ESG: The Present and Future of Et HOW INVESTORS RANK ETHICAL BUSINESS PRACTICES
Investment and ethics can sometimes be at odds with one another. Historically, investors haven’t prioritized the moral implications of giving money to companies with dubious business practices. Today, some people hesitate to invest in companies that compromise their values, but with ESG, they can have a clear conscience. Environmental, social, and corporate governance (ESG) is a new investment approach that gives investors a real voice. WHAT DOES ESG MEAN? E is the environmental category and refers to companies following sustainable business practices or creating products that combat climate change, deforestation, and other environmental concerns. S is for social, which emphasizes human rights and community relationships — for example, fair trade certification, which warrants that producers of a product are fairly compensated for their work. This would be absolutely necessary for investors in social-oriented organizations. G gives investors
a standard for corporate governance to ensure companies have equitable compensation for employees.
WHO DETERMINES WHAT COMPANIES ARE ESG-CONSCIOUS? Research firms like Bloomberg compile stats on a wide variety of companies to ensure investors know where they’re putting their money. Researchers look at annual reports, company structure, and other factors to determine ESG scores. They use a 1–100 scale; the higher the number, the better their ESG ranking. HOW DO I INVEST IN ESG? There are several methods to find and invest in ESG-conscious companies. Financial advisors specializing in ethical investing can lead you in the right direction, showing you companies with solid returns while following sustainable business practices.
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You may say your children wouldn’t do that. You have everything thought out. I’ve heard clients tell me that, and I’ve watched their children go to war with lawyers on both sides over fine china. Sometimes, the simplest things, not the significant money sources, come under contention. It’s the little things that mom or dad may have said they’d give to one child, and as we get older, we forget we made that mental commitment, and now we tell somebody else they’re entitled to the same items. And that’s where the conflict comes in. I believe assets should not destroy families. Instead, they should build them up and allow a blessing to be passed on. You’ve worked hard for those assets over your lifetime and guarded them throughout your retirement. Let’s not let simple written language destroy those relationships. I seriously think you should entertain the objectivity of having independent trustees and allowing the advisor, if you have that relationship, to maintain that relationship throughout your generations of family. This is why we have enhanced planning with all our client’s plans. Our goal is to get to know you, your dreams, goals, and desires and ensure your plan works through retirement. Along the way, we need
to know if your plan could be affected by your mom, dad, sister, or brother by their putting in place items you did not know. And the question we ask is: Will you have physical, financial, or emotional responsibility for them? This will affect your retirement. Lastly, when you pass on your assets to your charities and children, is it set up so they have the maximum awareness of what these assets can and will do as a tool and the ability to manage them? If there’s any thought or concern that should be addressed in such a way that puts your children or grandchildren in the best stead possible through generational wealth planning, we have that tool. We are happy to discuss it with you, your children, and your grandchildren to ensure the wealth you’ve created can continue for future generations and provide the benefits you wish it to. I encourage you to talk to your financial advisor about these and coordinate with your legal team to ensure the results you’re looking for align with your desires. –Gary Mattson
to this brother who was being penalized for his actions, they would lose their inheritance as well.
As you can imagine, the family trustee’s sibling, who was in charge of this, had to file the documents, and now, they don’t speak to each other anymore. If this were an independent trustee following the document’s directions, the family continuity would still be intact. Over my 35 years of doing this, there are several other situations where an independent trustee is the best solution. I’m not saying that for just you as my client. I’m saying that for me as well, for my family. I never want to put my children at odds with each other. So, we do our best to talk about everything we’re doing and how we’re doing our planning so everybody knows how we set this up, my wife and I, for their benefit and offer them the opportunity to respond to our information. Of course, there are the typical responses — “We raised good kids. We don’t care about it. We want it to take care of you.” Those words are good until the last shovel of dirt has been put in place of the last one standing, and then the feuds begin.
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