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Once a month, we take a look back at what God is doing in the world of Faith Driven Investing and the global markets. We also spend time looking at current trends and outlooks with great interest and discernment in hopes to identify God’s redemptive work in the world. Tune in as Matt Monson of Sovereign’s Capital, Daniel Phillips of EverSource Wealth Advisors, and Ross Roggensack of Oak City Consulting push the conversation forward about faith, investment philosophy, and the frontiers where innovation is happening. This is Marks on the Markets for June 2022.

Episode Transcript

John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman. And today we have our monthly marks on the Markets podcast where we find experts from around the industry to dig into the most prominent trends in the markets and the underlying economy as well as within faith driven investing. Today we have three extraordinary people on the call who can guide us through this. The first is Matt Monson from Sovereign’s Capital. Matt leads the public equities capability at sovereigns and has a long and distinguished career at other equity managers around the United States. We have Daniel Phillips from Eversource Wealth Advisors. Daniel is the director of investments at Eversource. He helps to position individual portfolios as well as to select and screen investments for Eversource and also has a long and established track record in the industry and a deep understanding of financial markets and the instruments that access them. And then finally, our dear friend Ross Roggensack of Oak City Consulting. Ross is a founder and the leader of Oak City. He advises large institutions about their portfolios and selects investments on their behalf and has been a longstanding not only participant in the financial markets, but also a real pioneer and longstanding contributor to faith driven investing. And someone I know a lot of other folks in the industry look up to for his innovation in that space. So thanks so much for joining us, gentlemen. And we’re excited to dive in.

Ross Roggensack: Good to be here.

John Coleman: So just to start again, we are living through exciting Financial Times right now and sometimes rocky Financial Times. Matt, I was hoping you could kick us off with just your opinion on what the latest is in financial markets, what’s driving that declines this year and what do you see happening in the remainder of the year?

Matthew Monson: Thanks for the question, John. Good to be with you today. So if we rewind and start back on January 1st. What we’ve seen is that January 1st through the recent trot on June 16, the Russell 3000, you know, broad market indicator for market returns was down 24% and 24% is a big number. In fact, it was the fifth worst pullback that we’ve seen in the last 32 years. And so for perspective, the Great Recession, back in 2008, 2009, we were down 56% over a year and a half. And when COVID started, we were down 34% over two months. And the two other large pullbacks we saw were 2000 and 2002 connected to the tech bubble and 9/11. And those were also down in the 36 – 30% range, both of them. So that leaves this 24% pullback that we saw through June 16 as the fifth largest since 1990. So since June 16, now the market’s been up 6.7%, which leaves us now year to date, down about 18 and a half percent. And no one really knows whether the recent trot on June 16 was the bottom of this pullback or if we have further down side to go. If we look at the data, though, there’s two key things that I look at just to assess where we’re at. First is the multiple on earnings and then second is the absolute level of earnings. And so if we look at the multiple on earnings in over the last 20 years, the S&P 500 has traded at about 16 times forward earnings. And as of January 1st, when we were at a peak in the market, we were trading at 22 times forward earnings. And since that time, we’ve fallen down to 16 and a half times today. And so now we’re back in line with the historical earnings multiples. In terms of where earnings are at, you’ve seen a really nice run up in earnings. You know, pre-COVID, when things were, I think I’d say fairly normalized in 2019, you had $138 earnings in the S&P 500, whereas consensus earnings for the 12 months forward today is 237, which is a big number. So if instead you take that 138 pre-COVID number 2019 and you were to grow that at something normalized, call it 8%, and then layer in all the incremental inflation we’ve seen above and beyond normal run rates. You know, that would put us at a number about 15% lower than where consensus is today. So is there about 15% lower earnings that could roll through consensus? I think there is. You know, could we see that as an incremental draw down in markets? I think so. But that doesn’t mean that markets will get all the way there. It’s possible that they do. And it’s also possible that markets won’t go all the way there and people start buying and buying the dip. So we don’t know what’ll happen. But as we try to gauge what our downside looks like, that’s what we think about. One thing that I think is interesting is that off a trot there’s usually a really fast recovery. So within the first 90 days after those big seven trots that I just mentioned, you know greater than 20% drawdowns in the market, that first 90 days out of the trots, markets are up 27%. And so investors are really rewarded for being fully invested. At the bottom. And so as I just think through markets, if the draw down feels significant and if we feel like the multiple is a reasonable multiple on a normalized level of earnings, I’m focused on assessing how much more downside there could be, but also thinking through how much upside there’s going to be coming out of the trot and not wanting to miss those first few days and weeks of it.

John Coleman: And Daniel and Ross, just building on what Matt saying there, obviously a couple of fears that he’s highlighting are that this inflationary environment, which has got people scared, will be doubled with a recessionary environment, one in which the economy contracts. We had a little bit of contrary news this morning where jobs are actually looking better than anticipated. As you hear what Matt said with, you know, as much as 50% additional downside in the markets, although that’s certainly no guarantee of that. How are you thinking about the remainder of the year? Do you see those risks as high or are you keeping an eye out for a recession right now? I would love to get your thoughts on what you think the potential risks moving forward for the rest of the year are.

Ross Roggensack: I think that we never really know. I’ve been around for all of the dips that Matt was talking about. So I’m the old guy on the call. So I’ve seen all this before and you never there is no bottom, you know, we don’t know the bottom until well after. We don’t know if we’re in recession until well after. I think the biggest surprise for us this year, not surprise, but the biggest pain point for us has been the bond market. The bond market is usually the way that we can lever against a big drawdown and the bond market through June 30th. Just to Bloomberg […] is down over ten. Corporates are down 15% and emerging market bond funds are down over 20%. So this sort of free lunch, we’ve always been used to where we can put bonds up against stocks and it will ease some of that pain. It’s only made it worse. And so, you know, with positioning is pretty hard right now unless you’re already in cash, unless you’re already in something else, it’s really difficult to, for example, pull money from bond funds or bonds to put in stocks because they’re already down a lot, too. So it’s a tough position if you aren’t already ready for it, if you’re in a tough spot.

Daniel Phillips: Sure. So I would just add to that that just given where we are following up on Matt and Ross’s comments, it’s just going to be very difficult for the Fed to manage inflation back 600 basis points or so to their policy target without creating a recession. And that really hasn’t been done before. And I just think the real question is how long does it take us to enter a recession and then how deep is that recession going to be? We know it’s coming at some point, but timing is always just the big variable. We’re in the late part of the economic cycle from all of the coincident indicators, and the Fed’s just using very blunt hammers of monetary policy to create enough demand destruction to cool the economy off. And we’ve seen the market’s response today, but the Fed isn’t still halfway done, given their guidance at the same time. On the other hand, corporations and households are overall in pretty good shape, strong corporate profits, strong cash balances. And the employment numbers that, John, that you mentioned, we had a great employment number this day, although initial claims are starting to lift off again. So that’s the counterbalance. And so the question, of course, is when inflation is stretching everyone, especially those in the lower incomes that are most impacted and haven’t recovered from COVID, but I go back to it would be really helpful if you guys could let me know when and how deep.

John Coleman: So yeah, we’d all like to know that maybe just to pick up on what you’re talking about, Daniel, because I think this is a really important topic and then we’ll circle back to how you all are thinking about positioning your clients portfolios, which I think is an important thing to touch on. Obviously, the question right now is how the Fed and the federal government in the US can implement their tools to try and tame inflation while preventing a severe recession. You know, the danger whenever you’re trying to raise interest rates and tame inflation is that you go too far, too fast and tip us into a more dramatic recession or that you don’t go far enough and we end up with both an inflationary and a stacked environment. Stagflation like the late 1970s. I would love your perspectives on just how you think the federal government and the Federal Reserve are responding right now and what tools you would encourage policymakers to use to ensure that we do tame inflation, but do so in a way that’s not too dramatically impactful to the underlying economy. And maybe, Daniel, would you mind starting there?

Daniel Phillips: Sure. So the two big policy tools you mentioned are monetary policy and fiscal policy. And on the fiscal side, the Biden administration has been noticeably silent about any new stimulus measures really for the last several months after pushing very hard last year. So they’ve gotten the message and they’ve pulled back. And so don’t expect support from the economy on that side or more stimulus on that side any time soon. On the monetary policy front, the Fed is now aggressively raising rates and some people would argue that they’re already going too far, too fast. But they are really trying to avoid a situation in which inflation expectations get ingrained in the consumer psyche and corporate expectations. And we have a runaway situation like we had several decades ago. And so they’re moving fast. We’ll know in hindsight, with the bit of hindsight, whether they were right or wrong. But it’s hard to differ with them for that aggressive response that they’re now having after being very slow and claiming it was a transitory problem for the last 12 months leading up to their more aggressive stance earlier this year.

John Coleman: When it is, you know, and Matt, I want to get your perspective as well. But it is such an interesting confluence of events right now. I mean, we had almost a decade and a half, actually very low interest rates with fiscal stimulus at various times. COVID obviously led to a ton of fiscal stimulus, even though employment recovered very quickly out of that. And then we’ve had these supply chain problems, whether in gas and oil or in other parts of the economy, which are also inflationary. They raise prices. And so there has been this confluence of easy money, fiscal stimulus and supply chain disruptions that have really ratcheted up inflation. And it was unfortunate that it was thought of or characterized as transitory for so long when it did seem to be structural earlier and earlier, action might have been helpful. Matt, as you think about that question of the tools that our policymakers have at their disposal, what do you hope to see from the Federal Reserve or the federal government moving forward in order to manage this problem?

