Society investing – Good investments helping other Americans

When you were making investment decisions in the past, you were likely seeking ways to grow, preserve or protect your investments. You may have bought stocks, bonds, mutual funds or ETFs (that ultimately own various types of stocks and bonds for the most part). Have you ever thought of how that investment actually contributes to society? When you buy a share of Apple stock, does that money go to Apple? Unless the company is having a secondary stock offering, the proceeds would go to the seller of the security on the other side of the trade.

What about buying bonds? You are actually lending money to the issuers of the securities seeking debt much in the same way that you may have taken on debt from a bank to buy a house or car. If you are creditworthy, you have demonstrated enough financial stability to have credit extended with the likelihood of paying off the debt over time. Even when you buy a CD from a bank, or a Treasury from the U.S. Government, you are actually lending your money and receiving a small (and today that’s really small) amount of interest. Are you contributing to the economy, or simply looking for somewhere else to put your money other than a mattress?

What if you could effortlessly direct your money in a highly effective and methodical way to find qualified borrowers with strong credit scores and financial stability seeking to borrow a little money? What if you could identify responsible Americans that need money to reduce their interest costs of high rate credit card loans, or need money for home improvement, or need money for education? Let’s also hypothetically say that these borrowers may have outstanding loans for $10,000 at 18% with a credit card, but could consolidate that to pay it off in 3-5 years at a 14% rate? What if you were the bank, and could lend them money at 14%?

Now, let say there’s not only one borrower. What if there were 100, or 1,000 or 100,000 or 1,000,000 or more American borrowers?   What if, instead of giving them a bunch of your money, you could contribute a little bit across a bunch of loans, and essentially become the bank? What if this was automated so you would not be distracted by the daily activities of hundred of loans? Well, it’s here.

Let’s think about it a little further. How closely related is a loan for a debt consolidation related to the movement of General Electric or Google stock? How is it related to a 10 year treasury rate, or a municipal bond from Maryland? What about the relationship to gold or metals? What if those other investments had no bearing on the loans in which you participate? Well, they really don’t.

This is not a dream, it is a reality, and it has been going on under your nose for almost 10 years. It’s called peer-to-peer (P2P) marketplace lending. It is not only an investment worthy of part of many investor’s portfolio, but it is a socially aware contribution to America and Americans. What I am saying here is that not only is this a very compelling investment, but it also happens to go to help American families trying to improve their own financial situation. In fact, you may not be an investor reading this, you may be someone that either needs credit at more attractive terms, or know someone that may benefit from marketplace lending. It works both ways, because it mutually benefits both parties. The borrow pays less interest, but the lender still earns higher interest than other investments.

This is not an experiment; it is a fast growing industry creating real and tangible social and economic impacts for both borrowers and lenders. For me, I call it Society Investing. It feels good, and it is a sound investment for investors seeking to increase their income without a sacrifice of increased market volatility. Pick up the phone and call us. We love to answer your questions. Call Ethos Private Wealth at (305) 602-1000.

Here we are… it’s 2014, and I’ve got a New Year’s resolution proposal for the financial service industry: resolve to raise the bar!

If you know me, then you know how strongly I believe that we should raise our standards – whether it’s in the area of impartiality, education, client service or professional competency. We have a huge opportunity to distinguish ourselves by raising a very low bar set by our regulators.  It’s really easy to live up to low standards, and it is time that we take it upon ourselves to help the industry ascend from the depths that history has taken it.

Would investors object to higher standards? Would regulators object to higher standards? Let’s move to embrace a new and higher set standards – creating a community of excellence for those who wish to pursue the worthwhile efforts. We are in such a unique position to help investors, help ourselves and show true leadership in the industry where there is no clear current leader.

Education is one of the foundation elements to actuate a change. A good place to start is education around the safety of client assets, or custody. There are rarely conversations about this, and it serves as an important education point. Why not have conversations about control and separation? We are missing an opportunity to talk about checks and balances. We are missing a chance to educate clients around a subject that they are eager to hear about – keeping their assets safe.

But that’s just the beginning, and simply one element of attention. We can do much more, and we can be much more as a community.

Why should we continue to wait for Congress to establish regulatory requirements and mandates among wealth advisors, asset managers and third-party custodians. Our regulators have already demonstrated that they are not able to agree, and they continue to settle for mediocre standards. They may be contempt with that, but why should we? That simply does not seem “suitable” – nor does it help investors.

There are always some that will be satisfied with being so-so. But, we have a unique opportunity to do more than what is required, to build a higher expectation and establish a higher moral standard that can advance the industry. And, we can do this because we want to, not because we have to.

Sure, I always set a high bar. But, I’m not being so idealistic here that I think cancer can be cured with chicken soup, or that greed will be a thing of the past, or that honesty in the world will run rampant. What I do believe is that we hold the power to actuate change that can serve as a quantum leap in the industry. If not now, then when?