a buzzword that people are looking for, but it does also turn people off. And every advisor has a client that is afraid of the word ESG. So I do think talking about values.
I mean, everyone has values when you see the surveys about how many people are looking for. The survey question is, do you want to align your investments with your values? Not do you want to invest in ESG? So I think that's really clever as a, and just a good idea to not put ideas in people's heads before they express what they really care about.
James Brewer: And I think a challenge with the ESG terms. So, you know, if I, if you said, do you believe that companies should have good corporate governance? Yeah. Right. But we don't say that we say he has G and some people wouldn't even know what that is. And you say, do you think that the boards of directors of publicly traded companies should be their frat brothers?
Right. Okay. Do you think that boards of directors should be diversified and have minorities and women, you know, represented? So that's a G now the environmental, some people think that means that I'm going to be in an environmental company. They may not think that that actually means, well, am I driving a Tesla?
I may invest in a Tesla or, you know, what is the building that the corporate offices of this company, you know, they, they they've made it lead platinum. Right. So, [00:48:00] so I think the more we could talk or like private prisons instead of S right. So I think ESG is this term, which is like, you know, one day I realized, what is Tia?
We call it TIAA-CREF who was for the greater good, well, it's the teacher's insurance and annuity association of America. I believe they there's a third day that they don't even have. Right. And I said, so then, you know, well, what if people actually do you're in an annuity for a lot of people that go, I hate annuities, Ken Fisher.
I hate annuities. Well, TIAA it's in the name, but they don't say they don't give you the name. They give you the initials. Right. So I said, maybe we lost something by. You know what Tia get offended. If I say insurance and annuity, you know, are we offended when we say environmental, social and governance, and then maybe a backup is, are you familiar with those terms?
And maybe the person isn't right. So often the things that we don't know, we reject, we, you know, we'd go to a foreign country. We go with know people that we don't know, they don't look like us. We start to reject things that we're just unfamiliar with. So I think that sometimes we have to help the conversation for people and then assessment and maybe, you know, you know, Run in with ESG, like, you know, holding a poster, you know, you walk and, you know, start a conversation and say, you know, like, so what kind of things are you?
What's your philosophy? Which so, oh yeah. Okay. And then, you know, are you familiar again, I've had conversations with people like on Vanguard and said to a guy, well, you know, I just don't have that much money, blah, blah, blah, whatever Solomon. I said, well, and I said, well, you know who I am? And I said, so are you familiar with their, you know KLD investment?
I mean, it was like, of course he didn't right. And I said, well, if I said, I'm going to give you [00:50:00] this one and say, even if you, cause he was a pastor right away. And I said, even if you don't invest with me, I said, at least if you're going to say, because he was not only was he a pastor, he was doing some other kind of social stuff.
And I said, because otherwise you are the. You know, Monday through Friday, I'm supporting the system and Friday night and Saturday, and what Sunday morning, I'm doing something different, but you're investing in the system. That's creating the need for what the work you're doing on Friday, Saturday, and Sunday morning.
But I just, you know, but some of the people, they were afraid, you know, we're afraid of change. Right. I'll never heard of it. Like, I'm like, well, you know, I think it's 248 or something like that, investments that that Vanguard has. And I said, when I hear indexing, well, which one? Like which one they got a lot.
Well, you know, the S and P 500. So I'll use it as one. Like the people that want to act like, oh, I'm so smart. It doesn't beat by one of my, well, you know, there's a lot more than the S and P 500. And why would Vanguard do more than the S and P 500 if that's all there is. And so this, the familiar term that you hear at night, another person, I would say, do you ever hear about the bond returns.
What was the bond index today? No, that's the NASDAQ, the S and P. And I said, I don't really know anybody who invest in the NASDAQ, but they give you the number. And I said, I could even tell you like which one they give by the one that only has 30 with 35 companies, the one that's got, you know, a hundred, the one that I can tell you, which one's going to show the most volatility, but they generally are giving you the volatility.
They're not telling you about, you know, man, the bonds, nobody's excited about bonds. So why aren't we telling anybody about it? I said, but you got bonds in your portfolio. In this case, he had 60% bonds, 40% stock. And he was freaked out over his investments. And I said, so if people are freaked out about investments, even bring it ESG, it terms, I'm not familiar with [00:52:00] Sri terms.
I'm not familiar with right. Socially responsible, like, well, geez, this isn't again, like my friend who bought non-profits like when you can't, she can't investment in our private. But that's what he in and he owns a business. So, you know, you might think, of course he would know, like we have to do these. No, the people don't know they're really coming to us for our expertise.
And sometimes like with my friend, who's a strong Catholic, we went, I'm not a Catholic, but I went to Catholic school for 13 years. I'm like, dude, you can't not do this at firstly, you just reject it. You're the one on your Facebook page talking about, you know, your school and like, and you're not again. So we some, but I think often advisors, sometimes we're afraid and, or either try to take the path of least resistance.