Matthew Monson: I think the Fed will be able to accomplish demand destruction through raising rates. The other side of the equation, though, is supply. And as the both of you have already commented on briefly, if we see China move away from a zero-covid policy and start putting people back to work and delivering goods, then that starts to ease supply chain issues. And we’ve also seen through just a really strong economy over the last couple of years. There’s a number of businesses, both domestically and overseas, that brought on more capacity. And some of that capacity has already come on. Some of the capacity, you know, like semiconductors, everyone sees on the headlines. Some of the capacity is coming on in a year from now or whenever that might be. And so both sides of that equation are important, because if you destroy demand but supply is going down, then you could still see high prices. Whereas if you destroy demand and you see supply neutral or going up, then I can see inflation coming back in check. And as Daniel said, I think that a recession is not just an obvious conclusion, but it’s probably a necessary conclusion to bring inflation back in check in. The faster we can do it, the better. Because otherwise you can enter this death spiral of, you know, picture it where there’s high prices of goods on the shelves. And so the worker goes to the employer and says, I need higher wages because I’m getting pinched on what I’m buying. And next thing you know, they make higher wages so they can afford higher priced goods on the shelves. And it just goes in cycles because if there’s no obvious end to that.

John Coleman: Ross, I want to come back to you because you were talking about the fact that, you know, with bonds also suffering right now, there hasn’t been an easy answer to positioning client portfolios. You advise sophisticated institutions with large pools of capital. How are you helping those institutions weather this period of volatility right now? And how are you positioning their portfolios to do that effectively?

Ross Roggensack: Well, like today’s news so often and again, I’m the old curmudgeon in the crowd here, John, it’s often just noise. And you have to be careful to differentiate news from noise and what makes you do something. And so this spring, we finally had enough news that it felt to us like it was time for us to make some adjustments. The Federal Reserve kind of reversed course. Inflation was not transitory. And then the Russian invasion of Ukraine, all those three things together made us stop and finally reduce equities a bit. Pullback, fixed income as much as we could. It was already at a minimum level, so we pulled the bed more, we raised cash and we added to our allocation to real assets dirt, oil and gas, things that are inflationary in that way. And so we’ve already made those changes. So we have a lot of cash and a lot of real assets and less equities. I think if you’re scrambling now to adjust your late, it doesn’t mean you can’t do it. It just means it’s a lot more difficult because of what I said before with with just a 50:50 allocation is down 11% through June. That’s a really hard time to try to reallocate those assets. So that’s what we’ve done. I do think, as Matt was saying before, equities are getting a lot more interesting. I think that if you look at stocks over five and ten year rolling periods, if you are a long term investor, it’s very seldom that you lose money over a five or ten year rolling period. It’s really hard to do. And so we think you don’t want to panic here. Certainly you should be eyes more wide open to adding to, especially to US small caps, value oriented companies that are much cheaper. They’ve gotten beat up a lot worse than large cap even. So, we’re looking in those kind of areas right now.

John Coleman: Daniel, any differences in the way that you’re thinking about advising individuals right now? Obviously, you have the opportunity to speak with a number of individuals. What are you advising them during this period?

Daniel Phillips: Right. Well, just for context at Eversource, Wealth Advisors obviously were asked allocators for private individuals and families. And we really allocate to three major asset classes, equities, fixed income and then the private markets section of a broad alternative space, which would include private credit, private real estate and private equity. And so when we’re thinking about the big themes we’ve all mentioned that are impacting markets that our clients lives, it’s just very important to us that we have a thorough understanding of each client’s objectives, that risk tolerance and their time and liquidity constraints, because that’s what really dictates how defensive or opportunistic we can be in this environment. So back to your question. Headed into 2022, we saw very elevated valuations in both US equity and fixed income markets and sectors and many of our clients were under allocated to private markets. So we were taking advantage of the opportunity to allocate to more defensive strategies that would perform well and a already very inflationary environment. Those included private market strategies like adding to core or value add real estate, primarily focused on multifamily or direct lending to US middle market companies primarily and senior secured floating rate debt funds. Now, as this correction in equity and fixed income markets has continued, that opportunity set, I would say, is shifting. And as a general rule, private markets tend to lag. Public market valuations and public markets tend to recover more quickly, as already been mentioned today, as this correction continues, if it continues in a significant way, we would probably shift our capital allocation focus back to public markets, equity and fixed income on the margin.

John Coleman: That’s super helpful. Daniel. Ross, I want to come back to something that you touched on earlier and then maybe also ask Matt to comment if he has anything to add. As we zoom out from the U.S. economy. You talked about emerging markets earlier, Ross. I know that you watch those markets closely. You talk about the impact of the Russian invasion of Ukraine on global markets. If investors are thinking about their international exposure, what are the similarities and differences between some of those international markets right now in the U.S. markets? And are there opportunities or risks that you see abroad that are very different than those we’re facing at home?

Ross Roggensack: Well, they’re certainly they’ve been exposed in Russia and in China. Those have been terrible markets to be in. It’s been a real focus on U.S. equities for so long that you have to wonder just a reversion to the mean will international and emerging come back? And we’ve avoided international markets mostly were in U.S. and emerging. We’ve avoided Russia and China as we have a freedom waiting to our emerging markets investment. But I’m certainly curious about emerging markets. We’ve also had at the same time, we’ve had this profound rally in US stocks. We’ve had a profound rally in the dollar, which is really hurtful for international and emerging market equities. And so should we get a situation, for example, like China, who is about to really stimulate their economy? I don’t know when it’s going to happen. We all know it’s going to happen. And when that happens, we’re probably going to see the dollar go down a bit, which would really be helpful for emerging international stocks. So we’re sort of keeping our eye on China right now. We’re not investors in China, but we certainly think that can drive returns going forward in emerging. So I would certainly keep my eye on that happening. And if it does, you should start to see some money flow back to emerging international equities for sure.

John Coleman: And before I ask Matt to pick up on that comment, Ross, one thing I love that you mentioned in passing is that Oak City incorporated, is this idea of a freedom waiting and monitoring the ethical behavior of countries outside the United States to determine whether you have exposure. And, you know, for a long time, people have argued on two fronts. First, that that’s the right thing to do from a values perspective. And secondly, that long term that’s actually a financially beneficial thing to do, and that you have higher hopes for countries that are respectful of human rights, that are more prone to democracy, etc., than you would have autocracies or countries that are disrespectful of human rights. And I think certainly that Russia in particular has proven an affirmation of that thesis right now. And and I think a lot of the same risk factors are at play in China right now, not just with some of the ethical lapses that people rightly highlight, but also the risk factors that if they were to invade Taiwan or if there were other international disruptions, that they could face a similar contraction or dynamic like Russia. So I think that’s something that Oak City has done that I find really interesting in both a line from a values perspective and also from an economic perspective. Matt, are you seeing anything substantively different in international markets right now or do you have a sense for other factors that might be at play?

Matthew Monson: Yeah, I would say I’m in full agreement with Ross. His comments about those were spot on. A couple of those that really resonate with me are just kind of waiting for some of that mean reversion and non-U.S. equities to occur and any of the strength in the dollar to unwind. But in general, we’re domestic equity investors and at these valuations we’re excited.

John Coleman: I want to pivot a little bit now just away from the pure economy. One of the benefits of all three of you is you’re not just really smart investors. You’re also deep in the faith driven investing movement, which is obviously important to the folks listening to this podcast. Daniel I might ask you to lead off and then Ross, I would love for you to follow. If you don’t mind, why don’t you just give us an update on the state of faith driven investing as you see? What progress are you seeing in faith driven investing right now? What trends are you most excited about and where do we need to make more progress?

Daniel Phillips: So in the public markets within the last year, I think the primary thing I’ve noticed is a marked change in the conversation, moving away from an emphasis on avoiding companies with objectionable practices to more of an emphasis on engagement. So John, I think your message than all investing is impact investing is getting through and investors are starting to wake up to the influence that they’re giving these large asset managers like BlackRock, Vanguard and State Street and the ESG practices those firms are pushing in boardrooms all across corporates in America. And some of those policies are good, they’re helpful. But others don’t align well with the Christian worldview, and they don’t value the flourishing of people, which is where God’s heart is. So I’m thinking of even that conversation this last week with a client who was just very focused on this just in an active, vocal way. So I think that there’s just going to be a growing demand for asset managers that will build excellent products like Vanguard and BlackRock to take their stewardship responsibilities seriously from a Christian worldview.

John Coleman: That’s great. Daniel. Ross, what are you seeing right now in the evolution of the industry?

Ross Roggensack: Well, usually the institutional market leads the retail market, but the opposite has happened here. We’ve seen the smaller retail market, individual investor, lion’s den sort of investor lead us out. And so we’re starting to slowly see better and better quality and think about people like Victor and James at Lumos and think about Patrick Fisher at Creation. I think of other people that are very high quality investors that are in our world now in the institutional space. And so what we’re starting to open up to is that there’s real quality in solving the problems like education and world poverty and other things that are in front of us from people that are well trained and well positioned, that are, you know, have excellent product to offer us to offer to our clients. And so it’s really exciting. The last five years and five years ago, we really didn’t have very much, to be honest, to offer. And it is exploding and getting better. And I think, you know, like Daniel said back to your all investing is impact investing. I think it’s getting through. I think the ESG movement is getting through to the faith led movement to say, hey, we can do this. And so really highly qualified people with pristine backgrounds are coming to the market and that’s very exciting for us. On the institutional side, for sure.

