Should You Build Your Retirement Through Values Based Investing?

When planning for retirement, it’s easy to focus on savings and investing without considering values-based investing. But for many mass affluent investors—especially those with $500,000 or more in investable assets—there’s a deeper question: How can my money reflect my personal values?

That’s where values-based investing comes in. Also known as ESG investing (environmental, social and governance) or socially responsible investing, values based investing aligns your investment strategy with the causes you care about. Whether that’s protecting the environment, empowering women, not investing in private prisons and more, your financial plan for retirement can—and should—reflect what matters most to you.

What Is values based investing?

Values-based investing is a financial strategy that considers both financial returns and your personal social values. It includes your personal ethics, social beliefs, and sustainability goals as part of your investment plan.

Unlike traditional investing, which focuses only on risk adjusted returns, values-based investing also asks:

• Does this investment support companies I believe in?
• Am I avoiding businesses that conflict with my values?
• Is my wealth building the future I want to live in—or just chasing profit?

Many people assume they have to sacrifice performance to follow their values. That’s not true. A 2022 Morningstar study showed that sustainable and ESG (Environmental, Social, and Governance) funds can perform as well or even better than traditional funds.

Start Values Based Investing by Defining What You Care About

Before you can include your values as part of your your investment plan, you need to clarify what those values are. Consider what you want your money to accomplish—beyond growing your wealth.

Some examples might include:

• Faith – Avoiding investments in companies that conflict with your beliefs.
• Climate Action – Choosing funds that avoid fossil fuels or promote clean energy.
• Equity & Justice – Investing in companies that support racial, gender, and labor equality.

Organizations like As You Sow provide a sampling of some of the possibilities that can be considered in a portfolio through their Invest Your Values Tool. Not sure where to start? Write down the causes you care about, and discuss them with a financial advisor who understands this approach.

Design Your Investment Plan Using Values Based Investing Principles

Think of your investment plan like designing a house. You wouldn’t hire a builder without first describing the kind of home you want. Similarly, your financial team can’t help you align your retirement with your values unless you tell them what those values are.

Let’s say you care deeply about sustainability. You may be willing to invest in green construction, even if it costs more. The same logic applies to your investments—you might choose ESG mutual funds, exchange traded funds or direct indexing options that reflect your climate values, even if they differ slightly from traditional benchmarks.

Values Based Investing Tools to Align Your Portfolio With Your Beliefs

You’ve likely heard of socially responsible investing (SRI) and ESG investing. These are often the frameworks used to implement values-based investing.

Options include:

• Mutual Funds and ETFs that avoid controversial sectors or favor sustainable businesses.
• Direct Indexing, which lets you customize your portfolio to exclude specific companies or industries and harvest tax losses—a strategy you can explore further in this Forbes article on tax loss harvesting.
• Impact Funds, which focus on measurable positive social or environmental outcomes.

Your investment adviser representative or stock broker (registered representative) can help you explore which of these tools align with your financial goals and your vision for the world. To understand what registrations advisors you may be eavaluationing have, you can check credentials through FINRA.

Make Values Based Investing a Team Effort With Your Financial Advisors

Not all financial advisors are knowledgeable or experienced in this area. Some advisors carry the Chartered SRI Counselor (CSRIC) designation. While certainly a signal of knowledge it does not mean that only advisors with that designation are knowledgeable. You may consider looking for one of InvestmentNews Advisor of the Year, ESG/Responsible Investing, Excellence Awardees, 2025 and 2024.

Another potential challenge is that not all broker dealers allow their advisors to sell all funds. For example, Charles Schwab allows some funds that Ameriprise does not. Each company has its own reasons. That should help you know that you may not be getting a full picture of your options. It can also narrow the viewpoint of advisors not exposed to more options.

Do a Values Based Investing Checkup Before You Retire

Ask yourself:

• Have I established my risk adjusted return targets?
• Have I clearly written down my values for which I may elect to or not invest in?
• Do my current investments align with those values?

If the answer is “no” to any of these questions, now is the time to take action.

How Values Based Investing Can Empower Your Retirement Strategy

For mass affluent individuals, retirement isn’t just about reaching a number. It’s about living with purpose. You’ve worked hard to accumulate wealth. Don’t let your investments undermine the values you’ve built your life around.

Whether you’re a Baby Boomer entering retirement, a Gen Xer planning your next chapter, or a Millennial thinking long-term, values-based investing allows you to grow your wealth while building the future you want to see.

And perhaps most importantly—values based investing allows your money to stay in alignment with who you are.

Helpful Resources:

1. Morningstar ESG Fund Performance Study
2. IRS Guide to Charitable Contributions
3. FINRA Guide to Financial Professionals