Leading Robo Advisors for Socially Responsible Investing

Daniel Penzing
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How Can Robo Advisors Make SRI Easy?

Robo advisors are a great source of socially responsible investing (SRI) opportunities. They're cost-efficient, they don’t manage investments, so they don’t charge a management fee, and they're typically overseen by a registered investment advisor. This makes them ideal for portfolios that are made up exclusively of SRI investments.

But robos aren't the only way to find SRI investments. Traditional individual retirement account and 401(k) platforms also provide access to SRI funds.

Robo advisor platforms, like Betterment and Wealthfront, often make it easy to add SRI funds to your portfolio. You can even tailor your risk profile to access socially responsible investors by committing to specific risk factors.

Betterment and Wealthfront identify several different types of funds that fit into the SRI category:

  • Green funds invest in stocks that meet specific environmental standards
  • focus investment in sustainable industries
  • avoid holdings in sectors that harm the environment

These funds seek to produce returns that outperform traditional investors without sacrificing the environment, so they're especially popular among environmentally-minded investors. While these funds may be less aggressive than some traditional investments, they can still experience some level of volatility.


Personal Capital

Personal Capital is a web-based accounting software that focuses on investment accounts. This program allows you to analyze your income, assets, and expenditure all in one place. Personal Capital helps you to realistically plan for your future by creating goals and taking concrete steps to meet those goals. Personal Capital makes it their mission to help users define and achieve their financial goals. They want to encourage their customers to become better investors by making it easy for them to invest in a responsible and socially responsible way.

Personal Capital was founded by Bill Harris, who is a veteran entrepreneur from Silicon Valley. His resume includes time as the founder of Go Computer and the creator of WordPerfect. His days of computer software are behind him, as he has put his focus on socially responsible investing. He has teamed up with a host of other experienced social investors and founded Personal Capital. They are now disrupting the system by helping millions of their customers invest more responsibly. They have also simplified investing by eliminating most of the paperwork and stress.

Personal Capital is different from a lot of other wealth management companies because they are truly independent. They have no proprietary products or hidden fees. They use technology and online software to make investing easier and more efficient. They want their customers to save on banking fees and make more educated investment decisions.



Ellevest was founded in 2015 by former Wall Street expert, Sallie Krawcheck. Ellevest caters specifically to women and analyzes their reasons for making investment decisions. It has three financial products “ one is for retirement, one for women with start-ups, and one for women who want to earn more. It offers customers financial advise and tools through its patented process that culminates in the financial blueprint that is customized to the wants and needs of each woman. Ellevest also provides relationship coaching, career counseling and leadership coaching. It strives to make the women who work with them more financially independent, not just for retirement but for life.


Warren Buffett once said: "Lending to the poor is a very good thing. That doesn’t mean you want to buy stocks from the poor. When you ‘lend’ money, you want collateral. And when you ‘buy stock,’ you don’t want a darn thing! If you understand these two things, you literally cannot go wrong on an investment."

The idea of ”lending” money and ”buying stock” may be a bit confusing for non-investors. However, Buffett is reminding us of the difference in risk between different financial products. When we lend money to someone, we want that money back. We want it back in full, with interest. If the borrower can’t make payments on time or fails to pay back the full amount of the loan, the lender may choose to repossess the collateral, or in this case, take back the mortgage.

What Is Socially Responsible Investing?

Socially responsible investing, also known as impact investing, describes a certain style of equity investment aimed at generating both financial and social outcomes.

It is a type of investing that has a measurable positive social or environmental impact alongside a financial return.

It is often confused with socially conscious investing which refers to investments in corporations that are widely perceived as being unethical or unethical. Socially conscious investing also has a social component but not financial one.

Some people assume that environmentally investing or investing in clean energy is a type of socially responsible investing.

But this is not the case because the ultimate goal is to make a financial profit.

Investing in environmentally conscious companies does not change the focus of investments on profit.

Socially responsible investing is about investing in companies that benefit society.

It is more about making a profit than making a difference.

The main purpose is to make the company do business in a way that benefits society.

Many socially responsible investors are focusing on a few sectors.

For example, they may be investing in the health sector or the green technology sector.

Investors may be looking for companies that are involved in renewable energy technology, sustainable agriculture, or the health industry.

Other areas of interest include companies that make socially responsible investments, pay dividends or have a charitable attitude.

Companies that receive socially responsible investment include those that have social, environmental or corporate governance concerns.

