Why Faith-Based Money Management? with Bob Doll

What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values. How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity and have been trained to offer biblical financial advice. To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. Why do you suppose Jesus had so much to say about money and possessions?

Hi, I'm Rob West. Our Lord and Savior knew that how we handle money can reveal our spiritual priorities. Every financial decision has a spiritual component, which can even be true of our investing. Bob Dahl joins us today to answer the question, why should we strive for faith-based money management? And then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. Well, it's great to have my friend Bob Dahl on the program to share his insights about faith-based investing. He's of course CEO and Chief Investment Officer at Crossmark Global Investments, a new underwriter of the program. And Bob, it's great to have you with us.

Great to be here as always, Rob. Bob, Crossmark Global is playing a really important role in the faith-based investing movement. I want you to start by just sharing a little bit about the company and its mission. Well as you know, the faith-based money management business is small.

There are not that many players. We're privileged to be one of them. We're a faith-based money manager dedicated to help people line up their investments with their faith and or their values, which are usually one and the same, with an important caveat that we've got to give them good investment performance. So we want people to be able to do that and feel good about it.

Part of it's the education process. It's the central focus of our business, and we offer a wide variety of screened and unscreened products for our advisors and their clients. So seeking appropriate risk-adjusted returns and aligning your values with your investments sounds like a great opportunity for God's people. Let's dive into some of those specific solutions, Bob, that I know fit into two big categories. The steward funds and then what we call separately managed accounts.

Explain those. The steward funds are the mutual funds made by Crossmark. We have nine of them that span the big broad categories in stocks and bonds, and in those we employ our best attempt to take what God's Word says about things we should avoid and things that are good to reward that side of it. So our mutual funds are the entree for lots of people to what's Crossmark. We also have separately managed accounts where people of certain means can come to us and say, you know, I'm against this. Could you exclude that as well as the other things you're excluding?

Or please don't exclude this thing over here. And we even have some unscreened money where people say, no, no, no, just manage our money and beat the benchmark. So we can address lots of different needs through the SMA. Yeah, it can get really creative and customized for the needs of your investors. Bob, you recently wrote a great white paper addressing the question, why faith-based money management? And you start out with a definition, which I think is important because it could mean different things to different people. So define that for us, faith-based money management. Well, as you know, God's word, the Bible provides amazing amounts of wisdom and instruction for Christians, both theologically and practically about how to invest. And I would argue, and I know you do too, that investing is just one part of life.

All of our life should be lined up with God's word. And it's really a matter of holiness and the whole process of becoming more Christ-like a definition of faith-based or biblically responsible investing as a lot of people call it. Taking from the Christian investment form goes like this, let me quote, an investment decision-making process that applies Christian values to issues facing shareholders and stakeholders regarding moral and social principles. This process coupled with traditional financial analysis provides a platform for investment decisions that allow us to be faithful stewards of God's gifts and respect the foundational beliefs of our shared Christian faith. That's a lot of words, but I think it really does tell the story.

There are many terms, as we just said, that fit that. Faith-based, ethical, biblically responsible, the meaning of these often overlap but may come across differently depending on who the investor is and what their demographic looks like. It's been helpful, Bob, and it's something we're going to continue to unpack just around the corner. Bob Dahl here today. Bob is CEO and Chief Investment Officer at Crossmark Global Investments, where investments and values intersect. They're an underwriter of this program, and when we come back, what about values alignment in your investments?

What about positive screening? It's more than just kicking out the bad guys. What does that look like, and how does this apply to you and your investments? Bob Dahl with us just around the corner on Faith and Finance.

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That's christiancreditcounselors.org, or call 800-557-1985, 800-557-1985. So thankful to have you with us today on Faith and Finance with me today, my good friend Bob Dahl. Bob is CEO and Chief Investment Officer at Crossmark Global Investments, an underwriter of this program and a leader in faith-based investing. And today he's sharing his insights on investing in ways that honor God and make the world a better place. I'm so thankful to do a deeper dive on all of this to connect Bob's insights on the markets and the economy in general with the actual solutions that will help you align your Christian values with your investments. And Bob, you were giving a definition of biblical money management before the break, and you used a term values-based.