John Coleman: That is encouraging. And Matt, I know you’re very focused on the public markets and on driving faith driven, investing in the public markets, but aware of others doing great things as well. What’s your view on how the public markets are evolving and are you seeing the same thing that Daniel is in terms of engagement and more positive screening as well?

Matthew Monson: Yeah, building off of Daniel’s comments, which I fully agree with, you know, the market and public equities is really built on a foundation of negative screening and those tools have worked really well for us for a long time. But I see a transition towards, as Daniel mentioned, coming alongside companies and CEOs that are doing incredible things for the flourishing of man. And what we’ve found through data is that you can stand alongside companies like that and achieve investment returns that are very attractive [vis a vis] the market. And through strategies like that, you can also deliver impact, which is historically something that’s been difficult to achieve in the public equity markets, in private markets. It’s easier to achieve impact coming alongside companies, delivering them primary dollars they can put to work that you can see the impact on employees, communities, customers. Whereas in the public markets, impact has historically been more challenging because you’re buying secondary shares and the companies don’t really know who their shareholders are. But what we’ve seen is the ability for investors to come alongside CEOs to encourage them with the best practices they see from other faith driven CEOs, and to drive spiritual integration deeper across corporate America. So I think it’s a really exciting time for this next leg forward in what faith driven public equity can do.

John Coleman: That is exciting. And as Ross mentioned, you know, the space is evolved so much over the last five years, it still has further to go. You all highlighted some great progress that we’ve made so far. If you had a magic wand to kind of wave and introduce additional strategies or additional ways of approaching faith driven investing here, what’s the next horizon for the industry? What do you think are the big gaps right now and what are you looking for? And Daniel, perhaps you could start, if you don’t mind.

Daniel Phillips: Sure. So just back to just my earlier comment, I think we need to see more institutional level asset managers come into the public market space and create high quality product, particularly product that can gain scale on the index side and really compete with the high quality products that BlackRock and Vanguard have created. But product that really focuses on engagement from a Christian worldview perspective with U.S. corporations and really balances out a lot of the pressure that these corporations are getting from the other side of the spectrum. So we would be very excited to see movement on that front.

John Coleman: Ross, anything on your mind on that topic?

Ross Roggensack: Well, I was thinking the other day, I would really love to see somebody figure out how to invest in the ability to clean water across the world. I think that it’s really hard for us and if we can find a faith driven kind of organization that would try to tackle that, it affects so many people. I would love to see more things that affect human flourishing, like affordable health care and again, clean water, a better environment that can sort of love our neighbors in a way that’s tangible and also be good investments for institutions. So I would I would love to see that I’m looking forward. If anybody wants to holler at me, I’m glad to listen.

John Coleman: Well, as we conclude our podcast today, I want to ask a couple of questions here. First, I’m going to do a lightning round and put you all on the spot with a couple of basic questions about the economy. And then we’ll conclude just with a quick question to each of you about what you’re learning from God through his word right now that you think might be helpful to others just to prepare you for that. If you don’t mind, in a few sentences. But the lightning round first and maybe as we go through this, I’ll ask Matt to lead us off and maybe Daniel, you go second, Ross you go third. What do you expect inflation to be over the course of the next 12 months? If you had to put a number to it.

Matthew Monson: I would bet that we come down from the level of 8% we’re at today and we start to enter way down. We won’t reach all the way down to the Fed’s target, but I think that we’ll start making progress in that direction.

Ross Roggensack: Higher, I’d say 10%.

Daniel Phillips: So as the supply chain eases in China, we’d hope to see that trend down more towards 5% towards the end of the year. But it’s there’s still a significant part of that that’s structurally persistent. Still, without the Fed creating enough demand destruction.

John Coleman: I got a little divergence of views there.

Ross Roggensack: Yeah, sorry. I think I don’t think the Fed can handle it. I think inflation goes higher, oil goes higher, grains go higher, and they just can’t. But who knows? That’s why it’s a market, right? Yeah.

John Coleman: I’m a little nervous.

Daniel Phillips: God’s in control. The Fed is not.

John Coleman: Ross has seen more cycles than the rest of us, so that does give me pause. Similar question. Do you think we’re in recession right now? And if we slip into recession, how long do you think it lasts? Matt, maybe lead us off.

Matthew Monson: I don’t think that we are yet. And just my gut is that if the Fed could manage it and we slip into one, I think it’s a shorter term, more shallow recession. Maybe that’s too much of a glass half full kind of answer. I’d love to hear from Ross second, because he had a really good contradiction last time around.

Ross Roggensack: Yeah, I don’t know if we are in a recession. I think that I don’t really worry about it. I think we’re in a bear market for sure. And I think that we’re in a position where the government is not our friend and the Fed is not our friend. If they’re raising rates and if the government’s trying to figure out ways to spend more money, and then bode well for capital markets for a while until we figure out maybe we can get through the midterm elections and maybe there’s some hope that comes through that we can kind of right the ship. But for now, you know, and recession or not, we’re in a place where it’s usually not great for capital markets.

Daniel Phillips: Right. Well, the official arbiter of who decides when a recession starts will tell us, I’m sure, 6 to 12 months down the road. But my instinct would be just know from how strong current corporations and individuals are, financially speaking, that were fast moving in that direction. And inflation has really been like a rubber bands just stretching, stretching, stretching. And the Fed is trying to ease it back without popping it pretty bad.

John Coleman: Last lightning round question this time next year, is the S&P500 higher or lower than it is today? Let’s start with Ross.

Ross Roggensack: Well, it’s always a coin flip one year, right? So I think the odds are higher. 60:40 is usually the way it is, so it’s probably higher, although we’ll see how much higher.

John Coleman: Daniel, what do you think?

Daniel Phillips: So I have to contradict Ross just for the sake of argument and so probably lower, but there’s no confidence going into that answer right there.

John Coleman: Matt, any difference of opinion? You might be the tie breaker here.

Matthew Monson: I would place my bet on the same or a little bit higher.

John Coleman: Okay. Okay. So we’ve got a relatively optimistic view of the public markets over the next year. Just as we conclude, gentlemen, given that we are the Faith Driven Investor Podcast, I want to go around and just ask you for a brief word of encouragement, something that you’re learning from God through his word right now that you think might be useful to others. And Daniel, if you don’t mind, maybe you could start.

Daniel Phillips: Sure. So just most recently, I think I’ve been convicted for myself and our firm by passage from the end of Colossians, three, that’s addressed to servants that talks about working diligently to the Lord, not by eye service or people pleasing, but with sincerity fear in God, because it’s Him we’re serving and He is the one who is going to give us our inheritance or our reward. And it’s so easy in the business of finance and investing, I think, to get distracted and to pivot with people’s perceptions. But we do. And we serve the great perceiver who sees all and knows all our hearts and he is after our hearts. So I just want us to bring that mindfulness, myself and our firm, everyone who works there to work each day and serving our clients.

John Coleman: Awesome word. Awesome word. Ross, what would you offer today?

Ross Roggensack: Two things real fast. I’m reading a book called The Economics of the Parables by Robert Sirico. It’s really interesting, and it’s just it’s just a lot of moral, economic wisdom taken straight from the parabels that I would recommend to folks that haven’t finished it yet, to be honest, but just received it. And it goes through parable by parable. I think it covers 14 of them. The other thing just on my mind is the assassination of Shinzo Abe in Japan just kind of should remind us all. I was thinking about what would have happened if after Ronald Reagan left office, if he were assassinated. And that’s what the people in Japan are going through today. And so it should take our mind off of whether Elon Musk is going to buy Twitter or what the Fed’s going to do. There’s more important things to think about than those little things that really don’t affect us day to day.

John Coleman: Very true. Very true. And I know everyone’s sympathies are with Shinzo Abe’s family today and with the people of Japan. Thank you for bringing that up Ross. Matt, close this out. What are you learning right now that you want to share?

Matthew Monson: You know, I’ve just been drawn towards a bias to action. And there’s this verse. It’s a little bit of a life first for me and the end of Luke nine, where it says anyone who puts her hand to the plow and looks back is not fit for service in the kingdom. And, you know, every time I feel like I’m really being directly led, all assess it, but I’m not going to sit and wait on it. For 12 months, I really have been moving towards a bias to action. And and it’s just something that resonates deeply with me.

John Coleman: Well, gentlemen, an excellent session today. We have Matt Monson from Sovereign’s Capital, Daniel Phillips from Eversource Wealth Advisors and Ross Roggensack from Oak City. We are very grateful you joined us today and very grateful for the advice you gave us. Thanks so much.

Ross Roggensack: Thank you, John.

Daniel Phillips: Thanks, John.

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Ben Erskine and Matt Miglarese join us on the Faith Driven Investor Podcast to discuss a concept that is gaining momentum: The Flywheel Effect of Spiritual Integration. But more than just a philosophy to discuss, Faith Driven Investors are deploying capital into real estate assets with operating partners that have a model for spiritual integration. Ben, a managing partner at Callis, and Matt, an advisor and consultant for faith driven investors, business leaders, and impact organizations, will explain how owners and operators of real estate have an opportunity to faithfully steward the properties and businesses that they have been entrusted with well. And they can do so while also achieving superior results in the marketplace. Sit back and enjoy the conversation.

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Robert Netzly is a globally recognized authority in the Biblically Responsible Investing movement and author of the Amazon #1 best-selling book “Biblically Responsible Investing”. He is the Founder and CEO of Inspire Investing, a leading innovator in providing low cost, high impact, biblically responsible investing solutions to institutions, advisors, and investors. Robert is a frequent contributor on FOX Business, Bloomberg, New York Times, The Wall Street Journal, The Financial Times, The Christian Post and other major global media for his thought leadership in the faith-based, environmental, social and governance (ESG) investing marketplace. Today, Robert joins us to talk about key aspects of Biblically responsible investing, what it means to be an active and engaged shareholder, and how your faith is reflected in the way we shepherd our capital.

