Claire inherited substantial wealth from her parents in the form of real estate and business ownership, both of which she was in the process of selling. Since she was due to receive a large cash sum, Claire needed a plan to diversify the proceeds and plan for her eventual retirement.
With limited personal investing experience, Claire wanted to learn more about strategies that could help her align her personal beliefs with her financial portfolio. Furthermore, she did not want to rush into a brand-new advisor relationship and expose her inheritance to excessive market risk and volatility. Instead, she wanted to make the right decisions to protect her wealth and sought guidance on how to select investments that would match her goals.
Was there a type of investment that would match her social concerns? What are ESG’s and could they better protect her from stock market swings? Would avoiding certain companies, such as tobacco and oil, negatively affect her returns? In which asset classes would ESG investments be most impactful to diversify her wealth?
After extensive dialogue to understand Claire as a person, her advisor at BWA introduced her to ESG investing and showed her how her investments could reflect her individual beliefs and support various causes. Aligning her portfolio this way sparked new enthusiasm for Claire. Her BWA advisor recommended that Claire invest a portion of her money in several mutual funds and select ESG investment vehicles to give her broad market exposure while also allowing her to support causes she is passionate about.
Claire’s diversified portfolio which included ESG investments allowed her to preserve her wealth amidst market volatility during the COVID-19 pandemic. Her wealth did not suffer the massive stock market decline as she was diversified across various asset classes, and she largely maintained the value of her inheritance.
When a person receives a large amount of wealth, it is common for their portfolio to need to be re-allocated to better match their goals and investment preferences. It is also becoming increasingly common to use one’s investments to support various causes, for example through ESG investments.
The challenge is to be able to create a well-diversified portfolio across multiple market sectors and avoid overweighting certain industries, particularly if one chooses to focus mainly on ESG’s.
At Bordeaux Wealth Advisors, we prepare financial plans for our clients to assess whether they’re on the right track for a comfortable retirement and if their portfolio meets their needs. For those who need to make changes, we propose recommendations regarding spending plans and a customized approach to reallocating the portfolio when necessary. We also help our clients manage and grow their wealth, educate them about new ESG investments, and offer personal advice so they can continue to apply their values to their financial portfolios.