But you know, when you have people invest in their values, when volatility does occur and inevitably he's going. You can at least point to the fact that, you know, when we first started this conversation, you add that portfolio that was invested in all these things that you told me you were against. Yeah.
The market's down, but you know, you're also still invested in companies that you actually care about. And by the way, they generally are the ones who don't have those negative press releases because of bad governance.
Gabe Rissman: Great. Excellent. So first I love what you're saying, that the examples of people that don't really understand ESG could that be nonprofits and w what's actually going on one of the biggest. Feedback and things that we hear from advisors is they show a client an impact report they start talking about. Yeah. What ESG means the E stands for environment companies are releasing toxic air pollution, including the water. Are you aware of that? And let's see how the companies in your portfolio are doing on those issues.
And, and that's just something that's mind [00:54:00] blowing that they can actually look at issues that impact their daily lives that they think about. And that's tied to their investments too. Holy cow. It's, it's such a cool thing to see people have that aha moment and realize, oh man, now they're now they're awakened.
And they, they started thinking about this. Do you, do you have any stories of that as well?
James Brewer: W I have a few where, you know, the person, like, kind of just didn't know. Finally, after a few years said, okay. Here, take a look at my portfolio and you know, it first it's a bad portfolio.
Like it has an S&P Vanguard fund S and P 500 and a bit of fidelity as a beat 505. It just give you the extent of bad, but then it has other 18 other investment for like, what would the heck came up with this? So, you know, after a while you kind of know like, well, I saw those two investments already knew that you were going to get some bad outcomes, but, but, you know, I think that it's still, the challenge becomes is the person is still looking for return.
So that's why I think it's take sometimes take return backwards. Right? If you have the portfolio and then go, okay, I'm going to show you a portfolio that according to what you've told me, It's got this return and here's the return of your portfolio. If you have that story and like what? And I said, so did you ever know what was in it?
So you probably related to, again, it said S and P 500 and some other names, do you, can, I know how many it, right. I've always thought about, like, let's go to a bar before anybody started drinking and say, let's take 10 people and see how many of the S and P 500 we can name. And if they got a hundred, I'd be surprised with 10 people.
Right. I'd be [00:56:00] surprised. So when you have people, then it's like, oh
Gabe Rissman: yeah.
James Brewer: Right. So people can't do that to say, do you understand volatility? So the us national. It was a financial capability study where most people can't get three out of five. Right. None of all the ask, what is ESG, right. And, and if we ask them, can you make more money or less, you know, will you make less money because of it or whatever it is.
Right. I said, they have no idea. Right. So they're looking at their friends. So often people are going to their friends for portfolios or, you know, their family members. Well, this is what I do. Am I okay? Just because they do it, that means that's right. So, you know, behavioral finance people do the wrong things at the wrong times.
And some people do it wrong, even when they know what right is. So, you know, I just think like putting it in front of them, You know, sometimes they still have to sit back and go, like, I didn't know. But then even after that, some of them still slipped back into, but didn't, they tell me I'm supposed to get the most return.
So one of my questions to, you know, folks is, do you know how much you need to say? And what rate of return for how long to reach your retirement income goal? No one has ever answered. Yes. That was truthful. I caught one who said, and they said, well, yeah, 27 other questions. I just didn't want to answer no, on the first one, I said, okay, you know, so this, just to let you, they were uncomfortable with the truth, but I said, you don't know.
Okay. So when the process of planning and when we say, okay, at some point, what up and down movement are you willing to deal with? As long with your savings rate, then I'm just trying to get you [00:58:00] that portfolio. It no longer should be about which one made more or less. Now that is the technically correct financial planning answer, but it's not usually what most people are thinking even when they get to the rate, but shouldn't, I try to get the most money I can is kind of what I said, but you don't do this on a daily basis.
I try to have quarterly meetings with people. And the answer is no, because invariably more return. Most of the time means you took on more risks. People love crypto and Bitcoin when it's up, they don't even know, you know, they're not calculating down as a, as a possible risk at the time they're talking about it.
Right. So, but that's what we're trying to do. So I think we just have to have, you know, continue to reinforce the message with those who do come in. We come in contact and continue to reinforce the message to help them with those two.
Gabe Rissman: James, loved having you on. Thank you so much.
Do you have any, any final things that you want to share?
James Brewer: No. I think you have been one of the best interviewers I've ever had. Oh my
Gabe Rissman: God. Too kind. And I, well, I'll, I'll spill the beans. I you're the first person I'm interviewing for this series. So I will let you know how you stack up when I've gotten, just passing, but I thought, yeah, those are some great stories.
Really, really loved talking to you. So this is a ton of fun. All right, thanks. Cool. Have a good one, James.
James Brewer: All right. You too.