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast, Luke. Great to be doing this with you.

Luke Roush: It is great to be on. It’s good to be on with Robert again.

Henry Kaestner: It is. It is, is great. In the last episode we had done. I recall that I talked about my very limited economics, background and capability at the University of Delaware. I just kind of stumbling through micro and macro as I was spending more of my time selling T-shirts. But I didn’t ask you about your background, and I don’t know that anybody knows on the podcast that you actually study public policy at Duke. You must have had economics at some point in time. Right?

Luke Roush: Me, absolutely. Yeah, there’s a lot of it more than I’d like to remember, but I really enjoyed it, particularly the micro, because you can kind of get your arms around it and you get to see it every day.

Henry Kaestner: Yeah, yeah. OK, so speaking of economics, we have a guy that we’ve had on. This may be their first repeat customer on the Faith Driven Investor podcast, and we’ve got Robert Nazli in the house. And Robert has been a great friend of the movement and has been an inspiration to us and that he’s gone out and launched a firm against all odds, finding a need in the market and really just really launching something really special. We’ve had you on before, Robert, and where you gave a little bit of a longer biographical sketch, but I want to revisit some of that too. Who are you? Where do you come from? What is inspire?

Robert Netzly: Yeah, it is good to be back. And if I am the first be customer, wow, what an honor. I think unless you just can’t find another guest to be on here. And then so, you know, it’s absolutely one of those things. Yeah, no. My economic background consists of learning how to grow up on food stamps with a single mother with a younger brother who is autistic. And, you know, parents, you know, went through the 70 drug scene and everything and just not, you know, a typical background that you might think of as a business leader went to community college and dropped out my junior year, you know, done all kinds of different things along the way. A lot of ministry, you know, at our local church that we kind of helped start up back in the day and somehow by God’s grace ended up in the investment industry and really took to it, you know, so that’s my background, you know, in a nutshell, but I’m certainly not the guy you would have picked in high school or junior high or anything else is like, Hey, this is this is the guy who is going to start an investment firm. I got D’s in math, hated public speaking, and here I am, talking to lots of people about money. So there you go.

Luke Roush: Well, you know, the concept of biblically responsible investing is really something that you helped really to initiate, maybe to share a bit more about that and then maybe how the movement has evolved over time.

Robert Netzly: Yeah. And I certainly didn’t invent the idea, for sure. You know, my professional background was at Wells Fargo Private Client Service. Working out in Carmel, California really is happy as a clam there and then of learning how to do math and learning how to talk to people again by God’s grace. But then I stumbled across this whole concept of biblically responsible investing online one day. This idea that you’re not just looking at the financial returns of a portfolio, but you know, God probably cares about the kinds of companies we’re investing in. Are these companies manufacturing abortion drugs or selling pornography or violating human rights in their supply chains? What are these companies doing? What are you doing as an owner to profit from these things? And what does the Bible have to say about that? So that’s that’s typically responsible investing. When I first looked into that, I honestly the Holy Spirit has gripped my heart because here I was president of our local pro-life pregnancy center at the time, and I discovered I owned stocks in three companies that manufacture abortion drugs and got hit me upside the head with the fact that every time that young lady goes across the street has an abortion. Planned Parenthood. I just made money in that transaction. I literally profited, recommending all my clients to do the same thing, and that was my intro to biblically responsible investing.

Luke Roush: It was there. Was there a moment in time where all of a sudden or maybe an experience where you realized, like, I need to leave wells, I need to start a firm? You know, oftentimes in that formation story of a company, there’s some sort of injustice or something that’s, you know, just broken in the world that you feel called to fix. Let me speak a little bit to kind of that catalytic zero to one moment.

Robert Netzly: Yep, and it came really quick. Once I again stumbled across this realization, I just I could not do my job with a clean conscience anymore. In two weeks time, I was just dead in the water, which was, you know, troubling because I didn’t know if I could even stay in the business. I’ve never met anybody doing what we do now. I have no conception that there is even something else going on in the industry, you know, in other places, in a Christian sense. So I went home, told my wife, Hey, honey, I think the God’s call somewhere else, and I need to work somewhere else in a different industry. And here’s what I found. And she’s like, Well, we got two babies in the mortgage. So what’s the plan? Right? And ended up just was this close to going to seminary? I was honestly in conversations with multiple seminaries, and like that was I was just going to do a pastor thing. And the only way I could think of staying in the business was, well, I suppose I could, you know, leave the bank start an independent firm that only did some sort of. Look, gold type, you know, investing, but that’s crazy, because I don’t have the experience or money or connections or, you know, all the things that you’re supposed to have before you do something like that. But as we prayed as God does, he just made it unmistakably clear through a number of ways. But the compulsion was just undeniable that that’s exactly what I was supposed to do. So two months later made the incredibly frightening decision to leave the bank left my clients there with a team I’d been with previously started over or just need a laptop. Less than two months of savings, the bank fully prepared never to pay my mortgage ever again in my life and fully convicted. This is exactly what God is calling me to do. It doesn’t mean it’s going to be financially successful, so maybe I’ll go broke in six months and move on to the family with my mom and whatever and then go to seminary. But whatever God like this is your plan. I know this is your call in my life and I’ve got to obey. So that was, you know, a little over 10 years ago. So while the think

Henry Kaestner: Robert, one of the things that you’ve talked about a bunch is what does it look like to engage with companies and be kind of an activist shareholder? Having some skin in the game? Being a shareholder affords you a different opportunities to be able to witness and be heard. Talk to us a little bit about what that looks like in the investing you all do.

Robert Netzly: Yeah, and this is again, I mean, it was accidental almost that this whole business started. I got into this industry and then really sort of fell into this idea of shareholder engagement wasn’t something that was on our, you know, business plan to do. But as we, you know, as guidance really grew this business from those early days and started opening our eyes to there’s more Christians in this industry that God is doing the same sort of work in their hearts. It wasn’t mine and looking for ways to do this. It just became evident that there is a larger voice that needs to be shared with corporate America. And these companies were investing in, you know, occasionally a quote good company will sort of get off the rails or something. And now we got to dump some out of our portfolio or think of, you know, do something there. And I think the first time that we had a conversation around this idea was a friend of ours in the industry. Another Christian financial advisor was working with Chevron, kind of engaging with them to stop giving money to Planned Parenthood. They’ve been donating money to Planned Parenthood, and we live near the Chevron headquarters in the Silicon Valley area. And so he asked, You know, can we attend this meeting and stuff like, sure. And so you end up going to this meeting and happy story. Chevron stopped donating money to Planned Parenthood and, you know, the short version of that story. And that led us to sort of think of, well, what other companies might we engage with? And so over this time, when we’ve seen things at a business that we’re invested in or we like to invest in a business that needs a little help, we just pick up the phone and call investor relations, send an e-mail. Investor Relations and we’ve had amazing success that we never thought we would with many companies, huge companies that are actually interested in hearing from all of their investors, including faith based investors. And oftentimes are very receptive to integrating the feedback they hear from us into their business practices. So it’s been really encouraging and it’s become a bigger part of our business and kind of day to day here it inspire.

Luke Roush: So you’re kind of describing, you know, and this concept of kind of negative screening, positive screening, active engagement, which you’re kind of describing, is that third bucket. Maybe you speak a little bit to kind of how you’ve seen bride evolve over time along all three dimensions of how people might think about their faith being reflected in how they shepherd capital.

Robert Netzly: Yeah, I think historically the exclude part of that equation has been the starting point, going back decades and decades, and it’s absolutely essential. I mean, I do believe strongly converted from the word of God that it’s just like I should not, as a Christian, be making money from abortions, right? And a number of other things. So we have to be looking at the exclusionary criteria in our portfolios. But then we go beyond that. And really, the nexus of inspire and Inspire was this idea that well, in addition to excluding where the most glorifying companies, I mean, there’s companies out there that they’re not necessarily Christian or run explicitly by Christians or Christian values, but they’re operating in line with God’s principles like fairness and morality and ethics and things like that, right? Surprise, surprise. And I wonder if we could measure the relative biblical alignment of companies and then invest in those most biblically aligned companies. You know, the most inspiring, positive companies that are creating products that are blessings of people that use them, that have policies and practices that just bless their employees, that bless the communities they operate in a lot of different specific ways. And so we created what we call our Inspire Impact Score methodology, which is just our rules based approach to scoring companies from a negative hundreds of positive 100. We invest in anything above zero, anything below zero we exclude. But really, we’re looking for those highest scoring companies as a real, faith based approach to environmental, social and governance investing ESG. And that’s been a big trend as we’re seeing more investors. Is sort of ride the coattails of a broadly secular, you know, progressively secular, oftentimes ESG movement in the industry and say, Hey, you know, the Bible talks about environment, the Bible talks about social, the Bible talks about governance. What about a biblical worldview on those issues from a positive perspective? So we invest in those highest rated companies from a biblical lens in those categories? And then the third is that engagement where we have this, you know, as investors, we have an opportunity to call the companies that we invest in. We can file shareholder resolutions and get involved in proxies. If you want to or just very casually just off the books to have conversations, say, Hey, you know, I’m an investor, I’m a Christian, I care about certain things and you know, x y z like, please don’t give money to Planned Parenthood. That’s something that I don’t really want my company doing. Here’s why. In a number of other issues. So that’s that exclude, endorse, engage sort of framework that we use here to inspire. And we’re seeing a lot of other faith based asset managers and wealth managers get more involved in that, which is really exciting to think. You know, as Christians, as the industry, there’s a lot of money 20 trillion dollars plus that are controlled by Protestants, evangelicals and Catholics in this country alone. Stocks, bonds, mutual funds. That’s a lot of capital that can have a lot of influence if we just are intentional with those conversations.

