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Socially Responsible Investing

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*This blog is for university employees investing in their retirement plan

Socially Responsible Investments / ESG / Green Energy.  How do you invest in them through your university retirement plan?  Can’t do it, right?  WRONG!

These types of investments have really caught fire the last few years.  I’ve had A LOT of clients inquire about how to invest more socially conscience / green.  This is very easy to do so outside your university retirement account.  For example, I custody my clients accounts at Charles Schwab.  Day-in-and-day-out, mutual fund / ETF managers are creating new socially responsible investments.  Frankly, these days, there’s probably too many to choose from.  

However, the question remains, how does one access these types of investments through their respective university retirement plan?  I mean, the Board of Regents (or whatever your institution calls their governing body) has all the “say” as to what goes on in the retirement plan, right?  NO NO NO.  Not anymore!!  This used to be the case a few years ago, but university retirement plans have evolved.  Partly due to fear of being sued, and party due to employee demand for more choices.   

For the purpose of this blog, I’m not going to dive into the “being sued” aspect of retirement plans.   For that part, I’ll direct you to googling Schlichter Bogard & Denton, LLP.  I’ve seen university retirement plans, almost overnight, perform an about face to stay away from litigation.  And by the way, Schlichter Bogard & Denton are winning most cases (mostly fees related).  

University retirement plans have done a good to OK job over the last few years in expanding their investment choices and lowering investment related costs.  However, there’s certainly a lack of socially responsible investment choices across the country for university retirement plans.  There’s an easy solution to this issue – it’s called BrokerageLink.  The BrokerageLink feature is not a “one-size-fits-all” feature.  It’s specific to each university retirement plan.  Your university may only offer BrokerageLink for certain account types (401a, 403b, 457b), or only offer it through Fidelity OR TIAA – not both.  Therefore, it’s important you ask your vendor if they offer this feature and if you can buy ETF’s within your BrokerageLink account.  If you’re able to buy ETF’s, this opens up a whole new conversation as to what socially responsible investments you can buy.  Not going there in this blog though…..

So, once you’ve established the fact that your university retirement account allow the BrokeageLink option, this affords you access to THOUSANDS of investment options.  Here is where you’re able to sift through all the socially responsible / ESG / green energy investments out there – more than you’ll ever need.  

In fact, I recently had a client express interest in having her entire (100%) university retirement plan portfolio made up of socially responsible investments – challenge accepted.  I was able to craft up a portfolio made up of ALL socially responsible investments – even on the bond side.  She was thrilled!  We did this without sacrificing quality of investments, but did give up a little on costs though.  Her investment related expensed did go up slightly, but not enough to steer her away from her investment philosophy.  

So, BrokerageLink is the key. I encourage you to ask your retirement plan vendor about this option if you’re interested in investing in these types of investments.  FYI... retirement plan vendor reps (usually TIAA / Fidelity folks) will not help you out with this - at least their not supposed to do so.  Fidelity and TIAA reps may direct you in the right direction, but not when it comes to choosing which investments align with your investment philosophy - this goes beyond their scope of services offered.  

If you’re interested in having my firm help you out.  We help university employees all over the country navigate their retirement plan.   Feel free to email me at greg@shepardfinancial.com to schedule a 20ish min phone conversation.

Also, check out some of my informative podcasts that gets into all kinds of higher ed retirement plan topics you won’t finds answers to anywhere else.  

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