To effectively advocate for new offerings through your employer-sponsored plan, first build a coalition of peers and interested co-workers inside your company. Your voice will be much stronger as a group. If you’re writing to someone in power, advocating on behalf of 10 or even 20 people carries a lot more weight than just one. One way to spur interest would be sharing the results from your Tobacco Free Funds search among fellow employees. All plan participants are offered the same basket of mutual funds as you are, so they are probably asking the same questions right now.
The 401(k)/403(b) plan administrator, manager, or coordinator should be known if you are a plan participant, and that’s where to start. There could also be a chief sustainability officer or employee engagement manager, and those could be good resources. An effective method is to go to the LinkedIn pages of those people and find who might have some sympathy for the cause. Do any of them volunteer or have connections with organizations concerned with climate change? Look for indicators that they’re friendly to sustainability and start contacting them in order of their friendliness. In a publicly listed company with more structure, a coalition is vital to signal to managers that it’s an important issue for many employees. If it’s a smaller company, the CFO or CEO could be approached directly. In a mid-size or family company, a family member could be more influential.
The usual starting point in these conversations is: “We want to reduce the future risk of our 401(k) fund choices. We also want to invest in a healthy future. How can we enhance our 401(k) choices to do so?” Here are the criteria. Getting three new fund choices added to the list of the existing 15-30 is a formal process, and could take a year to be added. Larger companies often have some form of investment committee, which engages an investment advisor. There may be some funds in your plan that you see contain only one tobacco company or movie studio. You could ask the plan administrator to call the fund manager and say, “Is there a substitute for this one tobacco company? If you made one change you would be tobacco free!”
If the investment advisor and plan administrator refuse to help in swapping out some tobacco heavy funds for some tobacco free funds, you may need to get fellow employees to sign a petition requesting the change and send it to the investment committee. If you are told, “But you’ll make less money if you’re not invested in tobacco.” You can say, “Actually, tobacco is a risky investment. We want to diversify, and be part of a healthy future.” (Check out this statement on tobacco divestment from the California State Treasurer.)
It’s much easier to divest and reinvest; it’s your money, and your financial advisor works for you. You just need to have a meeting to discuss what you have learned about your holdings and how you would like them changed to align with your values. An investment professional will advise you of potential risk and you can make your own decisions.
You can trade your own portfolio, or tell your manager to do it. They may push back and tell you that you’ll make less money. Again, you can reply, “Maybe, but it’s my money, I want less risk, and tobacco is a risky business.” It’s financial advisors job to make you money, so you should drive home the point in no uncertain terms. Ask for help finding the best choices. The advisor may say no if you tell them to invest in a specific fund because it has a short or rocky history, so you may need to be patient as they find a better alternative. The goal is to remove the risk, not a specific fund; focus on risk, especially future risk, as well as returns. If they’re being lazy or unwilling to help you with this transition, find a new advisor. If your broker is tied to a big-name brand, they may only be able to offer products that the particular company has approved. If you want innovation, you might need a new advisor.