Henry Kaestner: One of the things I want to do is just go off script just a little bit. We’ve got a great carryover audience with Faith Driven Entrepreneur and you are a Faith Driven Entrepreneur. You’ve seen an opportunity, a problem to be solved. You’ve leaned into it, you’ve created a business around it, a business that has grown very rapidly. What’s it like just to navigate through all that? As you know, your interview by The Wall Street Journal or The New York Times, all of a sudden the spotlights on you and the more influence you have, the more critics you have. What’s that ride been like for the last five years?

Robert Netzly: Unexpected as everything else, and to flesh that out a little bit. Yeah, I mean, from the moment I left Wells Fargo and started talking to clients about this concept, it was obviously God was at work, people’s jaws at the floor, their eyes opened like, Wow, I’ve never thought about this before. How do I invest this way? I had to bring other advisors into the practice, not my plan. The influence and business just started growing, and I have no business training background, as I alluded to, and it’s been failing forward fast and trying to keep up with what God is doing. So there’s a whole lot of learning on the fly. A whole lot of build the airplane before you hit the ground, FDE jump off the cliff and all of those analogies that entrepreneurs are aware of. Our particular story around 2015 is when we started aspire as a standalone company and realize that there’s more of an industry and we need to create some products like our exchange traded funds and other asset manager products to really serve the financial advisors that we’re trying to go all in for God’s glory in the practice. But there was a dearth of, you know, product availability. And so in 2017, we ended up launching the first two ETFs in the New York Stock Exchange on a wing, a prayer hole, up top ramen beans and rice, you know, months without salary. Small, committed team that just knew that. We knew that. We knew that God was calling us to do this, and we had to bring this to market because God’s people need to be empowered to invest for us, and they weren’t empowered to do that. And so by God’s grace, we lost this to its 10 year goal ended up being like a one year goal somehow. And the next day, we’re yeah in the New York Times, on the front page of the business section in The Wall Street Journal. All these other hundreds of articles and interviews later, just trial by fire and what we’ve really learned from that process. Obviously, what we’re standing for is not really well embraced by many people in our world these days, and we’ve been called lots of names, you know, for believing things about the Bible. But we’ve just been encouraged also that there’s such an outpouring of support from people who do love God and do believe the Bible and are just so thankful that first week I got a Twitter message from a gentleman in Zambia and he was just gushing and saying how he’s been praying for us ever since he heard the news of the New York Times and that he bought shares in our ETFs in Zambia. You know that very first week we were trading, you know this hundreds, literally hundreds of other stories like that. So we’ve been incredibly encouraged that this is a work that God is doing. He is opening the eyes of his people all over the world, literally that he cares about how we manage his money and that when you step out in faith to follow God and something he’s calling you to do, he’s not going to let you get just get run over by the bus, right and say, Oh, sorry, you thought you were following my instructions, but you made a wrong turn? Sorry. Now he either protects us by correcting us when we do make those missteps or encourages on those correct steps that correct direction. But if you’re stepping out in faith, you can’t make a wrong step is the point. You’re not always going to have success when actually you’re not always going to, you know, avoid problems, but God will be with you, and he will take you through those things and faithfully follow his leading through prayer to the world through intensive to the Holy Spirit. Direction your life. Without a doubt, we would not be here if it was us trying to figure out a business plan. This has been trying to follow God’s leading in our life as a business. A lot of times as counterintuitive. A lot of times it flies against the business convention. We got a lot of advice from a lot of smart people who got decades of industry experience that our idea was terrible and we were going to be miserable failures. Some of them were Christians, but we just knew God was calling us to do it. And it’s not bad and thankfully miserable failure. You know, we were managing about $2 billion of assets right now or the third fastest growing registered investment advisory firm in the nation, two years running in 5000 top quartile. Like all glory to God because this was not our plan. And he is just doing a work and we’re trying to keep up and be faithful. That’s the calling is to be faithful. And that’s what we’ve learned.

Henry Kaestner: We started a new program with the Faith Driven Investor podcast. We’re kind of doing a pilot on it. It’s called Lightning Round, where we go through, and we asked our guests a series of questions maybe proceeding from easy to hard. But we want to try that with your new game.

Robert Netzly: I’m game. I mean, do I win a prize or something? And I do? Well, that’s big

Luke Roush: prize for those. We’re in and out burgers and the children’s prize?

Henry Kaestner: Yes. All right. Number one, there’s been much talk about the fact that the next generation, the next generation is just much more conscious about what matters to them. And I’m thinking about this as a father of a 17 year old and 16 year old and a 20 year old. Big name and teen fashion is Hollister, you move the company to Hollister, California. Is that the pander to this next generation of new investors

Robert Netzly: and move the company away from Hollister, California? To be clear, so we started the company in Hollywood, California, which has no relation to the clothing brand other than enterprising high school students selling their Hollister phys ed. You know the thing about $15 for $75 on eBay? So that’s the limit of the connection there. OK.

Henry Kaestner: So I was hoping it was more so for us. It was just brilliant marketing. You’re a fourth grade teacher. Give us one quick story 30 seconds or less about your favorite interaction with a fourth grader.

Robert Netzly: Yeah, I was almost the fourth grade teacher. Again, not to correct the host of the show twice in a row, but I went to school with the fourth grade teacher and I was this close. I did guest teaching during college before I dropped out. But an interaction that sticks with making those sort of student teaching things was clear. Today there is this little fourth grader named Paul in California, whereas doing my student teaching and there’s a little school garden. We went out there and we were pulling weeds in the school garden and this little kid, you could tell he just didn’t come for the best family. He had behavior issues. I was sort of assigned to sit with him like in the class because, you know, the teachers like, you just deal with this and that’s, you know, if you can deal with this kid like, great, thank you. So I can teach the other ones. But me and Paul just like, hit it off and I like I started saying, Do look at that, we you just that’s a huge weed. You are like a championship weed puller, Paul. And he just his eyes got big and he was pulling more weeds faster with more enthusiasm. Many other kids in that playground would bring every single one of them show me so I could like, give him an attaboy, Paul. And it just was so great. Is it a delight to me to see you when you encourage people?

Henry Kaestner: I imagine that translates into role as being a manager. Yeah, right? Because I’m not going to let the hostage thing go. I visited you in your office. It was on Main Street in Hollister, right?

Robert Netzly: No, we moved it from there. We started it there and we moved it. Now we’re in Boise, Idaho, so.

Henry Kaestner: Oh my goodness, I didn’t. Yeah.

Robert Netzly: Yeah, we moved. We escape California and are here. So we moved here in 2020. Super happy. We still have an office in California. I just we love our people there and it is a great community and

Henry Kaestner: you did teach fourth graders OK and I did. Yeah. Aside from your interaction with Chevron, what’s your favorite interaction you’ve had with a company in your role at Inspire?

Robert Netzly: That’s a hard one. I had some good ones. One company that will remain nameless, so I don’t throw them under the bus, but it was a different sort of conversation. It’s a major military contractor, major military contractor, and we called them because they had seemingly started moving towards endorsing, like LGBT activists, sort of legislations and policies that were also discriminatory against people of faith and things of that nature. And so we were just ERG. So I ended up having a conversation with the CFO. And after a few minutes of sort of getting to know each other, he’s feeling me on the phone. He realizes this is a safe space. He opens up and says, You know, I just got to be honest. I go to the Calvary Chapel in the next town over on a Christian. I love Jesus. I resonate with the things that you’re telling me right now and your concerns. But here’s my problem. I’m the CFO of this major military contractor, Fortune 500 company. I sit on the board, obviously, and we are just getting hammered by this really militant group that wants to push this particular agenda and push us in this direction. And I don’t know what to say, but I can’t just say, you know, I’m a Christian. I don’t believe in this stuff. I don’t want to support it. Like that would be suicide and wouldn’t be effective anyway. But he said, Thank you for calling and sharing your perspective because now what I can say in the boardroom is, you know, actually, I just had a conversation with this. Group of investors represent faith based investors all over the globe who see this issue in a different way. And so now I have some counter pressure that I can just say, Hey, you know, we need to serve all of our shareholders. Let’s just do our business and let’s stay out of the social politics arena and just do a good job for our shareholders and make good products that help our troops and everything else stick to the plan. And so it gave him something to, you know, to bring to the meeting. So I thought that was really cool, that we could have that effect.

Luke Roush: All right. I’ve got my three verses. You’re an early adopter in biblically responsible investing, and yet, you know, 10 years in or 15 or 20 years and you look at sort of the percentage of assets within kind of faith driven institutions that are managed in kind of a traditional British manner. And it’s still it’s really early. How do you walk alongside, you know, other investors that maybe kind of either on a different glide path towards a different way of doing what they do or maybe have different views? You know, I’ll always remember this time when Henry and I were in Texas talking about, you know, we kind of avoid alcohol, firearms, adult entertainment, all these things. I said, let’s go back to those firearms for a moment. And so there’s different. People who kind of see things differently, a couple that issues that we should all be able to agree on as believers. But then there’s also some kind of different perspectives, maybe just kind of walk us through and it’s maybe more than a 30 second answer, but walk us through how you have engaged with others in your own journey and then translated that to the journey that there are.

