Values-Based Financial Planning 

Your Feel-Good Freeway to Personal Wealth and a Better World 

For some time during and after the ‘excess 80s’, investing was all about making as much money as possible, regardless of who got hurt along the way. It’s good to know we’re a far cry from those days, with more and more Australians insisting that their financial values reflect personal principles. 

ActOn Wealth works closely with clients who are focused on building their wealth whilst honouring what matters most to them. So, how do you do it, why, and how else do you stand to gain? In this article, we introduce the concept of ethical investing, or values-based financial planning, and show just how easy it can be to do better. We also meet a client who’s gone down this path and find out.

How Conscious Investing Can Help You In Ways Beyond Financial

The way you spend your money says a lot about the person you want to be in the world. After all, it’s your finances that underpin many of life’s possibilities. Aligning your finances and principles can: 

• Create peace of mind knowing your financial decisions reflect your ethics.
  
• Help you feel better about the future and your role in defining it.
  
• Reinforce your commitment to long-term goals.
  
• Alleviate some financial stress by knowing every dollar has a meaningful purpose.

To put it succinctly, values-based financial planning makes things personal.

Why Our Client Brooke Switched to Ethical Investments 

I had amalgamated my various superannuation funds probably over a decade ago, when I was in my early 30s, self-employed and trying to tidy up loose financial ends. To be honest, ethical investing was not on my radar at the time. Whilst I was being a conscious consumer in many other ways, I didn’t make the connection between my personal principles and my financial decisions, as strange as that might sound. 

Fast forward to a few years ago, and I’d wisened up. Whilst I didn’t think I was going to change the world with one superannuation fund, I couldn’t reconcile the fact that my nest egg was helping fatten up companies that compromised my moral compass. I thought making the switch to green investments could mean a lower return, but it was a sacrifice I was willing to make, especially since I didn’t have dependents. 

I approached ActOn Wealth with the specific brief to transition my funds over to more sustainable companies. I wanted to pursue a more values-based financial planning model. This process involved me really articulating and consolidating my definition of sustainable and financial values. It’s not always black and white, and I was grateful for Thomas’s help. The ActOn Wealth team ran various financial models to determine that, yes, I was likely to take a financial hit in the immediate term. However, over time this would balance out and, if anything, I’d be on target to exceed my previous fund’s forecasting. This financial year ending, my fund drew a net profit of 13.17%. 

The process was painless. Thomas took care of the paperwork and ActOn Wealth charged me a one-off handling fee. I am now two years into the change and I am a lot more comfortable about how I’m moving through the world. I don’t feel any double-standards guilt when I have conversations and express my disappointment in such a company, or such a government policy. I don’t feel like I’m a direct part of the problem anymore and, even though I’m just one person, my green investments are genuinely and tangibly part of the solution. That feels really good. 

Questions to Help Inform Your Responsible Investing

As we heard from Brooke below, defining the meaning of what is and is not an ethical investment might not always be instantly obvious. Some of the following questions might help distill things for you: 

• What causes or communities are most important to me?
• Do I want my investments to avoid industries like tobacco, mining and fossil fuels?
• How do I want my legacy to look?

Responsible Finance – How ActOn Wealth Can Help Align Your Money Values

There are many ways our socially responsible financial planners can ensure your money and morals align. We can: 

• Recommend ESG investing options and funds that actively solve challenges that are important to you.  
• Help negatively screen, excluding sectors or firms that compromise your values.  
• Ensure you receive appropriate insurance advice to protect your family, dependents and assets. 
• Build an estate plan that channels your wealth to beneficiaries and causes that you truly care about.  
• Help you embed charitable giving into your financial plan so that doing good is almost an autopilot state of being! 
• Structure your finances to minimise tax responsibly, with the aim of freeing up more funds to direct to meaningful uses.  

What Else Can You Do to Align Your Money and Morals? 

Aside from speaking to us about socially-responsible investing, you can also consider: 

• Supporting local businesses with a genuine focus on your immediate community. 
• Seek out social enterprises that could do with a helping hand, be it financially or in more tangible ways (such as volunteering your time). 
• Consider switching banks and favouring a reputable establishment with strong ethical practices. 

Making a difference can start right now. 

FAQs About Socially Responsible Investing

How to Align Investments With Personal Values?

Decide what causes are most important to you. Remember that nothing and nobody is entirely perfect, including your financial values. If you’re looking for a 100% flawless fund, you’ll be searching for a long time. Don’t feel like you have to make a 180-degree leap. Feel confident to take small steps and learn as you go. 

What is ESG Investing? 

ESG (Ethical, Sustainable and Governance) investing is another word for social or responsible investing. This concept weighs financial factors alongside a company or fund’s  environment, people and governance practices to determine its eligibility.

How Do I Screen Investments for ESG Factors?

ActOn Wealth regularly reviews investment companies and funds with an ESG lens on behalf of our clients. Contact us about values-based financial planning today on 1300 022 866. 

What Are the Tax Implications of Ethical Investing in Australia?

The ATO does not treat ethical investments any differently to more traditional options. This means they are subject to capital gains, tax on income and dividends, etc.  Speak to Acton Wealth’s tax advisors for more information. 

How Do I Switch to Ethical Investments?

It’s easier than you might think. We can help assess and maximise your ESG financial opportunities across investments, savings, insurance, estate planning and more. Speak to ActOn Wealth finance advisors on 1300 022 866.