First Step: Define What Socially Responsible Investing Means to You

Socially responsible investing is a term that’s a bit nebulous. Different people can have different definitions of the term, and for some, it’s just a matter of putting SRI funds in their portfolios. But if you are looking for a more sustainable and harmonious financial future, socially responsible investing comes with an important caveat – one that’s difficult to recognize at first.

You’ve got to define what you mean by socially responsible investing with precision if you want to achieve success with your portfolio.

Essentially, socially responsible investing involves positioning yourself to win financially when the world is a healthy, harmonious place. So, if you define socially responsible investing as investing in companies that respect workers, the environment, and the community while simultaneously maximizing your performance and minimizing your risk, then you will likely want to go with socially responsible mutual funds.

If, on the other hand, you define socially responsible investing as taking a hands-off approach to the markets so you don’t have to engage with companies that coerce, abuse or exploit their workers, then you should consider investing in socially responsible stock ETFs. Other socially responsible investors might pour their money into socially responsible municipal bonds or socially responsible mini-bonds.

The Downside of Socially Responsible Investing

`Socially responsible investing, (SRI) is investing in funds that refrain from investing in companies that do not adhere to your religious beliefs, morals, or otherwise ethical considerations.

It is generally agreed by most industry players to be a good idea, however in practice is can be prone to some serious issues that are important to be aware of before you make any financial decision, particularly if this is a long-term one that will involve your retirement or similar.

Some small market players are more focused on profitability, then they are on ethics. This is quite a significant issue with social investing, in that the companies that are ones that fit your ethical profile may not really be good investments.

Socially Responsible Investing is not for the dedicated or faint of heart. The same reasons that make socially responsible investing so attractive in the first place also make it difficult. It's a combination of factors leading to certain financial loss if you aren't sufficiently well-versed in the initial subject material.

On the whole, socially responsible investing can provide you with a better world, if you take the time and research to find those companies that are really out to improve the world around them, and thus have a better chance at staying profitable in the long run. There are a number of investment platforms that allow you to do this with a touch of a button.

Socially Responsible Investing Funds

Investing with a conscience has been around for some time. The concepts of socially responsible investing come from several different perspectives, including religious, ethical, social, and political. Social investing is the idea that investment decisions should consider how the company is behaving in its community or the environment at large, as well as profitability.

Socially responsible investing may be of particular interest to Boomers and Seniors because they may have more to spend or financial independence to spend it with, but not always the investment horizon to make their nest egg last through retirement.

The 2010 study "Who is Doing Socially Responsible Investing Today?" published by LIMRA showed that Boomers and seniors are very interested in socially responsible investing and had increased their investment allocations as a result. Conducted by the Life Insurance and Market Research Association (LIMRA), the study showed that, of individuals with a socially responsible investing (SRI) investment policy since 2006, Boomers and seniors increased their SRI allocations to be 10 percent of their investment portfolio. Additionally, half of Boomers stated that they would be willing to spend more on an SRI product than they are currently spending in order to adhere to their values-based investment choices.

So as Boomers and seniors age and encounter retirement, they have more money available to be invested, and they are increasingly interested in investing ethically. This may be a ripe opportunity for socially responsible investment.

DIY Socially Responsible Investing

Socially responsible investing and social impact investing have come a long way from its humble beginnings. According to recent surveys, over ten percent of the investors in the USA are now working on socially responsible investment strategies. DIY Socially Responsible Investing.

Socially responsible investing is being used as a tool by investors who are interested in creating positive social and environmental change by professing that the way that the money in the market is being invested and how it is being used is more important than the profit that can be created.

Over the years, this strategy has also been used as a means to foster responsible corporate practices by financial institutions by ensuring that their investment practices are rooted in a deep commitment to reach and maintain social and ethical standards. DIY Socially Responsible Investing

The best robo advisors for socially responsible investing help you create a balanced portfolio that is in tune with your own values and helps you reach your financial goals.


Robo advisors and ETFs generally have the lowest fees of any investing service online, and they can be a great way to build a socially responsible, low-cost portfolio.

All of these websites have the option of setting up an account that will automatically invest in companies that pass certain screens for the best combination of profitability and social responsibility.

Two excellent benchmarks to keep in mind when building your portfolio are the KLD 400 Social Index and the Domini 400 Social Index. These indexes screen for financial performance and social responsibility. You can buy shares of both indexes through low-cost index ETFs from Vanguard.

Here are some of the most promising robo-advisors:


Wealthfront is an SEC-registered investment advisor and currently offers two investment accounts – an individual and a joint account. Both accounts can be set up to automatically invest in low-cost ETFs selected by Wealthfront based on your risk tolerance, time horizon, and goals. Their portfolio focus is on low-cost ETFs.