Can You Trust Your Money Managers?

By Steve Moore, Founder, Committee to Unleash Prosperity

Every American wants to live comfortably in their old age. Many of them plan for it by investing in various retirement mechanisms over the course of their working lives.

Unfortunately, financial literacy being what it is today, too many Americans turn their savings over to large investment houses that are using their power in the marketplace to push for political or societal change rather than focusing on decisions that will produce the greatest possible return for the millions of people who have entrusted them with their money.

Before Joe Biden became president, money managers were supposed to consider their fiduciary responsibility to their investors above all else. The current administration has weakened those rules – over the objection of Congress – to allow fund management firms the ability to give environmental, social, and governance concerns equal consideration to their responsibility to make money for their investors and shareholders.

The place where this is most obviously seen is in how these firms – which own 75% of the United States publicly traded companies – cast their votes in favor of special-interest shareholder resolutions that seek to require racial and gender equity in corporate senior management, order companies to divest their holdings in money-making oil and natural gas operations, and make investments in line with current progressive political trends rather than the opportunity to maximize the ROI.

Some people call this “ESG.” Others are starting to call it “patriotic investing.” By whatever name it’s known, however, it’s a raw deal for the small investor whose life savings in managed by gigantic funds.

The Committee to Unleash Prosperity run by publisher Steve Forbes and economists Dr. Arthur Laffer and Steve Moore, recently examined the proxy voting behavior of some of the nation’s largest investment firms as it pertained to their support for ESG measures. The results, which can be found here, may surprise you.

Some of the world’s biggest money management firms, companies you may rely on to take care of the money you ‘ll need to enjoy your golden years securely, may be undermining your interests by siding with those who want to use corporate America to affect social change.

We’re not against that if people want it, but the research shows that too many small investors have no idea how the proxy voting rights attached to the shares owned by these firms are being voted. They’re being used to push ESG measures which, the Committee study shows quite clearly, do not always produce the best return on investment.

We’re not telling you how to invest your money or with whom. That’s your decision. Any action you take is probably best done with the help of a competent financial advisor who understands all the nuances involved. What we are telling you is to be careful how you invest your funds and to make sure any firm with which you do business puts its fiduciary responsibility to you and your family ahead of any ESG goals.

The Committee graded the firms on their performance in this crucial area. Check and see how the company or companies that manage your money did. If they did well, congratulate them. If they did poorly, contact them and let them know you expect them to do better. The security of your retirement may depend on what you do.