Robert Netzly: It’s a good question. And for us, as an asset manager who you know, you buy one of our funds, we can’t customize this fund for people, right? And so what we found is that having a standard approach to how we’re screening on the screens, we just screen out the same things for everybody. And we don’t do the whole custom screening thing. What we found is if you ask a client what’s important to you, I’m going to customize your screens. Usually it wraps around an . They don’t know how to think about that. And it just kind of it’s not a really positive conversation and it sort of stands out. So instead, we’re just like, what? Here’s the screens and we take the approach where we want to defer to our brothers and sisters who, you know, don’t have a problem with alcohol. I’ll drink a beer with you, right? But I understand I’ve got brothers and sisters who have alcoholism in their personal history. Maybe they’re had an abusive parent or something, and they don’t want to have anything to do with that. So we keep alcohol out of the portfolio. I’m a gun owner. I live in Idaho, you know? But I understand the other side of those issues. And so we add deference to our brothers and sisters. We screen out more than just sort of what, you know, our own personal conscience or whatever else may lead us onto. And what we found is a sort of counterintuitive that the people who care about those issues are absolutely grateful. It allows them to invest with a good conscience in your product. The people that were like, well, alcohol and I don’t really care about it. Well, it’s not like they want to invest in Budweiser specifically, and they’re not going to invest with you because you don’t own Budweiser. It’s just not really important to them. So as long as you can deliver a good product, the more you screen out, the more people you will actually attract and be able to serve is what we have found, and we see people having challenges and they try to water that down or sort of find a middle road. You end up not appealing to anybody.

Luke Roush: What’s something that you see differently than the rest of the world, but they would disagree with you?

Robert Netzly: Yeah. Well, I mean, as far as like the world in general, secular terms of the world, obviously lots of things we see differently. The whole approach to the ESG conversation, you could start with that. You know, we see that differently, both within the faith community and within the secular community. We’re a little bit of a pariah in both of those categories, sometimes because in very conservative Christian circles, ESG is, you know, synonymous with, well, progressive liberal. And they think, well, you know, ESG is evil. On the other side of the equation, you know, ESG does mean, well, the liberal progressive. And we’re not that. And so like, who are you guys to say that you’re is ERG like, you’re not like us, you can’t believe the Bible of Jesus and also see your ESG. So that’s a big differentiator. I think it just makes sense. The Bible tells us to take care of the planet. It doesn’t mean that we can’t pump out of oil out of the ground, but we should do it in a responsible way. Right. We shouldn’t just rape the planet, you know, indiscriminately. We should care for the stewardship of the planet does say how we should care for society people. You know, abortion is wrong. We shouldn’t do that. Those are social issues that are not, you know, the progressive ESG style and governance, corporate governance. Yeah, if the executives are stealing from the company, that’s wrong. If they’re bribing politicians, they shouldn’t do that. So having a truly faith based biblical worldview on ESG and using that terminology, I think is important for a number of reasons, but sometimes causes us to need to explain, you know, on both sides of the equation, you know what that actually means.

Luke Roush: What’s the new discovery? Since you remove the Boycie, you appreciate the most? And what’s the thing that you miss the most about Hollister

Robert Netzly: new discoveries in Idaho, Ben? Just freedom and just leave it at that in a lot of ways. I do miss. There’s just so much in California in general. I mean, you can drive to the beach and then later you can be in the mountains and you can be in the redwoods and it’s all around there, right? And it really is a special place. Just the diverse topography here. Here you’ve got mountains, you’ve got sagebrush, you’ve got topography, but it’s not quite the same. So I’d say I miss that. I was also, I’ll say I’ve been surprised to find that there’s phenomenal coffee shops and exquisite cuisine, including sushi. I had the best sushi in Boise, Idaho. We’re going to have anywhere else in the world. Come on, come on. There is some really good restaurants here and the coffee shops are like and is better in San Francisco or Santa Cruz or any of those other places. I challenge you to that test. That is absolutely true.

Henry Kaestner: All right. So I think you did well. I think you’re around 30 seconds, maybe forty five. But I thought the answers were awesome. We’re going to go back to a tried and true question that we’ve asked every guest across the Faith Driven Entrepreneur podcast and Faith Driven Investor podcast, and that’s something that you’re hearing. From God’s word, maybe it’s today, maybe it’s over the course of last week, but how is God speaking to you through the Bible?

Robert Netzly: Well, just recently, and this is related to the business where Jesus is really criticizing the Pharisees about use of the analogy that it’s like a cup this washed on the outside, but inside it’s all filthy and they’re just caring about the outside. But the inside is dirty. You know, there’s a lot of applications in our personal lives. We don’t want to look nice and shiny, but that our personal life is a wreck in our thought. Life is a wreck. And I’ve just been convicted that as the Supreme Court is looking at, you know, potentially rolling back Roe v. Wade and broadly expected, you know, ruling that just recently, I was given a statement from one of the most outspoken advocates for pro-life issues huge ministry, $200 million or some endowment. They own five stocks and companies that are manufacturing abortion drugs. Obviously some intentional, but it’s there and it’s across the Christian landscape. And so, you know, as we’re praying for an end to abortion, how can we not also be investing for an end to an abortion? So we really need to, you know, not just have a nice looking portfolio in terms of returns, risk adjusted or anything, but inside we’ve got to clean that up and things like abortion drugs do not belong, you know, in a portfolio like that. So that’s the stuff that’s been on my heart and God’s grace will we’ll get there?

Henry Kaestner: So you have been called the best dressed man in the world of faith driven investing. So that has nothing. So that passage in Matthew that you refer to presumably has nothing to do with you.

Robert Netzly: I hope not. But yes, in some sense, of course, my cup inside needs to be washed daily so that you’re

Henry Kaestner: not refuting the fact that you’re the best dressed man in Faith Driven

Robert Netzly: Investor. Well, I’m not saying that either. I don’t know anything.

Henry Kaestner: It’s awesome seeing you again. I’m sorry to have not known that you believed. I mourn the loss of another great, committed Christ follower that’s serious about faith and investing in this fine city, California. We’ve lost two great ones over the last two years, Luke and now Robert nicely. But I’m grateful for you. Spend the time and in via Zoom and and share with us.

Robert Netzly: It is my honor. Thank you guys for having me.

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Johan du Preez’s career is defined by ambitious initiatives and big results. He says,“Capital always has an agenda. Whether by design or default, explicit or subtle, positive or negative, the application of capital facilitates and drives a bigger agenda.” Find out how this philosophy guides him to invest in partnerships that benefit the Kingdom, not just the marketplace. 

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John Coleman is Managing Partner of Sovereign’s Capital. He is also a frequent writer and public speaker, with a recurring series of articles at Forbes and HBR. John previously published two books. His third book, “The HBR Guide to Crafting Your Purpose”, was published in January of 2022. John is going to be co-hosting the Faith Driven Investor Podcast. Before he does, we wanted to sit down with him and talk more about what it takes to craft your purpose.

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast, as always, I’m here with Luke. Luke, you’re calling in from Tucson, Arizona, so you’ve taken the show on the road.

Luke Roush: We haven’t been out here with Kyle Pratt and Vermeer Southwest, but it’s great to be on the show.

Henry Kaestner: That’s awesome. That’s another great Faith Driven Entrepreneur leading the business, creating making it happen. Lebanon employs Lebanon customers in a way that points to a God that loves them and loves big machines. And I’ll tell you, I love the tour that Carl is taking us on. There’s something about the little kid in me that just loves these kind of ditch digger type of big machinery. I got in the cockpit of one of those front end loaders. I felt like at five years old again, it was time. Travel was awesome.

Luke Roush: That’s why I’m here basically for that feeling yet again.

Henry Kaestner: Yeah, yeah, that’s super cool. So today is a special edition of the podcast because we are introducing the world to our great friend and partner John Coleman and John is such an encouragement to us personally. And then, of course, professionally. And John is joining the podcasting team, and he’s going to be taking over as co-host. And many times he’s going to be the lead host. And one of the things that you always want to do whenever you’re involved in a project is to bring other people on board that are better than you are at whatever the task is that you’re accomplishing. And this sounds like false modesty. And maybe you thinking, maybe it’s not. Maybe you think it’s actually a really low bar, and it probably is that, but John is a guy who really gets the space around and understands it at heart level. He, of course, is a committed follower of Christ. And it’s just really encouraging for me. And maybe, Luke, you’re speaking this a little bit too. But you know, when you have had your hand at the plow for a long time, as we have with sovereigns and then Faith Driven Investor, when somebody that has John’s type of background and has been doing investments at such scale but says, you know, gosh, what you’re doing is really important and kind of the zenith of his career, he comes over into what you’re doing. That’s amazingly encouraging.

Luke Roush: It is, indeed. You know, and I think the movement that we’re all part of that all of our listeners are a part of is increasingly able to recruit, retain and excite some really world class folks from secular asset management firms that I think feel a sense of calling and purpose in mission to do something more. And there’s certainly, I think, a lot of asset managers, a lot of advisors, a lot of other players in this space that are increasingly developing products that are interesting and sort of worthy of pulling a broader group of folks over. And like you, Jon also has a face made for radio and voice made for print journalism, so we’re excited about that.

