Why advisors should consider a CSR program

Headlines portray the financial industry embroiled in lawsuits, engaging in wrongdoing, paying huge settlements. Recruiters are finding that younger jobseekers are heading to other industries instead – even while the financial industry is aging as advisors retire. What is a retirement advisory to do?

Consider creating a CSR program, said financial industry panelists in a recent webinar from the National Association of Plan Advisors, sponsored by Nuveen. As you might already know, “CSR” does not stand for “customer service representative” or “client services relationships” – useful in their own right, of course — it stands for corporate social responsibility.

Some distill it down to “responsible business” or “good corporate citizenship” or “business accountability.” Wikipedia dries it up even more by calling it “a type of international private business self-regulation.”

You might think of it as a way for a company to effect positive change. Or you might think of it as your firm’s relationship with the community and environment around it.

Beyond the numbers and dollar signs, isn’t that what your business comes down to – relationships?

“It matters to clients,” said Jason Chepenik, managing partner of Chepenik Financial. “Clients are looking for a cultural fit. ‘Who’s a good partner who has the same cultural dynamic?’”

Besides clients and prospects seeing your firm engaged with the community, “it improves employee engagement,” said Kathleen Kelly, managing partner of Compass Financial Partners. Younger generations want to be part of something bigger, beyond profit-making – “They want a purpose-driven workplace.”

“Every Fortune 500 company has incorporated corporate social responsibility. It’s inevitable. Advisors need to understand and get out in front of this,” said Brendan McCarthy, DCIO national sales director at Nuveen. “The advisors incorporating this are seeing great success in recruitment.”

But keep in mind, corporate social responsibility is much broader than just philanthropy. It includes governance, community, diversity/inclusion, and sustainability, McCarthy said. For example:

• Governance: Holding and adhering to consistent policies; obeying rules and regulations.
• Community: Making a difference in your part of the world.
• Diversity/inclusion: Making efforts to employ teams of diverse people and be inclusive.
• Sustainability: Making a positive impact on the environment.

“No idea is too big,” said Chepenik. His firm’s creation of an event called the “4.01k Race for Financial Fitness,” which it now licenses for others to use in a philanthropic manner too, started “by accident, as a wellness initiative.” But it doesn’t have to be financial, he said. “If you love the arts, support that. Then tell people about that, so they can get inspired too.”

Corporate social responsibility involves “looking at what areas you have a genuine interest in and are supportive of,” said Kelly. She was in Girl Scouts from the second grade on, so it was natural for her firm to get involved with that organization, she said.

And like Chepenik, she too did “accidental CSR” as many firms do, quietly supporting organizations or causes without calling it a strategy or program. Kelly started an annual luncheon over a decade ago as a thank-you to clients and prospects. Since it was near Christmas, they partnered with Toys for Tots to collect donations. She added a different inspirational speaker each year, as well as including people from the Marines Corp to speak. “Clients are very engaged with it,” she said and start talking early about who this year’s speakers might be.

“I wouldn’t have called it CSR at the beginning,” she said. “Historically, financial advisors are very involved and engaged in our communities, and it’s just putting a name on it.”

Which leads to another matter – “A lot of people aren’t incorporating their CSR activities into their firm’s story or brand,” said NAPA’s Nevin Adams. Often it feels like bragging to mention such activities.

It’s not, said McCarthy. “The mindset that calls it bragging is past, thanks to social media. And social media is one way to get that story out there.”

Even with the more business-oriented LinkedIn platform, Chepenik said, “People want to see personal and relatable things and CS is one way to relate to others.”

And what about RFPs? Should CSR be mentioned as you go through the RFP process? Yes, the panelists said. “We try to weave it in where logical. It provides a common thread of interest,” Kelly said, especially if the business owner also supports that area.

“Ask the question of your prospect or committee” about what CSR initiatives they support, “and they light up,” said Chepenik. “Not a whole lot of advisors are asking that question.”

One important caveat all three mentioned: CSR has to be real. “It can’t be faked,” Chepenik said. “This is for those who want to commit time and treasure.”

“Groups are out there trying to catch companies ‘greenwashing,’” McCarthy said – trying to expose companies pretending to have a commitment to, in this case, the environment and sustainability, but not actually walking the talk. “Make sure it is authentic.”

There are many examples online of companies and their CSR programs, many well-known, many not so well-known but interesting to see how they dovetail with a company’s mission. As with any initiative, there are certain pitfalls to avoid besides a lack of authenticity.

But bottom line, “I want to be a partner. I don’t want my clients to see me as a vendor, but a partner,” Chepenik said. “CSR is a great way to build on that.”

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