I'd love for you just to go a bit deeper into what it looks like to align our values with our investments. Right. We want to make our values God's values, and we can start with the Bible. If you count the words of Jesus in the red letter New Testament you might have, you'll count more verses on money and possessions than heaven and hell combined. Isn't that amazing?

Yeah. And the reason, of course, is he knows that our attitude toward money—not just the money we have, but how we earn it, what we do with it, invest it, spend it, how we give it away—says a lot about our hearts and our faith. So money and faith are interrelated, and they are warp and woof of a Christian walk. Another way to look at it is to say there's nothing wrong with earning lots of money or having a lot or having a little, but it must not come at the expense of the holiness of life and our spiritual development, discipleship process, if you will. Therefore, it's really important that faith-based investors consider, can I say, the moral implications of their investments. If we really are followers of God's Word, we've got to go there. So we know Christians are intentionally investing billions of dollars to support God's principles, but how are they approaching it? That's what values-based gets at. Aligning our money and our practices with biblical values is for God's glory and, at the end of the day, our joy. Yeah, and I know our goal is really, well done, good and faithful servant that we read in Matthew 25. So how do we know, Bob, if we're on a path to hear those words, and perhaps how can we evaluate what we're doing in this area? Well, there are lots of people that can help. Christian financial advisors can help us there. I love Randy Alcorn's work in this whole area, and he says, the biggest obstacle is to think that the money and possessions we have are actually ours. When we realize they're not ours, they're really God's. In fact, everything we have—our minds, our bodies, our time, our relationships—they're all God's. And if we look at it that way, it gets a whole lot easier to do these things. One of the things I do on occasion on this test for people is to pretend it's Saturday afternoon.

Nobody else is home. There's a knock on the door, and it's Jesus. Bob, can we look at your checkbook, and parenthetically, can we look at your calendar? How we spend our time and money says a lot about our hearts. And how would you feel if the Lord showed up and knocked on your door?

Would that be a good hour session, or would you be embarrassed? If you feel good about it, you're probably on the right track. Yeah, I think that's well said, but I think for so long, we've really thought about that question that you just posed about Jesus coming to the door around, are we falling into materialism? Are we spending too much in the selfish pursuit of indulgence?

Are we giving enough? And we've not really thought about that in light of our investments, and for good reason, because I think a lot of these investments, like what you have at Crossmark, are somewhat new to the scene, and yet we're seeing a lot of Christians jumping on board. So describe the approach that you take, both the screening out, which has been the focus, and the positive screens we can bring into this conversation.

I'm glad you brought up both sides. It's not just what are we against, but what are we for? So the exclusions, every firm that's in this business approaches it a little differently. For us, it's revenues-based. How does the company earn their revenues? And if it's things that are questionable, cigarettes, tobacco, abortions, those things we don't want any parts of, and we think our clients do either.

We've got a list. Some of them have thresholds, 2% of revenue, 10% of revenue. So there's a practical element of this as well. That's the exclusionary side, which again has been around for a while.

The more interesting and newer side is the positive side. I think Eventide Asset Management in Boston has done a great job pioneering this work, and we have spent a lot of time at Crossmark designing the same sort of how does a company treat its employees, its suppliers, its customers, its community, the environment that they're in. These things are all objective and measurable, and they get points in our values scorecard when they're doing well there and don't get points if they're not. So we want to own companies that have all the good, can I say, Rob, secular positives, good cash flow, reasonable price stock, good strategic planning, but also is doing good in advancing the kingdom here on this planet.

Yeah, boy, that's compelling. Bob, obviously when we talk about investments, we want to get a return on our investment, and that's very appropriate. You conclude your paper that we're looking at here today by saying that some financial advisors may wrongly assume that faith-based investing results in financial sacrifice. You have to give up something in the form of return in order to do this. Will you comment on faith-based investing and performance?