Henry Kaestner: Well, yes, true about me, very much not true about Typekit. We’ve already established that going to need to do some sort of a video release you get, I think, the best beard in the feature of an investment labar LaVar. Maybe also a low bar, I don’t know. But you know, the other thing that gets me excited about Jon is that there are some number of national champions in the mix of what’s going on in the Faith Driven Investor ecosystem. I immediately am thinking about Geoff Johns, who went to Duke University, where he was a national champion skydiver. Most people don’t know about that.

Luke Roush: Yeah, I mean, that’s a good bar bet. What was Geoff Johns, national champion at No. One, when the bar would guess sky diving? I don’t think

Henry Kaestner: I mean, I think, well, it’s going to be a good test of whether people are listening to Faith Driven Investor Praxis. Yeah. So he was a national champion skydiver, which I think is just crazy, crazy, cool. He, of course, for those of our listeners who do not know, co-founded the Impact Foundation with Amy Minnick, which is an incredible organization that helps people to invest their philanthropic capital. So I think if you’re donor advised, fund money, your foundation money supporting ERG money, that money might do an incredible amount of good for God through investing. In some cases, the causes that have got is put on your heart to give money to. In some cases, you may go pretty far by investing, and most people don’t know you can do that with your philanthropic capital as what Jeff does or what you mean and they’re expanding can do remarkably well. It impact foundation and he, as you now know, is a national champion. But John Coleman, also a national champion and something that’s a little bit more germane to what we’re talking about right now, and that is he was a national champion in debate. Am I getting this right, John? By the way, China is, we’re putting you on the spot with this kind of awkward question. Maybe it’s not that awkward, dude. You’re a national champion. That’s incredibly cool. Welcome to the show. Welcome to the program. Welcome to the ministry. You’ve always been a part of it, but we’re this is your coming out party.

Speaker 3: Oh, I’ll thank you all. Look, I was going to say thanks for the kind words until Luke jumped in with the face made for radio comment partner, so on. But you guys know I’m just so humbled and honored and grateful to be working with folks like you and the rest of the team at sovereigns and the folks at Faith Driven Investor and just really excited about the mission that we’re on together. So I feel remarkably privileged to be in this position and working with the all. So. Thank you for having me on the show today as well.

Henry Kaestner: Yes, yes, OK, pleasantries aside, national champion yes or no? Tell us about it.

John Coleman: Wasn’t debate actually. So debate is more for people who are willing to respond to others. I was a speech national champion, which meant I just got to monologue for ten minutes without anyone responding, which is, as Luke knows how I prefer it these days as well.

Henry Kaestner: Oh, that’s awesome.

Luke Roush: That’s all that sounds like a good podcast host.

John Coleman: As long as you don’t challenge anything. I say Luke. Yes.

Henry Kaestner: And so as Luke and I like to do with every one of our guests, we try to get an autobiographical flyover. So who are you where you come from? What motivates you? We’ve got a whole bunch of different questions. You are a investor. You’re a family man, you’re an author. We’re going to get to all of these things. But tell us about where you come from.

John Coleman: Yeah, gosh. So I grew up in Georgia and Florida. I was actually born in Florida while my dad was at the University of Florida, getting his college degree. He was a rodeo cowboy at the time, although my mom made him retire from that profession when I was born and had a great upbringing, lived in the Panhandle for a little while, which is where my dad’s family is from. Grew up mostly in Columbus, Georgia, which is about two hours south of Atlanta, and my mom’s family’s from all over Georgia and most exciting Vidalia, Georgia, known for its sweet onions, which hopefully people have had and, you know, had a great upbringing. There grew up in a Christian family and so was always raised around Christian principles. Like a lot of kids, I had my own ups and downs in my faith, you know, as I went away to college and those sorts of things, but never really found myself very far from it. You know, there were points in time where it differed a bit, but I got to go to a Christian high school. You know, it was really brought up around the habits of the Christian faith. And so a wonderful foundation there that I can thank my family for and my community for. After school, I really had no idea what I was going to do. I should have a better story about my lifelong calling to be an ambassador here, but I actually thought I might be a journalist or a think tank person or a professor and stumbled into my first real job after college. I was desperate for a job. I was ending a summer job and needed an apartment in like two weeks. I was losing the apartment they had provided. And so I took the first job that was offered to me as I interviewed, which was as a quantitative energy trader at a little hedge fund up in the D.C. area. It took me about a week to learn that I was the world’s worst quantitative energy trader. It fortunately took my firm a little bit longer than that, so I had some time to prepare. But, you know, I was then able to know to explore a bunch of different stuff for my career. I spent some time at McKinsey and Company. I did some graduate studies in both public policy and business and then spent about nine years at a firm called Invesco that did diversified money management globally before coming to sovereigns. In the midst of all that, I managed to meet a lovely woman who became my wife, Jackie Coleman. She has traditionally been in education and counseling. She was actually a marriage counselor when we were dating, which led to the most stressful application process of my life, which was to be Jackie’s husband as she was grading all my, all my tests that she put me through as we were thinking about getting engaged. And and yeah, we’ve had four kids over the last nine years, so we have four little kids. We love to write. We love the outdoors. We love to travel. We actually just got back from Israel yesterday, my first trip to Israel, which was really life changing, and we have a great life. And then I was fortunate enough to run into Luke a few years ago, and he didn’t scare me off before I met you, Henry, which is the good news. And reconnected with you guys a couple of years ago and was just really, really fortunate that you all invited me to join the sovereign’s team about 13 months ago, now last February. And I am just so grateful for that and have had a blast so far

Henry Kaestner: was a no brainer. And I’ll speak for Luke. Absolutely some number of people that listeners may not be familiar with Invesco big institutional player. Tell us a little bit about what Invesco does and then the role that you played there.

John Coleman: Yeah, I had a few different jobs there, so Invesco is about a one point three or four trillion dollar asset manager globally. They manage about that much in assets, and they do basically everything from kind of ETF and index provision on one side, as the S&P 500, they have the QQQ. So if you’ve been watching the NCAA tournament, you know the Nasdaq QQQ all the way over to actively managed mutual funds, fixed income and then into private markets. So things like direct real estate and private equity and fund of funds and venture and those sorts of things. So really, a full spectrum investment manager, I have. A few jobs over the course of time while I was there, I was our head of strategy for a while globally. Worked a little bit on our digital businesses, things like robo advice, et cetera. And some of the acquisitions that we did as a firm and then really ended my time there working in two areas. One was our global institutional client business where I was a member of that kind of operating committee there. We managed about $360 billion for institutions around the world, things like sovereign wealth funds or insurance companies. And then on the other side of the house simultaneously held a job in private markets, helping build out our capability in real estate, private equity, private credit, etc., including running our fund of funds in secondary capability there for a while. So I had a great, diverse experience. There is a big global firm, so I learned about all elements of the business, which was incredibly helpful and it was a great platform. I think for the work we’re doing now, just giving me a good understanding of that marketplace.

Luke Roush: So John, on the one hand, you know, having a job like that with a firm like that would seem to be, that’s kind of what everybody aspires to, right? That’s kind of the goal. That’s the end game. What led you to feel as though you really wanted to be doing something different? Maybe share a bit about that.

John Coleman: Yeah, yeah, absolutely. So it was a great firm and really appreciated my colleagues there, you know, at this stage of my career. There are a few things driving my professional decisions. One was will come to it in a little bit. In 2019, I actually started writing a book on purpose for Harvard Business Review. And in the midst of writing that COVID hit and was thinking about career things, and it really convicted me about just making sure that at this point in my career, I was really aligning my personal values and my sense of mission and my purpose with an organization in a deeper way. To be honest, before I started talking to you all, I didn’t know that I could have the kind of integration that I have now with my faith and with investing, you know, that seemed like a pipe dream. I thought I might have to go to a nonprofit or something like that, and at the intersection of those two wasn’t. I wasn’t able to do that right until I found y’all. And I also had this belief that I wanted to go out and help build something to join a smaller firm where I could be a part of the team that was really helping to grow and build it. And again, you know, the path to sovereigns was even greater than I expected because we’re not just building a firm, I think we’re trying to build an entire type of investing in and we have a mission that’s broader than us in a movement. And so, you know, those two things coming together with the idea, you know, I’m a little bit further along in my career now. I know how important it is to just love the people you work with every day and to be excited every morning to get up and work with the people you want to work with. And you know, the mission alongside the opportunity to build along with working with the best people that I could possibly hope for, really created just the perfect situation for me to want to come over.

Luke Roush: One of the things that I think you’ve pushed us on and stepping back actually from sovereigns, I think you’re starting to push a broader dialog around. Is this idea that as investors, we aren’t in a kind of values neutral arena, that’s not the space that the world pushes us into. Would you mind just sharing a bit on this construct that all investing is impact investing, which I’ve heard you give that talk? Others who are listening to the show probably heard you give that talk, but maybe just unpack that a bit.

