Throughout the Hebrew calendar, Jews around the world celebrate the holidays, practice Jewish traditions, and spend time reflecting on their history with loved ones. This past year has been different – in many cases, families and friends were unable to physically be together to share in their traditions. Gathering around the table to light the candles and recite blessings has been replaced with baking challah or hosting seders virtually.

Given the ongoing global pandemic – which has exposed deeply embedded economic, social and racial inequities – members of the Jewish faith are asking themselves, what will the new resilient year look like for Jewish values? How do we find balance between our faith, finance, philanthropy and these ongoing current events? How can you align your financial life with your desire to create a more just and vibrant world for all? 

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At Morgan Stanley, some of our clients have leaned on their faith to provide hope and guidance in these trying times. Spending our time volunteering and ramping up our charitable giving in alignment with our faith and values is for many the first place our minds go, but financial advisors can play an important role in helping their wealth management clients align their financial lives with their faith and values – including through their investments. Here we hope to provide a clear picture of how investors, working with their financial advisors, can align Jewish values across their investment portfolio and their philanthropic giving.

Stakeholder Theory: Looking inwards and out

2020 has been an inflection point in our industry: Sustainable and impact investing has gone even further into the mainstream reflecting increasing client demand but also a growing confidence that investments that create positive measurable environmental and social outcomes may be better positioned financially as well. For example, the MSCI KLD 400 Index, which consists of companies that meet environmental, social and governance (ESG) criteria, outperformed the S&P 500 Index in 2020 by 0.5%. [1] 

The spotlight on environmental, social, and governance-related investing has driven new interest in an old concept, stakeholder capitalism, in which companies are motivated to create outcomes for all stakeholders, not just shareholders. This means taking care of your employees, the communities in which you operate and the environment through more efficient use of natural resources. The principles of stakeholder capitalism can also be instructive when thinking about the core pillars of Judaism. Namely, a community oriented perspective and an increased focus on how your actions can create societal benefit may resonate deeply with many people of Jewish faith, making sustainable and impact investing a helpful approach for families seeking to align their overall investment portfolio with their values. 

One of the key questions our financial advisors prompt their clients to reflect on when thinking about their financial life is, “What is going to help you sleep at night?” For most clients, the answer to this question lies in the knowledge that one’s assets are protected to help ensure they can meet their financial goals. Increasingly, it is also the knowledge that while capital is invested, it aligns with your values and seeks to make a positive mark on the world.  

Financial and values-aligned goals, when thoughtfully integrated, can create powerful alignment between Jewish values and an investment portfolio.

Investing with Impact: Making a positive impact in the world through values-driven investing 

Those raised in the Jewish faith, or observing it by choice, may ponder a fundamental question when thinking about aligning their investments with their values: Is there a set of common values that spans the extraordinary diversity of the Jewish people and, if so, what are they? Judaism is a religion of laws, scholarly inquiry and there is robust debate over how the teachings of the ancestors are to be interpreted in the modern world.  

These interpretations may vary across people who are Orthodox, Conservative, Reform and Reconstructivist, and there are even likely to be disagreements among different members of the same synagogue. Looking to the Torah for guidance, any number of commandments and parables might add to the discussion of investing according to Jewish values. For some Jewish families, the concept of Tikkun Olam – generally translated as healing or repairing the world – provides a useful framework. Meaning: how can your investments work to protect your financial future while also creating better outcomes for the environment and for all people?

To help navigate this topic, we launched the Jewish Values Tool Kit in 2019 which includes a suite of tools and resources to inform and guide investing and philanthropic implementation decisions with a Jewish lens. Investment approaches include restriction screening – avoiding objectionable issue areas; environmental, social and governance integration – actively evaluating a company on the basis of their corporate sustainable practices; as well as, thematic exposure – seeking out positive impact in certain sectors. Finally, for qualified investors, impact investing in the private markets. All of these approaches are differentiated by the underlying investment manager’s approach to shareholder engagement and their ability to report on positive environmental and social outcomes generated as a result of the investment process.  

To help with impact reporting at the total portfolio level, we launched Morgan Stanley Impact Quotient® (Morgan Stanley IQ) which enables Morgan Stanley clients to better understand and seek to improve their portfolio’s alignment with a customizable set of 100+ social and environmental impact goals – whether its transitioning to a lower carbon economy, green infrastructure, education, healthcare, diversity, equity, inclusion or place-based investing – all of which are themes that can intersect with pillars of the Jewish tradition for some clients. 

Working with a financial advisor, individuals and families can work to integrate their values across asset classes to build a resilient portfolio that is aligned with both financial and impact goals.

Philanthropy: Charitable, now and always

In 2020, many high-net-worth families doubled down on their philanthropic causes, giving more money in less time than we have seen in decades. Jewish values like Mitzvot (a good deed done from religious duty), Hatikvah (hope), and Tzedakah (righteousness and charity) guide Jews in their daily lives and can also be applied to help high net worth families engage in major philanthropic giving. 

Mitzvot – Judaism is a religion based on rules – 613 of them, in fact. Jewish families can turn to the mitzvot for guidance and clarity on how to give in accordance with their values. Guided conversations between family members on the basis of mitzvot allows for reflection and connection around these important guiding tenets.

Hatikvah  – Hope is so central to Judaism and Jewish life that it is the title of Israel’s national anthem. This year, families have turned to their faith to envision a hopeful future for their families and the world. It is the conviction of hope that has driven so many conversations with Jewish investors this year about increased giving. In fact, Morgan Stanley has seen a 40 percent increase in giving year over year to MS GIFT, our donor advised fund. Much of this increase has resulted from conversations around hatikvah.

Tzedakah – Traditionally, the Torah teaches that tzedakah should be an allocation of ten percent of earnings to charity. But for many families, that is just the start. Tzedakah has come to symbolize charity, but the word means righteousness. It is so central to Jewish faith that rabbis of classical Judaism have called it, “equal in value to all the other mitzvot combined.” (2) While finding the “right” amount differs for each family, by coming from a place of righteousness, families can reflect and share together what giving means to them and align on a plan that works for the whole family. 

While the times are challenging in so many ways, many people of the Jewish faith have been able to find comfort in a set of deeply rooted values to seek clarity, hope and righteousness. Just as everyone has a unique set of financial goals, working alongside with a financial advisor, individuals and families can work to align their philanthropic and investment capital with their unique Jewish values. This will help ensure impactful investing and giving, not only L’Shana Haba’ah (“Next year in Jerusalem”), but for generations to come. 

Lisa Shalett is head of Morgan Stanley Wealth Management’s Global Investment Office & Wealth Management, Chief Investment Officer; Melanie Schnoll Begun is Head of Philanthropy Management, Morgan Stanley Wealth Management; and Lily Trager is Director of Investing with Impact & Head of Impact Solutions, Morgan Stanley Wealth Management.

[1] Bloomberg, MSCI, Morgan Stanley Wealth Management, December 31, 2020

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