For Muslim investors who want their portfolio to reflect their values, investing is a bit more complicated than simply buying the S&P 500.
Fahmin Fardous joins Michael to discuss her expertise in crafting values-aligned portfolios for investors, as well as the rewarding nature of working with first generation immigrant families.
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Episode Highlights
- Overview of values-aligned investing and halal investing.
- Opportunities for disruption in the wealth management industry.
- The unique financial challenges and opportunities facing first generation Americans in 2024.
- Catalysts for growth of values-aligned investing in recent years.
- How a background in psychology translates to a career as a financial planner.
Today’s Guest: Fahmin Fardous, Zenith Wealth Partners
- Zenith Wealth Partners – Official Website
- Zenith Wealth Partners on LinkedIn
- Fahmin Fardous on LinkedIn
About The Uncommon Advisor Podcast
The Uncommon Advisor podcast features insights from advisors who are embracing a modern and holistic approach to wealth management. Learn how the most creative minds in the industry are innovating their practices to deliver superior client results, generate new business, and maximize retention.
Transcript
Michael: Welcome to the show. I’m Michael Johnston. Joining me today is Fahmin Fardous. She is a financial planner at Zenith Wealth Partners. Thanks for joining me today.
Fahmin: Thanks for having me Michael. It’s a pleasure.
Michael: So there’s a lot… You have an interesting background and an interesting area of focus. There’s a lot I want to dive into. I want to start with this idea of values aligned investing. Can you start at a at a high level for folks who aren’t familiar with that concept, what is values aligned investing and how does it incorporate into your practice?
Fahmin: Yeah great question. Thanks for asking. So values aligned investing really goes back to you know really truly your values right. So when it comes to you investing you might say yeah you know the S&P 500 is doing great. But I want to make sure my investments are staying more diverse. Like for example, there are some women who might say I want to invest towards women empowerment or supporting minorities or, you know, having strong racial diversity. So going into that is where like the values aligned investing comes in.
Michael: Got it. And I imagine there’s there’s a lot of different flavors of that too. For example, some people may have objections to cigarettes or pornography or there’s there’s various different things, right. Is that are those kind of different flavors of this bigger concept I guess.
Fahmin: Yeah. Yeah, absolutely. So, you know, I mean, some people are like, you know, I really care about clean water. Some people are like, I really care about, you know clean air or pollution. But then there’s another factor of it for specifically geared towards Muslims, which is like along the lines of halal investing. So halal investing really? I mean, what does halal mean? Let’s start with that. It’s it means like permissible. So halal is anything that’s permissible. But for Muslims what’s not permissible is interest or, you know, being in industries such as like, you know, as you mentioned, like alcohol, gambling, pornography or even just interest in general. So that’s when we talk about halal investments. That’s kind of where we dive a little bit more in. Like for example, you can’t we don’t necessarily invest in like the traditional bonds because the revenue from that is coming from interest. But instead we’ll invest in what’s called sukuk bonds, which are more international. But they come from more of like a profit sharing model instead of just like, you know, coming from a fixed income portion.
Michael: Got it. Interesting. So this seems this seems pretty challenging, right? Like if you if you think about the S&P 500 or a global or an aggregate bond fund I mean, a lot of these companies, they have arms in various, in various things. It seems kind of challenging to, you know, exclude, exclude these things. So what’s the approach for someone who says, these are my values? How do you help them build a portfolio? That is, I guess you’ve kind of got to hit two aims. You want to help them achieve their return objectives, but you also want to make sure that you’re consistent with their values. So at a high level, what’s your approach when when a client comes to you and says here are my values, can you help me build a portfolio that’s that’s consistent with this?
Fahmin: Yeah. You know, it’s a great point. So one portion is like, you know, there are clients who really want to insure their investments are values aligned, but they are not Muslim. Right. So that’s like much easier to do because you can go through a screening process. But then when they are like, yes, I want to make sure my investments are staying value aligned, but also making sure that, you know, it’s being combined, being a muslim, that’s when we have to kind of go into like a percentage mode where like, for example, like a company like Apple is, you know, is compliant for the most part. But then like they do have like a portion where, you know, they do have that, right, where they are getting some revenue from interest, but then they also have like Apple Music, which is not necessarily compliant. So that’s where we go into a percentage where up to 30% is a lot. So like 70% or more of the business has to be compliant. So they cannot have more than 30% coming in from interest revenue or they cannot have a company cannot have more more than 30% debt overall because also on looking back from an Islamic perspective, it’s also like companies that have less debt will tend to be able to stay more solvent in a more financial downturn position versus and be able to face the volatility that might come along.
