Listen to “In My Opinion”

It seems appropriate during Fourth of July week to talk about “foundational values”—and how they relate to financial planning and principled investing.

Ray Sclafani, the founder of coaching and consulting firm ClientWise, says that “financial advising is a noble profession”—one that is capable of not only impacting the current generation of clients that financial advisers work with, but also “carries forward through multiple generations.” He adds, for advisers, “Being relevant in the life of the ideal client, knowing who they serve, and designing a total solution to meet the needs of that client are paramount.” (Financial advisers can view several compelling practice management presentations by Mr. Sclafani here, developed in partnership with Flexible Plan Investments.)

His thinking ties in nicely with a trend that has accelerated over the past decade: Financial advisers have been increasingly embracing values-based financial planning and principled investing for their clients.

For many advisers, this starts with their personal philosophies and fundamental beliefs about how they would like to work with and serve clients.

Several advisers from across the U.S. have discussed the topic in interviews with Proactive Advisor Magazine. Here is a brief sample of some of their comments:

“From a potential client’s very first exposure to our advisory firm, I want them to know about our values-based philosophy in working with clients. … I believe that a foundation in humanistic principles is critical to our advisory firm’s success and can help define clients’ interactions with our firm.”

—A financial adviser from Pennsylvania

“There are characteristics I look for in potential clients. Do they see the value in long-term relationships? Do they want to make a difference in their family and community? Are they highly optimistic? Do they see themselves as having something of value to share? … When I see these characteristics, I am confident that we can work well together. Their needs and expectations will match well with what I can offer and deliver.”

—A financial adviser from Colorado

“I believe that when professional, process-driven financial advice resonates with clients’ values, people can become empowered to make decisions with clarity and confidence.”

—A financial adviser from Utah

Having a values-based practice philosophy is just the first step

While these advisers and others work to incorporate a values-based approach throughout their working relationships, many clients are looking to take that to the next level in terms of principled investment implementation.

They would like their investment strategies to reflect, to the degree possible, their personal beliefs, whether those are in the areas of socially responsible investing or faith-based investing. This is especially true for younger generations, who will be increasingly using the services of financial advisers over the next several decades.


The financial-services industry as a whole has increasingly come to the realization that this investor sentiment is a trend that will only become stronger in the future. There has been impressive growth in client assets now falling under the umbrella of ESG investing (companies that score well on factors of environmental, social, and governance practices).

“Doing good” and “doing well” don’t have to be mutually exclusive when it comes to meeting investment objectives for clients

Research shows that organizations that adopt solid ESG practices reap better operational performance. Another study shows that the incorporation of corporate social responsibility proposals can lead to increased shareholder value. In fact, according to research conducted by the Global Impact Investing Network, 89% of “principled investors” said their financial performance was in line with or outperformed their expectations.

Flexible Plan Investments (FPI) is no newcomer to the area of principled investing, having offered dedicated strategies in this area since the 1990s.

Advisers working with Flexible Plan Investments on behalf of their clients can offer investment strategies that meet their clients’ desire for principled investing in two ways: (1) portfolio strategies that uniformly invest in companies whose products and services align with core religious values, and (2) portfolio strategies that actively invest in forward-thinking and sustainable companies, while avoiding those companies that profit from activities deemed counter to humanistic and environmental values.

These include FPI’s Faith Focused Investing and the ESG-focused For A Better World strategies. Another benefit of Flexible Plan’s principled investing solutions is that they allow clients to give back 10% of FPI’s net advisory fees collected for these strategies to a socially responsible charity or religious institution of their choice.

FPI uses cutting-edge technology to create dynamic, risk-managed investment strategies that give investors the best of both worlds: growth and protection. The firm’s Research team creates investment strategies that are designed to adjust to market conditions, allowing investors to participate during strong market growth and mitigate risk during market downturns.

FPI’s principled investing strategies are no different in their approach—representing a significant differentiator versus passively managed funds.

Advisers can help their clients achieve their financial goals while providing the additional benefit of investment risk management—all within the context of contributing to a long-term, positive impact on the world.

One adviser summed it up this way in an interview with Proactive Advisor Magazine,

“I find that if clients understand what they are investing in, and how those investments align with their passions and values, they have a much better chance of sticking with their plan and being successful.”

Market update

After several days of weakness last week, and a slightly down week overall, the S&P 500 came back somewhat to finish off an impressive June and the first half of the year. Analysts attribute much of the first-half gain to the Fed’s willingness to consider cutting benchmark interest rates.

Barron’s lead column noted this weekend, “Fed-fund futures are anticipating three quarter-point cuts by year-end, based on the expectation that the Fed and other central banks will seek to offset the apparent decline in global economic activity.”

According to CNBC, there were several significant market data points achieved in June and the first half of 2019:

  • The Dow Jones Industrial Average rallied 7.2% this month, notching its best June performance since 1938.
  • The S&P 500 posted its best first half of a year since 1997, soaring 17.3% and posting an all-time high.
  • The Semiconductor ETF (SMH) notched its biggest one-month gain since September 2010.
  • Gold surged more than 7% in June, its biggest gain since June 2016.
  • Oil gained more than 9% in June.

As I write this article on July 1, the S&P 500 has achieved another new all-time intraday record. The move higher was powered by comments coming out of the meeting between President Trump and China’s President Xi Jinping. It was announced that the two countries had agreed to stop escalating the ongoing trade dispute (for now).

Bespoke Investment Group provided the following analysis this weekend, after the close of the quarter and before today’s move higher:

“While we haven’t seen big legs higher over the past 18 months, the S&P 500 has still managed to make three all-time closing highs, which has extended the bull market to 10+ years in length.

“New highs are new highs, and they’re indicative of a market that still has upside momentum. As shown in the chart of the 200-day moving average for the S&P, the index is currently in an extended sideways consolidation phase, which it has seen at two other points since 2009. A one- or two-month leg higher above prior highs would start sending the 200-DMA higher again.”


Bespoke added this commentary this morning,

“It’s hard to imagine a stronger way to start off the second quarter. … While the news surrounding trade has been positive, the reality on the ground remains less optimistic. Manufacturing PMIs for the month of June continued to show weakness around the world … a busy week of economic data in the U.S. will go a long way in determining whether the market is correct in its pricing of 100% certainty that the FOMC will cut rates at the end of the month.”

FPI Research update

Except for small-cap stocks, represented by the Russell 2000 Index (+1.09%), equity markets finished the week slightly lower. The S&P 500 and NASDAQ 100 Indexes were down 0.29% and 0.75%, respectively. The main headlines closing out last week focused on continued trade uncertainty, anticipation about news from the G-20 summit, and suggestions from the Fed that coming rate cuts may not be as aggressive as investors would like.

Two of our top-performing strategies last week were Sector Index Rotation (+3.78%) and S&P Tactical Patterns (+1.39%). Both strategies are able to navigate the fairly flat markets well. Two strategies that struggled last week were Self-adjusting Trend Following (-1.55%) and Managed Income Aggressive (-1.39%). Both employed leverage throughout the week.



PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.  Inherent in any investment is the potential for loss as well as profit.  A list of all recommendations made within the immediately preceding twelve months is available upon written request.  Please read Flexible Plan Investments’ Brochure Form ADV Part 2A carefully before investing. View full disclosures.