Guide to selecting a faith-based financial advisor in Texas

Faith-based financial planning/investing focuses on integrating your religious beliefs into your investment approach. The process can increase your comfort level with the financial planning process by closely aligning your faith and your finances. The approach retains the core principles of financial planning/investing while adding in the element of faith. Financial advisors, such as PAX Financial Group, who support this approach offer services such as investment management and planning for retirement or other major goals in conjunction with faith-based parameters.

Those who practice faith-based investing typically seek to invest in harmony with their religious beliefs by avoiding the purchase of securities of companies that engage in activities contrary to those beliefs. It can also involve proactive measures to purchase securities in companies that engage in business activities supportive of such beliefs. Essentially, faith-based investing involves aligning your beliefs with your financial planning and investing.

While the approach is similar to other investment strategies in that it involves seeking to identify and invest in profitable investments, individually or in packaged products, faith-based planning/investing doesn’t make return the sole criteria for making investment or planning decisions. From an investment standpoint, the idea is to generate returns while building an investment portfolio that doesn’t conflict with your religious beliefs. The investment securities chosen by this type of investing are often classified as ethically, religiously, or socially responsible investments.

The concepts of faith and money are not necessarily mutually exclusive. There is no reason you can’t be both faithful to your beliefs and successful financially. The intersection of faith and money centers on investing and planning in a way that makes sense both from the standpoint of your faith and your finances. The goal is to enable you to successfully plan for your financial future in a way that is compatible with your beliefs.

To accomplish this, comprehensive financial planning – including insurance needs, within the context of investing and planning parameters based upon your faith, can improve your chances of attaining your objectives. This approach centers on considering how each of your financial goals impacts each other and your finances as a whole. For instance, you may be saving for retirement at the same time you are setting aside money to fund a child’s college education, while also funding insurance and donating a portion of your earnings to religious or charitable causes.

The amount you set aside for each of these goals individually is likely to impact how much you can contribute to other goals. At the same time, under a faith-based approach, the investments being considered are evaluated for both their investment potential and compatibility with your beliefs.

Comprehensive planning can boost your ability to reach your goals because it helps you gain an accurate picture of how realistic your chances of achieving those goals are. This enables you to make any changes necessary to improve your chances of reaching them, whether to increase the amount you save or to change your investment approach – or to select more achievable goals. Comprehensive financial planning takes into account multiple planning criteria to help you plan for a variety of goals by keeping track of how funding each of your goals impacts your overall financial position.

For instance, if your goal is to retire with enough money to travel on a regular basis, you will likely need to set aside more in savings than if you planned to pursue a less expensive hobby in retirement – such as gardening, fishing, or playing board games, to cite some other popular but generally not as expensive avocations. What if you also wanted to buy a second home in retirement, such as a vacation home at a resort locale?

To achieve this goal as well, you would likely have to set aside even more in savings. If this is difficult to do given your current income, you might have to pick between the two goals or find a way to increase the return on your retirement savings. Because all of these factors impact your overall financial planning, taking a comprehensive approach to the process, in harmony with your beliefs, is important to improve your chances of achieving your financial goals.

In many ways, faith-based financial planning does not differ from ‘regular’ financial planning. It also focuses on identifying your financial goals and determining how much you need to set aside in savings, and how those savings should be invested, in order to reach them. Where it departs from regular financial planning is by adding faith-based criteria when selecting investments and making planning decisions. This can include excluding certain investment classes on faith-based grounds or setting aside funds to support your beliefs, among other approaches.

The key difference is that faith-based financial planning treats your religious beliefs as a significant, rather than a subsidiary, factor in the planning process. Rather than basing a plan purely on financial considerations, taking a faith-based approach involves placing significant emphasis on your beliefs as well. This includes considerations related to how the companies you invest in make money and whether the activities they undertake in the course of doing business accord with your religious beliefs.

A major benefit of faith-based investing is that it harmonizes your financial planning and investing with the values you use to guide your life. This avoids conflicts between your beliefs and your investing and financial planning, which can cause doubts and regrets that lead to investing becoming a chore or something to be avoided, rather than a worthwhile, profitable activity.