Michael: Sure. Yeah. That’s a that’s a good point that there’s a in addition to a kind of a values aligned perspective of it, you can make the argument that, that these companies are better positioned for long term financial success. Do you see, do you see an increase in values aligned investing. Is this something that that is becoming becoming more and more popular? People are you know, I’ve heard the term like, you kind of vote with your vote with your wallet, right? Or you invest in the companies who have values that align with your own or the alternative of that. Don’t invest in companies whose missions you are offended by or don’t believe in or inconsistent with your values, do you? Is this becoming more and more popular? Is this something that is is on the rise?
Fahmin: Yeah, yeah. You know, we see it more and more. And another thing people I think always kind of struggled with is that they felt like, oh, you have to have tons of money in order to make sure your money is staying aligned with your values. And that’s not necessarily the case so much, especially at a firm like zenith where we don’t necessarily have any minimums. So we actually can cater and tailor our clients investments in a way where they feel like they’re making a difference where and they don’t have to sacrifice returns in order to stay aligned with their values overall. So it’s it is definitely on the rise. And when more and more people are finding out that this is an available option, so many more people are like, yeah, for sure, I want to do this. Of course I don’t want. My money going into, like, making weapons or, you know, I want to make sure that, like, fossil fuels aren’t part of my portfolio. And but they also don’t want to sacrifice returns. Right. So it’s not like, oh, you know, I don’t want to have like 3% return just to say a line. So that’s something that we’ve seen over time. And then, you know, it’s really nice to see that we don’t necessarily have to sacrifice returns in order to stay aligned with our values, too.
Michael: Yeah, I agree absolutely. Our, our I’m trying to think about how to phrase this question. Are people sometimes surprised at at what’s in their in their portfolio or what’s in like a broad based index like the S&P 500? And how much of it if they sit down and think about it, how much of it doesn’t align with their values? I’m guessing that could be a pretty eye opening analysis or conversation in some cases.
Fahmin: Yeah, yeah, it really is. Especially when it comes to like, you know when we look at investments in like retirement accounts where there’s not necessarily a lot of options, right? So they kind of only chose from the options that the employer gave them. And it wasn’t like anything. And a lot of people will in a lot of our clients will come and say, oh, I don’t know what I was doing. I was just like looking. And I was just, you know, on TikTok or on Instagram or on influencers like this. So when we do an analysis, they’re like, oh my God, yes, I don’t want to do this. I definitely want to make sure it’s more aligned or, you know, as they get older too, people feel like, you know, they’re in a better place where they can make more solvent decisions, too.
Michael: Yeah, yeah. So I want to I want to zoom out a little bit from, from the values aligned investing. You mentioned zenith, Zenith Wealth Partners, and I’m just reading the description here. It’s described as disrupting the traditional wealth management approach. But what do you mean by that? Why is this industry, I guess, ripe for disruption at this moment?
Fahmin: Yeah, a great question. So, you know, I myself have been in the industry for about 14 years and I’ve seen the segregation and gatekeeping. And what I mean by that is traditional wealth management is always operating via minimums, like whether it’s 250,000 or 500,000 or 1 million. So with my background, I come from where there was $1 million minimum. And that’s something that I always kind of struggled with because I was like, you know, that’s not you should in order to get good quality financial advice, you shouldn’t have to be like all you need to have a certain amount of dollars. So at zenith, we don’t have any minimums. We meet our clients where they are in their financial journey. So that’s something that’s huge. And, you know, that is why we’re disrupting the industry. Because, you know, we don’t have necessarily have clients that are in, you know, that have gray hairs because now they’ve built up that million dollars. Right. We’ve got some clients who are starting, you know, right after college where we have some clients who are like, hey, I’m getting ready to retire. And I just want to make sure I’m okay. So we’ve got a huge spectrum of clients.
Michael: Yeah. You know, it’s always it’s always struck me as, as a little bit inconsistent or there’s always seemed like an opportunity there to so many advisors focus on, like you said, the folks with with gray hairs who are closer to the finish line of their career than the start. But it’s really in those, those early years, the younger folks like that’s where the highest leverage decisions are, right? Like Albert Einstein said that compounding returns are the eighth wonder of the world. And you know, if you can, if you can get to folks and start working with them in their 20s and their 30s, when they’re looking at having 40, 30, 25 years of compounding ahead of them, potentially like making the right decisions, then it’s it’s pretty high impact, right? Am I thinking about that the right way?
