5 min read

401(k) - The Instant Pot of Investing?

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New beginnings are a whole theme this summer, and when it comes to careers, there are significant changes on the horizon. As much as a quarter to 40% of the workforce have indicated they’re looking for new jobs. This trend signals a wave of potential opportunities to realign a well-known retirement savings plan: the 401(k). For many of us who have this plan, we’ve treated it like the Instant Pot of investing — we ‘set it and forget it.’ But perhaps now’s the time to review your 401(k) plan to see if it’s in line with your investing values and use these mindsets to explore your impact:

Be investigative: only 2.9% of plans offer ESG funds, so you may need to look closely at your current offerings or ask about a ‘brokerage window’ — the option to make your own choices using tools to help you go beyond the plans your company offers.
Be persistent: regulatory hurdles are beginning to be cleared just as ESG funds demonstrate they’re a strong contender for companies’ retirement investment offerings. And even the federal government has started offering ESG in retirement portfolios.
Be empathetic: If you want to ask your company to consider offering more values-aligned options, the person responsible for your company’s 401(k) plan might be won over by the persuasive data. Bring them along your own learning journey to see what could be possible, especially given that employees interested in ESG are more likely to contribute to their retirement plan.

You may be looking at your online statement and wondering how changing a fraction of your 401(k) would make any difference. At the end of Q1 2021, these retirement plans totaled about $6.9 trillion in assets with almost 60 million participants. Tapping into this exponential power to use capital for good begins with each of us taking the first step.

Three keys to maximize your impact

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We’re all about how to invest with purpose. But it can feel scary to move from learning to actually investing your dollars. Lucky for us, there are a bunch of resources to build our confidence in choosing the right investments for our values.

Start with this MarketWatch piece from our very own FWIW Founder, Jean Case. An impact investing trailblazer, she shares her top three pieces of advice for maximizing the impact of your investment capital.

Start by defining what matters most to you. Many investors start with what is termed “screening” to ensure they both include (positive screening) and exclude (negative screening) certain types of investments to more closely align with their values.
Pick a trading platform or advisor where you can focus your efforts. A respected trading platform offering sustainable investing options or a professional advisor can help you build the confidence and security of knowing investing professionals are monitoring both the performance and risks of the investments you make.
Follow the data. It's vital to look for transparency in intention, measurement, and reporting of ESG factors to determine if a company or fund is authentic in its ESG or impact claims.

The article is also full of actionable insights and resources to power your research and add more (actually helpful) tabs to your browser. Feels like we’ve shaken off some of those investing nerves already!

Let’s talk financial advisors

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What is a financial advisor? Do I need one? Can I still afford my beach vacay if I get one?

A financial advisor can be helpful in scanning the market, offering specialized recommendations, and ensuring your portfolio is aligned with your risk tolerance and values. Some people feel more confident with an expert by their side, and a financial advisor can take many forms.

The future is now, and using a robo-advisor can help you avoid paying for complex services you may not need (aka if you’re primarily focused on investing for retirement). You go online, answer some questions about your goals and risk tolerance, and then beep, beep, boop — the algorithms develop an investment plan for you.

Suppose you’d rather talk with a human and/or have more intricate investing goals. You could use an online financial advisor (medium cost) or a traditional financial advisor (highest cost but most specialized). The prices and levels of specialization are fairly customizable to your budget and needs. An important differentiator is an advisor's certifications and knowledge of ESG investing. Here are 10 questions you can ask a financial advisor to determine if they are credible and align with your investing approach.

Curious what others are doing? 43% of affluent millennials surveyed by Investopedia said they use a financial advisor, and of those, 20% said they used a robo-advisor.

Understanding your proxy vote

A graphic with a ballot box and many hands inputing ballots.

You may have heard talk about companies being “accountable to shareholders,” but what does that actually look like? If you own stock (that is registered to your name) in a publicly traded company, you have a right to vote on the issues that are on the ballot at a company’s Annual General Meeting (AGM). Shareholders can cast their ballots in person at the AGM, mail in their ballots, or vote through a third party, known as a “proxy.” The time of year — usually in April — when many public companies hold these meetings is often called “proxy season.”

Maybe you get a slew of emails from your investment platform each spring and just delete them (who, us?), but we’d encourage you to take a look and see what issues are on the ballot. You could have a say in issues like climate change, worker rights, CEO pay, diversity disclosures, limits on political/lobbying spending, and more. Because while you may not realize it, your vote has power, and the issues you vote on can affect your earnings and social impact.

We mentioned a couple of weeks ago that ESG shareholder proposals brought to a vote this year were 75% more successful than last year. And the FT's Gillian Tett recently wrote about the increasing activity of “shareholder activists” that led to revolts at the AGMs of several big oil companies. As Tett says, “the new activists are not just trying to save the world; they are also trying to save their own portfolios in a world where regulators are enforcing green standards."