While it may be possible to invest according to your religious beliefs with any financial advisory firm, a financial advisory firm, such as PAX Financial Group, can offer services tailored to pursuing a planning and investment approach aligned with your beliefs. This makes it easier for you to build a customized plan for investing in accordance with your beliefs. A firm focused on faith-based investing can typically offer a variety of investment options of this type, enabling you to pursue the approach which most closely suits your beliefs. An advisor who understands both your investment goals and your faith can connect with you on a higher level due to shared beliefs. This can help when it comes to both creating goals and developing a plan to achieve them. A faith-based advisory firm typically offers all of the traditional financial planning and investing services along with the ability to help harmonize your investment posture with your beliefs. Working with an advisor at a faith-based advisory firm can result in more detailed and easier conversations about defining your goals as well as how to go about achieving them. An advisor who understands your values is likely to be better equipped to help you design a financial planning and investment strategy that is right for you. For example, this might include an interest in charitable giving, or in excluding certain types of companies from your investment portfolio. Such an advisor can help you select a strategy that complements your values and fits your financial situation. By working with a faith-based advisory firm, you are more likely to find an advisor who regularly counsels investors on how to pursue such strategies and has the experience necessary to help optimize your efforts in this area.

Faith-based investment principles focus on more than simply maximizing investment return. They add to the equation considerations pertaining to how money is made, rather than simply how much is generated. They generally accord with the main precepts of a particular faith. For instance, so-called “sin” stocks, representing companies that earn their money from businesses such as gambling or the sale of alcohol or tobacco products, are often restricted in faith-based investment accounts because they contravene the principles associated with different faiths.

These principles will differ depending on the faith, but some common threads are activities focused on helping support values that encourage reducing poverty, protecting the environment, or benefiting the community. One faith-based investment strategy is known as biblically responsible investing (BRI*). An advisor who offers this type of approach might, for instance, suggest investments in companies that give back to the community while discouraging investments in companies that pursue activities that are seen as harmful to society.

Industries that are favored by faith-based investing programs may include:

• Clean energy firms
• Firms that promote fair labor practices
• Environmentally-friendly operations
• Companies with community-supportive policies

Industries excluded from such programs may include:

• Gambling
• Tobacco
• Predatory lending, such as payday lending
• Unfair labor practices
• Fetal stem cell production or usage
• Human rights violations
• Adult entertainment
• Weaponry

When designing your financial plan/investments to align with your faith, there are a variety of options you can choose from. One approach is to focus on investing in companies that conduct business in a way that fits your beliefs. Another approach is to exclude certain types of investments, for example, companies that sell alcohol or cigarettes, or arms merchants. Once you’ve selected criteria for selecting investments in line with your faith, the next step is to choose what type of investment classes you’d like to work with. This can encompass assets such as individual stocks, mutual funds, ETFs (exchange-traded funds), bonds, etc. It’s also important to apply traditional financial planning concepts such as risk tolerance and your time horizon when evaluating what investments are right for your portfolio. If you work with a faith-based advisory firm, they can help you determine how best to screen for investments that align with your faith. Do-it-yourself investors can use different online sites to research investments to find those which best fit their beliefs. Some packaged investments such as mutual funds and ETFs are designed with moral considerations in mind that may correspond with your faith. Funds of this type are often designated ESG to indicate that they consider environmental, social, and governance factors in selecting stocks. Additionally, various faiths publish lists of investment criteria to be used as guidelines when making investments. If you invest in a packaged product like a mutual fund or ETF, it’s important to check the expense ratio of the fund to see if it is competitive with similar offerings. Fee comparison should also be performed when working with an advisor.

Faith-based investing is designed to follow traditional investment principles such as evaluating risk tolerance and investment time horizon while incorporating parameters that account for a person’s religious beliefs in the process. The goal is to earn returns sufficient to meet your goals while utilizing guidelines derived from your beliefs to screen the investments used to meet those goals. As previously noted, taking a faith-based approach does not mean abandoning traditional planning concepts related to risk tolerance and the time value of money, nor does it prevent you from achieving financial abundance through your investments.