Fahmin: Yeah, you absolutely are. And that’s when, you know with our younger clients, you know, one thing that the trend we’ve been seeing is that people want to travel. So, you know, and of course, then they want to travel extravagantly or, you know, a large part of their budget really comes from that. So because they have time, we’re able to see, oh, you know you don’t necessarily have to go ahead and put a large sum of money away in order for you to be able to achieve your goals because you’ve got time on your hands and which is something, you know, they feel like, okay, I feel like I’m ticking off these boxes. I’m having fun now. I’m living life. But then I’m also making sure that, you know, I’m going to be okay for retirement because, you know, you can’t take out a loan for that.
Michael: Yeah. Right. Yeah. Great point. I mean, I am thinking back just personally, I, you know, I made a bunch of dumb money mistakes in my in my 20s. Right. And I say this as someone who has a finance degree, I’m a CFA charterholder. Like, I should have known better, but you just you don’t. There’s kind of a difference between what you learn in school and then kind of the real world of tax advantage investing and IRAs and 401 S and 403 BS and and kind of all those things. And it stings a little bit like to be honest because like you can’t go back and fix it, right. Like I can’t go back to 2008 and max out my Roth IRA. Right. Like, that ship has sailed like it’s long sailed. It’s it’s not even visible anymore. It’s so far gone. So a lot of these, these mistakes that folks can make, maybe mistakes is not the right word, but these, I guess, acts of omission that you can make in your 20s. There’s no way to go back and fix them, and you miss out potentially on a big amount of money. So and I guess it makes sense to me from a business perspective, too, if you think about having clients who are in the accumulation phase of their life, and if you look at this as kind of a long term thing, being with them for the long term seems to make sense intuitively to me.
Fahmin: Yeah, exactly. Which is why, you know, we firmly believe good quality financial advice shouldn’t be exclusive. It should be inclusive, which is why, you know being at zenith is is so wholesome because we see we see it from different spectrums. And most of our clients are first generation wealth accumulators. So, you know, they don’t necessarily come from money. So, you know, receiving that advice, right. You know, understanding tax advantaged accounts and just understanding what they have, the tools they have in their financial toolkit is so important. And a lot of people don’t have that because, you know, the traditional wealth management industry is so gatekept. So being able to offer that, that’s really how we’re coming in and disrupting the industry.
Michael: Yeah, I’m glad you brought that up. I wanted to dive a little bit more into that. I’m always fascinated by advisors who kind of specialize in some folks work with work with nurses, some folks work with divorcees or whatever it may be. And you mentioned one of your specializations is first generation immigrants who are looking to, to build wealth. So I mean, what attracted you to to working with this with this demographic and what are the challenges or maybe the opportunities that that these people face?
Fahmin: You know, great question. So you know what? It’s kind of like I kind of fell into it because I’m, you know, I’m an immigrant myself, so I’m a first generation immigrant. I came to the States when I was eight years old from Bangladesh. So being an immigrant itself is, is a challenge because my parents couldn’t guide me in a country they didn’t know much about. So, you know, I felt like I was a bit of an on an island, but I was also young enough to kind of understand quite a bit. But some people are not that lucky where they come when they’re much older. And it’d be the biggest challenge and opportunity is really the fact that, you know, being from a third world country, the challenge is you don’t have the same opportunities as your peers when you first kind of, you know, come to the States. But then the biggest opportunity is you’re in this land of opportunity, right? So you’ve got like this open playbook that you can go by if you kind of keep chugging along. But then, you know, the biggest advantage, this advantage is you’re here. The disadvantage is you have to figure it out on your own because you don’t really have a lot of guidance. So having someone that can relate to is something that I think would, you know really speak volumes because I wish I had that. There’s a lot I kind of learn along the way because there was no one else to teach me. So having a financial advisor that someone can relate to is really something that going to make a difference. And I hope someone can say like, hey, I’m glad for me, I met you, you know, and you know, you’re telling me things I didn’t know about. And so, you know, a young, even a young Michael, right? It’s like, hey, you know, if someone would have told you he thinks you know it. Just having someone to bounce off ideas off is even great.
Michael: Yeah, absolutely. I mean, I alluded to the mistakes that I made as someone who has a finance degree and a and that background. And so I can imagine, you know, someone who is trying to do this in a second language or a third language or a fourth language. In a lot of cases, in addition to trying to figure out, you know, when you’re move to a new place, trying to figure out the culture and the customs is is overwhelming enough. Before you get into all the technical, technical jargon, we probably don’t make it easy, right, with some of the names that we have for all these financial accounts. Yeah. Yeah, that’s kind of its own. Sure. Yeah. But then, you know.
