Research reveals the biases and barriers that stifle conversations about faith and investing between financial advisors and clients
3 out of 4 investors want advisors to understand their faith-based investing preferences. Skepticism and lack of awareness cause 9 out of 10 advisors to avoid the topic.
Today we released the results of research highlighting a largely untapped opportunity for financial advisors to strengthen their understanding of and service to their clients. The findings are based on a survey of 1,001 individual investors controlled for age, region and gender and 403 financial advisors across multiple distribution channels.
Whether and how faith may be considered in investment portfolios is a conversation that 75% of investors want to have with their financial advisor, according to the research report “Faith-based Investing: The conversation clients seek, The value advisors can add.” However, just 9% of advisors are willing to initiate such a conversation.
“This disconnect suggests that advisors run the risk of underestimating or ignoring what’s important to clients,” said Chad Horning, President of Praxis FundsTM. “But the research also explains why: Advisors are uncomfortable with the topic, have relatively low levels of awareness of solutions available, and lack confidence in the efficacy of those solutions. In short, they’re reluctant to engage clients on a topic they fear will not produce good results.”
Highlights from the research:
- 65% of advisors perceive a lack of client demand, interest and/or awareness.
- Just 59% of advisors are aware of faith-based investments.
- Advisors report a lack of product availability, doubt that investment performance results can be competitive, and believe that screening processes can be counterproductive to strong returns.
- Despite the biases and barriers identified, advisors and investors who are aware of faith-based investing share positive views on its benefits. There’s consensus in the data that faith-based investing empowers investors to feel a sense of purpose and fulfillment.
- Many expect faith-based investing to gain popularity over the next decade.
“Clients want to align their faith with their investments in order to create real impact,” said Mark Regier, Vice President of Stewardship Investing. “The broader availability of lower cost, liquid, tax-efficient faith-based ETFs can help raise awareness and prompt advisors to explore their options for serving these values-driven investors.”
Praxis is publishing this research in conjunction with its launch today of Praxis Impact Large Cap Growth ETF (NYSE: PRXG) and Praxis Impact Large Cap Value ETF (NYSE: PRXV). The two active equity ETFs track the CRSP US Large Cap Growth and CRSP US Large Cap Value indexes, respectively. The expense ratios for both ETFs are 0.36%.
“Now is the time to ask your clients about their thoughts on faith-based investing,” Regier encourages financial advisors. “Engaging clients about their values has the potential to build stronger connections, create a deeper understanding of the client, and demonstrate value by introducing them to an investing approach they may never have considered.”
The research was conducted by Bellomy Research in the fall of 2024.