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An Overlooked Piece of the “Move Your Money” Pie

Posted on the 16 November 2011 by Blab

An Overlooked Piece of the “Move Your Money” PieWritten by Rose Penelope L. Yee, Green Retirement Plans, Inc.

As we cheer for the Move Your Money campaign and as the call for it increasingly becomes more clamorous, let us also take a look at another piece of the money pie. For a lot of working folks, a big chunk of their life savings is held in their retirement plans at work, mostly in their 401K¹s or 403B¹s.  As real estate prices plummeted and home values spiraled downward, the old notion of the house being the nest egg is no longer true for most homeowners. Therefore, despite the rockiness of the markets, for most working people, retirement savings constitute the bulk of their financial assets.

It might surprise most to know that retirement savings in the 401K and 403B arena totalled $3.7 trillion in 2010. There are no metrics to determine how much of this amount is in sustainable and responsible investments. Anecdotally, from our experience, we know it is but a minute portion. Part of the problem is that most plan sponsors and participants are not aware that there are now socially responsible investment choices that can be made available in their retirement plans.

A retirement plan is like a three-legged stool with these essential elements: the investments, the platform and the advisor.

Investments: Socially responsible investments are one way that we can influence Corporate America’s behavior. Socially responsible investments seek to influence behavior by avoiding certain types of companies (i.e., sin stocks), investing in companies that further social justice, environmental stewardship and giving back to the community or investing in companies that are willing to consider changing (i.e., Calvert’s investment in Dell directly led to Dell’s creation of used computer parts recycling program).

Platform: The platform is where the retirement plan is housed. Participants check balances and make changes to their accounts on the platform. It is an encouraging sign that some retirement platforms now allow for what is called open architecture where a plan can include SRI’s in their retirement option mix. Social(K), a founding B Corporation member, is a leader in this field, providing over 250 socially responsible choices. A lot of platforms, however, still do not offer socially responsible investments and it is these that should be included as part of the Move Your Money campaign.

Advisor: It is important to choose an advisor who lives sustainable and responsible values, who has the experience and knowledge to help you choose amongst the myriad of available funds and who can guide you in creating the optimal plan for your company. Look for a socially responsible advisor who focuses on the retirement plan market. Such an advisor can guide you in plan design and implementation, choosing investments and writing the investment policy statement, serving as co-fiduciary in helping protect plan trustees from fiduciary liability and helping ensure that plan participants are as ready for retirement as possible.

As you contemplate ways of how you can make more impact, please consider switching your retirement plan to a socially responsible one. If you are not in a position to make this decision, talk to your HR person or the owner of the business. Ask them to move the retirement plan.  Make your 401K or 403B an integral part of the Move your Money campaign.

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