Fahmin: You know, it was funny. Michael is being an immigrant kind of makes you an innately grateful person because you reflect on, like, you know, what you saw and then what, now what you have. But then, you know, it’s the same thing. The opportunities are different. Like, for example, like, I didn’t go to kindergarten, like, that’s not part of like the public school system in Bangladesh. So but I was lucky enough when I came to the States, I grew up, you know, in like an immigrant type of town where it was a small town in Michigan called Hamtramck. And, you know, there were people from all over the world like Yemen, Albania, Bosnia Germany, Bangladesh, Pakistan. It was like a whole hodgepodge. So it was we all kind of like figured it out on our own in different ways. Yeah.
Michael: Good. It’s a great point about the innate, innate gratitude that that comes with it. I want to ask you a couple more questions about about your background, because it’s very interesting. You have a master’s in psychological studies. I don’t think a lot of financial advisors can say that. Financial planners can say that. How is that background in, in psychology translated to the work that you do? I mean, I think of financial planners, advisors sometimes is a big part of what they do is, is psychology, right. So how is how is that background translated to your work with zenith?
Fahmin: Well, thanks for asking. It is really interesting because, you know, when I was in undergrad, I didn’t know I wanted to be a financial planner, but I knew I wanted to work with people. I knew I wanted to help people. So my major actually was political science because I thought I was going to be an attorney. I was like, I’m going to go to law school. And this was, you know, right around the 2008 time. So all my professors were attorneys and they were like, this is a bad time. We don’t need any more attorneys like. And so I got really discouraged and I was already at the bank. So I kind of just stayed in the financial field. But then I really realized I loved working with people, which is what led me to get the my master’s in psychological studies. But then I also realized, like, I really like working with people, and I also understand money. And so when I kind of figured it all out, I was like, okay, I’m going to be a certified financial planner because I can help people. I can work with people. And, you know, it’s around money. And, you know, having that psychology degree really helps understand people’s mindset, right where they come from, because everyone’s in a different place and everyone has a different relationship with money. Yeah.
Michael: Yeah. We’re our own. I say we investors, we are our own worst enemy. Sometimes, like the the list of literature is is a mile long. You can look at Morningstar’s Mind the Gap study is a great one. That kind of shows the disconnect between essentially we we buy high and we we sell low kind of the opposite of of what we should be doing. The behavioral traps and the psychological traps are are real. So having someone with the experience and kind of the understanding of, of what’s going on there, I think it’s it’s pretty important. Let me ask you two more questions here. One, your biography mentions should always ask you about your recent travel destination or maybe an upcoming travel destination. You mentioned travel a couple times here, both in in something you enjoy and something there’s a lot of your clients enjoy. So what do you have for us? A recent destination, something coming up that that you are excited about or that you enjoyed?
Fahmin: Yeah, it’s funny you ask that actually, I just earlier this week, I came back from Bangladesh. I I went there after 21 years. So it was I mean, it was a long, long trip. But, you know, it was really nice because I have two little girls. So they visited for the first time. And, you know, I met a family after such a long time. So it was definitely really special. And, you know, travel is something that, you know, I really enjoy. But, you know, you just also have to make sure that you’re setting aside enough to make sure you know, you’re not going into debt trying to, you know, achieve these travel goals.
Michael: Right? Yeah. Great point. And it sounds like you survived the flights with two little kids halfway across the world, so no small feat.
Fahmin: Oh my God, the no small fee. Yeah I’ll tell you that. Like just alone. There’s no direct flight there. So we had a few layovers and just on the plane is about 19 hours if you combine it all up. So it was brutal.
Michael: My last question for you, where can folks go if they want to learn more about you and more about zenith?
Fahmin: But thanks for asking so they can visit Zenith World Partners. And go to the About Us section to learn more about me. And of course I have my LinkedIn. I have a pretty unique name, which is, you know, if you search me, you can. I’ll be the first one. I’ve never met another Famine myself.
Michael: Wonderful. We will make sure that those links, even if it’s easy to find, we’ll put them in the show notes to this episode so you don’t even have to search. We’ll have the links right there. You can just click on them for me. And thanks for joining me. It’s a great conversation. I appreciate your insights.
Fahmin: Thank you so much for having me, Michael. It was a pleasure.
