“What do you perceive to be the greatest threat to justice, or the common good, in our modern economy?”
Scott Rae posed that super-simple and not-at-all-provocative question to the three speakers in our March 15 webinar on modern finance. Jason Myhre answered in part by telling a story from a conference he attended:
A very well respected figure, brilliant…was talking about his investment process up on the stage….He said, “I pride myself on not knowing what’s in our portfolios.” So, if you think about this for a minute, his job is to pick the companies for the portfolios. And he’s saying that he considers it a point of pride to not know the names of the companies that he’s choosing. Now, why would this be? He’s a quantitative investor, he’s a numbers guy. He factor investing. And he’s boasting because his process is so disciplined around that, that he actually will remove the names of the companies from the numbers before he sees the numbers, so that he doesn’t look at the numbers and have a mental association: “Oh, this is Amazon. This is Google.” He wants to make purely rational decisions on the basis of those numbers. I remember looking around the room just to see how his comment registered on the faces of the audience. And there was great admiration. And on the one hand, I think we can admire that level of discipline in one’s process. But haven’t we lost something really important when we’ve completely removed the loathsome “core business” stuff of investing, and just made it this, kind of, math problem to solve for the purpose of maximizing returns? And so I really do think…the biggest challenge to serving the common good through modern finance is if we sever the connection to human beings, and to treat finance as just solving a big equation where all the decisions are come down to, essentially, how do we maximize risk-adjusted returns rather than engaging in that real human discernment about what is good for the world and what is fitting with the beauty and goodness of creation.
The world of modern finance is complex, but theological educators – and anyone who cares about justice and the flourishing of the world – can’t let that keep us on the sidelines. We want to better understand the opportunities and challenges involved in modern finance, especially as the finance sector becomes an even more important part of the structure and functioning of our economy. And while in some ways we need to pay more attention even to the most simple and basic rules, like “don’t invest in obviously bad companies,” at a deeper level we need to cast a constructive vision for finance as part of God’s oikonomia of all things.
To provide an easy way for those without a financial background to begin exploring these big questions, we gathered three Christians working in finance, and set them loose to discuss it, with one of our longtime ON leaders serving as moderator:
- Jason Myhre, Eventide Center for Faith and Investing
- Mary Naber, Sage Stone Wealth Management
- Shane Enete, Biola University
- Scott Rae, Talbot School of Theology
Check out the full video from the webinar below, as well as a few passages from this insightful conversation.
Jason Myhre on Understanding the True Heart of Finance
We look at this stuff, and we think we need advanced training in finance in order to make sense of it, let alone bring our faith into the picture. But the good news is that if we can get behind all of this financial machinery, investing is actually something very, very ordinary and transparent and easy to understand…. I think that at its most basic level, investing involves a supply of capital to support business, in exchange for the rights to receive profits and growth. It really is this simple. Now, of course, we’re not investing in buildings. We think of a business, this is a management team, and relationships with customers, employees, suppliers, communities, the environment and our society. This is what investing is today. Now, there is complexity because, although this is at the bottom of it, we can often not invest in companies directly, but rather by securities on the stock exchanges or secondary markets. Many of us don’t pick those securities. We’re investing in funds where we’ve hired a fund manager to pick these securities for us. Some of us work with financial advisors who pick the funds that then pick the securities. And many financial advisors today are increasingly using what’s called model allocations, where the funds they’re choosing are actually chosen by another group. And so there’s a lot of different parties at play here. But none of this stuff changes the fundamental relationship to investing.
Mary Naber on How She Talks to Investors about Ethical Investing
After I talk about these different ways of shifting capital from “investment of the world” into “kingdom work,” the way I like to broaden the perspective of those I am privileged to meet or work with, I like to look at scripture….Jesus himself gives us the parable of the master and the stewards. He says that the steward is accountable to the master for how the wealth he’s entrusted with has been managed. You know, Jesus himself says it straight up, in Luke. So if you have not been trustworthy in handling worldly wealth, well, who will trust you with true riches? He doesn’t say, “if you have not been trustworthy in tithing 10%,” he says if you have not been trustworthy in handling 100% of what I’ve entrusted to you, who will trust you with true riches? And it means that there’s eternal significance in these opportunities to transition our capital….That is an act of stewardship. It’s an act of honoring and glorifying God. It has significance immediately today, in the way we’re able to love our neighbors we may never meet, through our investment, and the moral economic choices we’re making personally in our own 403b or 401ks or our own IRAs. We’re loving our neighbor tangibly today. We’re loving God today. And he says we have the opportunity to handle, perhaps, eternal treasures tomorrow.
Shane Enete on Innovations Expanding Access to Capital
There is a story of a young boy in Nigeria who had just a cell phone, and late at nights, he wanted to help solve a problem where people didn’t have enough water for hygiene….And so he actually spent a month learning the chemistry and chemical processes, and he developed a product that allowed people to completely be hygienic with a gel that didn’t require water. And he did this all late at night, on his little cell phone, learning this. And so he has this great product idea that would serve his community well. But in order for that to go out into the community, it requires capital. It requires money and finance, really is this need. How do we match people who have these incredible ideas, who have this incredible passion for serving, with the people who have the money? And so, finance in the beginning has always been conceived as, everyone kind of puts their money into the bank. The bank gives a certain amount of interest for access to that capital, and then is the gatekeeper that sends the money out into the community. But, unfortunately, a traditional banking model creates a huge swath of underserved people in the community, just because there’s a limited amount of gatekeepers and there’s limited access to those gatekeepers. And I think there’s just been this neat movement that we’ve seen in culture, really brought on by technology, that has allowed access to capital to grow and grow and grow.