Absolutely. I'll start with the way we pay our portfolio managers. It's how they're doing versus the entire universe of investors in that category. So if you actually had to give something up, our PMs wouldn't get paid. There are lots now, studies, empirical studies, done by places like the Wharton School of Business, Oxford University, Biola University, and other leading institutions that have empirically tested biblically-based versus secular investments, and the good news is we don't give anything up. So you can line up your portfolios not just for the next life, but for this life as well, and do amazing things when it comes to returns.

Excellent. Well, I'll tell you, that's well said, Bob, and it's a great opportunity that folks may have missed and not realized that they could have the values alignment and even own companies that are blessing their neighbor and thinking about the impact on their shareholders and providing compelling returns. Now, what if they go to their advisor and their advisor says, I don't think you want to do that? How would you counsel them? I would counsel them to find a different advisor.

God is asking us to line up our entire life, including our finances, with who he is and with his word. And so someone that wants to dismiss that, I think, is probably not the right person to be your advisor. There are kingdom-minded advisors, the CKA program that we talk about all the time.

You can find advisors that know this part of the world, have other clients that are invested this way, and it's a joy. Excellent, Bob. Unfortunately, we're out of time, but great work. We're grateful for your active involvement in this program. We appreciate your time today.

It's been a blessing. Thank you. That's Bob Dolls, CEO and Chief Investment Officer at Crossmark Global. You can learn more at crossmarkglobal.com, crossmarkglobal.com. While you're there, sign up for Bob's weekly investment commentary, Dolls Deliberations. You can invest directly in the funds at crossmarkglobal.com, or you can find a CKA specifically in the area of faith-based investments at faithfi.com. Just click Find a Professional. Back with your questions after this, 800-525-7000.

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That's kingdomadvisors.com. Thanks for joining us today on Faith and Finance. We've got a few lines open today. We'd love to hear from you. If you have financial questions, we'd love to run that through the lens of Scripture.

Everything we do here is rooted in biblical wisdom. You can call right now at 800-525-7000. We'll go right to the phones. Let's head out to Texas. Hi, Mary. How can I help you?

Thank you for taking my call. Sure. I have a small inheritance coming of $40,000, and I am trying to decide, do I want to invest that into a rental property, like a three-bedroom home, residential home, or do I want to just drop it into a mutual fund? I found that FXAIX with Fidelity is a really low expense ratio and highly rated. So I'm just trying to get the best return on my investment.

Yeah. Well, I think either can do very well. Obviously, we like properly diversified stock and bond investing. We also like real estate as an asset class, and both can work really well. A lot of folks have made a lot of money in both.

I think the question is just, what is the best fit for you? And that comes down to both the financial side as well as the non-financial side. So the nice thing about putting it into a high quality, low cost, you're talking about an index, in this case, the Fidelity 500. And that's a very easy way to go in the sense that it's a passive investment where you can just drop it in and take a long view, which is always the approach we should take when it comes to stock and bond investing.

The other is through real estate, which is not quite as passive by any means, nevertheless still a great way to build wealth. And there are some opportunities where you can depreciate the property for tax purposes and you can deduct the maintenance costs. You could develop an income stream from it while also hopefully over time, seeing the property appreciate in value. I think the big question there is always, do you have the time and temperament to be a landlord? It's not just about collecting the rent checks, you have to find and screen tenants and maintain the property.

And you might need to take a late night call about a leaky pipe or a broken air conditioner if you don't have a property manager. And if you do, that could chew up as much as 10% of your income stream. And then if you need to take on debt, because it sounds like you're going to have $40,000, I can't imagine you're buying a single family home for $40,000. So you're just going to have to factor in the higher carrying costs right now just given interest rates. So maybe we start there and just kind of give me your thoughts on that to see if that is still a viable option or whether the passive investment approach, which again is still a very good way to go in terms of building long term wealth. It's quite different, if that makes sense.

Yeah. So the reason I'm thinking of the rental property is because I already own a home and I own a large piece of land and I'll be building a second home on that land and I was planning on renting out the original home. So there was going to be one rental property already. So I was thinking of having a second rental property and I have about 20 years before I retire.