A typical faith-based investment portfolio can provide significant portfolio diversification and the opportunity to take advantage of the benefits of investing in a variety of asset classes. This includes investments in the stock market, which have, on average, provided higher returns than more conservative investments such as CDs and bonds over the long run.

If you are investing for retirement, growing your savings is often a crucial component to preserving your lifestyle after you retire. Most retirees live on fixed incomes, which can subject them to purchasing power risk in the event that inflation picks up while they are retired. Investment growth is vital to improving your chances of earning enough while you are working to build up sufficient retirement savings to provide a buffer against inflation.

If you are looking to grow your savings for retirement planning or other purposes, faith-based investing offers numerous opportunities to achieve growth. Because the criteria which typically accompany faith-based investing (community-orientation, ethical treatment of workers, environmentally supportive, etc.) can be seen among many growing companies, investing in such companies can be appropriate for investors seeking growth of capital for at least some portion of their investments.

The number of investment securities of all types which can be grouped under the faith-based investing umbrella is large enough to build diversified portfolios that fit your preferred investment approach, of whatever type. This includes investing for income rather than growth via investments in bonds, CDs, and real estate – assets that are typically less volatile than equities (stocks).

Generally speaking, investors planning for retirement will focus more on growth-oriented assets the further they are from retirement while becoming more conservative as they get closer to and enter into retirement. The reason for this is that as a person gets closer to retirement, they have less time to recoup any losses their portfolio may suffer if a bear market occurs. Thus, for such investors, choosing a less growth-oriented portfolio allocation is typically the recommended approach.

Additionally, once you enter retirement, you are likely to need to generate at least some income from your investments, in addition to any pension plans, annuities, Social Security payments, etc. that you have coming in. Thus, placing some portion of your portfolio in income-generating assets is typically warranted for this purpose.

If you are seeking a faith-based advisor in Texas, there are a variety of criteria to consider. First, ask if the advisor offers faith-based financial planning/investment services. It’s one thing for an advisor to share your faith, and another to actually incorporate faith-based principles into the financial planning and investment process.

Another area to look into is whether the advisor is familiar with and follows biblically responsible investing practices. This approach enables an advisor to help align an investor’s investment approach with their faith. BRI focuses on using religiously based moral and social principles for making investment decisions.

It’s also important to look for an advisor whose approach to helping clients meet their investment objectives fits your needs. For example, an advisor who focuses on long-term financial planning rather than short-term trading is likely to be a good fit if your focus is on saving for retirement or other long-term goals.

Another factor to consider is whether the advisor is a fiduciary, which requires that any advice they offer to be based on what is in your best interest. This standard is generally considered more rigorous than the suitability standard, which simply mandates that an advisor recommend investments that are “suitable” for you.

Fiduciary advisors are typically compensated via fees linked either to account value or an hourly rate, rather than commissions. Advisors charging commissions can face a conflict of interest as the more trading they do in a client’s account, the more commissions they generate, even if this is not in the client’s best interest.

An AIF® (Accredited Investment Fiduciary®) is an advisor who has completed extensive training in managing investments and providing financial advice as a fiduciary. Working with an AIF® provides you as an investor with the peace of mind of knowing that your advisor has been trained in all the skills necessary to perform their role as a fiduciary.

As a fee-based fiduciary, PAX Financial Group charges no commissions in order to align our practice with our client's best interests. We focus on helping you get clear on what you really want out of your future. We offer faith-based planning and investing services designed to help you determine where you’re starting from and design a plan to get you from there to where you want to be.

We continually work together with you to keep you on track with your dreams. In fact, we’ve developed an entire system to help you pivot successfully to the next chapter of life. Whatever retirement looks like for you, we’re here to help you live your best life. We use a committee of experienced specialists, so there’s always more than one pair of eyes watching your money.

To schedule a no-obligation consultation, contact PAX today!

*Biblically Responsible Investing(“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high-performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome.

PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology.