As I read Dennis Sun’s column about not wanting to be told how to invest by San Francisco, I couldn’t help but wonder how Alice must have felt at the Mad Hatter’s Tea Party when she discovered what she thought were the ordering principles of the universe are turned upside down.
First, the picture at the top of the column appears to be a homeless encampment. I’m not sure I see the connection between homeless issues and investment advice.
Second, what is the connection between wealth management advice and San Francisco? I realize San Francisco is the poster child for municipal mismanagement, as well it should be, but again, what does that have to do with ESG investment advice? I’m not aware of any leading investment firm, other than Wells Fargo, headquartered in San Francisco, and even if they were, so what?
The largest money management firms such as Black Rock, Vanguard, Fidelity, Goldman Sachs, etc. are all headquartered in places other than San Francisco. Trying to blame San Francisco appears to just be a convenient dog whistle for people inclined to share Mr. Sun’s views.
Third, Mr. Sun states “large and small wealth management firms PRESSURE (my caps) investors and financial advisors to only acquire investments based on the company’s environmental, social and corporate governance (ESG) politics or beliefs.” I’d like to know what Mr. Sun bases this claim on. I have investments with Bank of America, Stifel, Schwab and Morgan Stanley. Never once have I ever been pressured to base an investment decision on ESG. In fact, I’ve never even been asked if I want to consider ESG when making investment decisions. Investors may put pressure on wealth management firms to make ESG investments, but that is the exact opposite.
Fourth, all of these firms, and as far as I know, all major investment firms do offer ESG products. Does he think he and people who share his views should tell these firms what they should or shouldn’t have available for clients who may be interested in ESG investments? If he does, I’d have to ask if he doesn’t see a bit of hypocrisy in objecting to others telling him how to invest while at the same time seeming to want to tell others who have different views than his how they should invest.
Fifth, part of Mr. Sun’s message seems to be directed at who Wyoming hires to manage its investment portfolio. If Wyoming disqualifies an investment firm just because they offer ESG products, Wyoming is going to find it pretty difficult to find well qualified investment advice. That doesn’t mean Wyoming can’t instruct its advisors to ignore certain ESG considerations which they will do. Maybe Mr. Sun disagrees, but close scrutiny of the Governance of firms should be of paramount importance. The recent failure of the Silicon Valley Bank can be traced directly to poor governance. SVB management made a bad bet on interest rates and then the same day they were closed, paid bonuses to themselves.
Sixth, if Mr. Sun is really serious about this, I’d have to wonder if he is really willing to walk the walk. He is correct when he states “ESG has become a major issue of interest in the modern corporate world.” Is Mr. Sun willing to eliminate from his life products sold by companies that have adopted ESG policies? Most Fortune 500 companies have to some extent adopted ESG policies. Is he willing to stop shopping at Walmart? If he has any Apple products, is he going to get rid of them?
As with so many controversial issues a lot of people like to demagogue them. However, it tends to get complicated if you are willing to dig into the details with an open mind.
Kim Love, Sheridan
Editor’s Note: Columnists and reporters do not select photos which accompany their articles/columns, nor do they write headlines.