Okay. And so what would you be looking to spend? Just as you've thought about this, maybe you've looked around a little bit in certain areas where you might want to have the rental property. What do you think your budget for this? In my area, I can find a three bedroom home for about $150,000. So 20% down or yeah, 20% down, $30,000, but has a little extra just in case for whatever the property taxes that are going to come up at closing or whatever. So there's going to be some expenses, no doubt. So I mean, at the current interest rates, you're talking about a monthly payment of around $700 a month.

If you had about a $100,000 mortgage, if you factor in property taxes and homeowners in the state of Texas, you're probably looking at instead of $700,000, maybe something closer to $900,000, $875,000 a month. Have you looked at with that type of property, what kind of rent you could throw off? Yeah, they're renting somewhere between $1,200 and $1,500. Yeah.

Okay. So I mean, if you could do that, obviously, let's say you spent $900 a month for homeowners, property taxes, and the mortgage, and then you're going to want to put a little aside for maintenance and upkeep. But if you could clear somewhere between $200 and $500 a month, you know, that sounds like a workable plan.

I think then the only other question is just let's play out the worst case scenario where we get into a deeper than expected recession over the next couple of years. Maybe you aren't able to rent it for either as much or maybe you go a period of time without a renter. Are you able to carry that on your own without the income or would that create a burden for you?

No, I can carry that without a problem. Yeah. Okay. So I mean, it sounds like as long as you can check all the financial boxes and to your point, you're already planning on becoming a landlord. And so there's some economies of scale there where you're now you're managing two properties and you've still got good energy, you got 20 years left, I mean, is this a great place to build wealth?

I think it could be. And to the extent you're funding retirement accounts at work or some other way in the market, I kind of like the idea that you're diversifying among asset classes. Do you have retirement accounts in the stock market currently? I do. I have a Roth and a traditional.

I also have a 401k at work. Okay, great. Yeah. I mean, so I'm on board with this. I mean, I think you've thought through it. It sounds like you've got the financial wherewithal to do it. You were already planning on doing it with your existing primary residence.

And what a great way to take this blessing of an inheritance and redeploy it into something that not only is going to provide a modest income stream for you now, but is going to be used through the rental to pay the debt and eventually have an asset, hopefully free and clear, that's appreciating. So I think it checks all the boxes, Mary, in my mind. Okay. Thank you very much for your help. I appreciate that. All right. You're welcome. Lord bless you. Thanks for being on the program today.

Quickly to North Carolina. Phyllis, you'll be our final caller. Go ahead.

Yes. I was calling, I had a concern in regards to, I just turned 66 on yesterday and I plan to file for Social Security at 56, I think in six months and I'm still working and I have a pretty good income, right at a hundred thousand a year. My question is, I would like to be debt free because I won't get a pension. I plan my retirement and I was wondering, would it be a good idea just to use the Social Security file for it and use that over the next couple of years to pay off my mortgages? I have a rental property where I only owe $40,000 on one, the other one's paid off. My primary, I owe about 110, so I'd like to debt free upon retirement because my only income will be Social Security and the income from rental. Yes.

Very good. Well, yeah, you certainly could do that. I mean, you're going to lock in your full retirement benefit. You won't be able to increase that, which you would be able to do if you delayed it beyond full retirement age. If you have a positive cashflow with the rental properties, you could continue to pay as you are until you retire with them.

But if you really want to be completely debt free by the time you retire, taking this full retirement age benefit and then just putting 100% of that toward debt reduction makes a lot of sense to me. So I'm on board with that strategy, Phyllis. All the best to you. And hey, by the way, happy birthday yesterday. We appreciate your call today. God bless you. Big thanks to my team today, Devin, Patrick, Taylor, Stan, Rich, and we're grateful for Sandy Dickinson as well. And everybody here at Faithful, may the Lord bless you and come back and join us tomorrow. We'll see you then. Bye-bye. Faith in Finance is provided by Faith Buy and listeners like you.