John Coleman: Yeah. You know, I think in popular language right now, a lot of people think of the term impact investing as concessionary investing, right? It’s where you have a mission and you’re trying to accomplish that mission with your money, but you might be willing to sacrifice return in pursuit of that mission. My belief if you look at the mainstream world of ESG investing, environmental social governance investing, which is now sweeping the world, is in fact that all of your investment dollars already have an impact. There’s really no neutral portfolio, right? And this has been true throughout history, but I think people are becoming more aware of it. Every dollar you put to work has an impact for good or for bad. And the only question is whether you’re going to direct that impact or you’re going to leave it to chance or you’re going to allow another institution to have that impact on your behalf. You know, what’s interesting is I think the mainstream investment management world has realized this in really dramatic fashion recently, and it’s actually the faith aligned investment ecosystem, particularly the Christian investment ecosystem that has been a little slow to come around to this. So some of the statistics I like to throw out there, Luke, you know, if you look at managed assets in the world in 2020, there were about one hundred and three trillion dollars in managed assets around the world. Now that’s probably north of there. I guess it’s somewhere around 120 trillion or something like that. Fully a third of those assets. So thirty five trillion were in explicitly ESG, environmental social governance investment strategies in 2020. So fully a third of the managed assets in the world. We’re explicitly targeting impact of some sort. And I would argue that even outside of that, that other 60 trillion in assets was similarly having an impact. So if you dig into what makes an explicit environmental, social and governance strategy that can be things like carbon neutrality, it can be negative screening like keeping fossil fuels out of your portfolio or positive screening, like supporting renewable energies on the environmental side. On the social side, it can be things like pursuing diversity and inclusion in your company or diverse boards of directors, or it can be excluding companies based on human rights issues in the mainstream ESG world. And then on the governance side, it can be diversity in the executive suite. It can be incentive systems, et cetera. But those are explicit strategies that has really blown up, and there are a number of approaches to that now around the world. And so you get this $35 billion, everything from basic negative screening to positive screening for the types of companies you want to invest in somatic investing where you say this is a renewable energy fund or this is a fund that focuses on carbon neutral companies all the way up, then to activism right or control like you would see in private equity. And so this ESG ecosystem in the mainstream world has really flourished. And as you dig into that, you know, a lot of your institutions on the Christian side, they would agree with some of those things, right? I think very few of us don’t want a great environment, right? We may have different approaches to that, but that’s what we want. But be there may be unaware actually of how they’re having an impact. And I won’t drone on about this too much. But if you look even at the rest of managed assets, you know, think about passive investing like your ETF or index exposure. A lot of people view that as neutral. I’m in the S&P 500. But if you dig under that and look at what constitutes that, you know, the top 10 investment managers in the world control 30 percent of the S&P 500. So there are 10 investment managers that control a third of the biggest publicly traded companies in the world. And if you look at the big three, which are BlackRock, Vanguard and State Street, which control most of the big passive holdings, they’re around eight point eight percent of each S&P 500 company in the country, and they’re the largest shareholder, taken together of 88 percent of the S&P 500. And if you look even beyond their ESG, what they’re doing with that is they’re using their proxies to vote, they’re issuing corporate resolutions, they’re pressuring companies to do things. And so I encourage people to unpack their portfolios and they’ll see even if they think they’re not really doing anything. For the most part, all of us are having some impact with our portfolio now, an explicit ESG strategies or other strategies. We often just don’t realize it.

Luke Roush: So one follow up on that, John, a lot of our listeners and I would put myself in this camp up until, you know, only a few years ago would think that whether it’s a public company or whether it’s a privately held company of really any size it, what can I do right? Like how much am I really going to hold? Am I really able to kind of have my voice be heard? Maybe just kind of unpack, because there are a couple of noteworthy examples recently of relatively small stakes swinging a big stick within large companies. Any comments you’d make on that?

John Coleman: Yeah, you know, I do think it’s overwhelming to kind of look at BlackRock, State Street, Vanguard, these multitrillion dollar companies, Invesco and say, of course, they can have influence, but like, what influence can I have? But I think one of the most remarkable things about public and private markets is that with a relatively small pool of capital, you can have a massive impact to sort of the public company side because that’s the hardest to get your mind around. When you buy a company in private markets, you kind of get that you can have influence on that company. But public markets, it seems like I’ve got to move billions and billions of dollars to have an impact. There was a great example recently of a group called Engine Number One, which is a hedge fund effectively located on the West Coast. That hedge fund is around the size of Sovereign’s Capital, the firm that you two founded, and that I’m happy to join today and with a $58 million investment point zero two percent of its shares. They invested in ExxonMobil and were effectively able to get three board seats at Exxon to try and push a more radically pro-environmental policy within that group. So 0.02 percent of shares if memory serves. And yet, because they were able to lobby a number of passive holders to vote with them, they issued a series of corporate resolutions. They were able to lobby for board seats and they were able to effectively take over not majority control of the board, but a substantial plurality of the board to try and enact this new, more radically pro-environmental set of policies at Exxon. And so that’s an example of what in the grand scheme of things is a very small asset manager and activist hedge fund that was able through a pro-environmental activist hedge fund that was able to take over one of the. Largest energy companies in history and really dramatically change its policies. And then on the private side, look, I think it’s something you and I see every day, right, which is when you own 10 or 20 percent of a company which Elon Musk now does of Twitter, which we could get into, I guess, at some point. But in the private sphere, or if you’ve taken a majority, you get a board seat, you may even have control of the board. You’ve got a close relationship with the CEO of that company or the founder, and you really have an opportunity to shape it. And, you know, in the context of the sovereign’s portfolio, what that means is we want to demonstrate love of God and love of neighbor through everything that we do to lead to human flourishing. And so that’s hopefully employee friendly policies is building an inspirational company with a real vision for the world, and it can be different from a culture perspective. And so I think it’s easier to look at the big numbers and get a little pessimistic about your ability to have an impact. But once you unpack those both in private and public companies, there’s just a remarkable opportunity to have an impact.

Henry Kaestner: So I want to impact that a little bit more with sovereigns. So if people are following along right now, they may or may not know a lot about. One of the things that there probably are pretty sure of is that it doesn’t have one point three or one point four trillion dollars of assets under management. So you’re going from running strategy and one firm with a lot to something that has something much less. And yet there must be some sort of working theory of change and impact that you see at sovereigns. You hinted at it there in just a little bit ago. But just unpack it more. What do you see as the future of Christian led companies and the ability for investors to come alongside them? Why is this something whose time has come?

John Coleman: Yeah. Henry, you’re great about reminding us that the two greatest commandments are love god and love your neighbor. Right? And Jesus reminded us, Well, Jesus first reminded us of that. I guess in the new you provide, it’s somewhat, Jesus said. But you know, and then he elaborates that everyone’s your neighbor, right? There is no one who’s left out of that. And I think that is actually a really inspirational vision for the impact that investment dollars can have. Because ultimately, what are you investing in? You’re investing in people and leaders, in the employees of companies and the customers that they serve and the vendors that they serve. And I think we live in an environment now where too often those relationships are transactional or they’re not founded on any sort of values or morals. And so they lead to environments like we’re seeing now with the great resignation where, you know, I write a lot on purpose, which will come to you. Some surveys indicate that only around 15 percent of people one five percent of people globally are engaged in their work. And that’s because companies and employees have chartered a mission or a culture that they feel is compelling. That’s bigger than them. I think his Christian investors, you know, the message of the gospel is good news. It’s good news. And I think our responsibility is to try and translate that good news into the way that companies work right in the way that companies live out their mission and values. They had the good fortune of sitting down recently with a guy named Michael Eisenberg, who I know has been on the podcast before an extraordinary investor in Israel, a person of Jewish faith, a really sincere Jewish faith. And you know, he was postulating that capitalism, which I think we all believe in here really was difficult to have exists in a flourishing way outside of the context of a deeply value centered society. And some might even say something like a Judeo-Christian society, although there are other sources values that those values really anchor society so that capitalism can flourish within it, and capitalism without those aspects can actually become a very transactional thing and can become something that takes advantage of people if you’re not careful. And I think what we would hope to chart is a philosophy of investing at sovereigns, whether through public markets or fund of funds. Invest in your private equity or venture where we can partner with founders who are sincere in their faith and companies that are sincere in their faith to create better environments for employees and companies that charter a bigger vision for the world.

Henry Kaestner: Indeed, bringing about God’s kingdom on Earth as it is in heaven while bearing witness to the king and just fired up to have you on board and running the firm with Luke on that. One of the other things that, of course, Solomon’s gets his opportunity to do is to come alongside men and women who are running in leading companies and helping them to borrow a term craft their purpose. And when I think about somebody who might know something about that, I go back to see if somebody might have written a book on it. Indeed, as it turns out, you have talked to us about the concept of helping somebody to craft their purpose. And this book that you’ve brought out with the Harvard Business Review.

John Coleman: Well, this all dates back. You know, you and Luke are athletic guys, Henry. I know your your family’s got a great one of

Henry Kaestner: us, more so than the other. Like, like the audience. Try to figure that out by Googling Luke Roush is 40 time.

John Coleman: Yeah, it was, you know, I think he said it was like a four. One or three, nine or something, Henry, these

Luke Roush: stories, it’s like it’s like fish stories, they just get better over time. I’m going to let Henry be my publicist. I might get drafted this year of Henry, where my agent

Henry Kaestner: yelled, I saw Terrell Owens this morning. Terrell Owens, at age 48, is going to come back at us as if Tom Brady can do it. I can do it. That means that, Luke, I think Terrell Owens is older than Luke.

John Coleman: Luke, you got your chance here.

Luke Roush: Most people, I can’t remember how old I am.

John Coleman: I heard he might be signing a contract with the Dolphins, so we’ll keep an eye on that. You know, when, when instead of sports, he were good at speech in college, you have to find nerdy hobbies. And so my hobby since I was a kid is writing. I love to write, I love to communicate. And so it’s been something I do in my spare time. My first book was actually a Christian book that I wrote in my early 20s.

Luke Roush: Well, tell us about that book before you get into the other book. Tell us about that book.

John Coleman: Well, again, the intersection of Chip Ingram.

Henry Kaestner: I think about it right now.

John Coleman: I wish, I wish. It is a book called How to Argue Like Jesus from crossword books and a friend and I, Joe Carter, who I had actually met online. This is the golden age of the blog and I had met online. We’re both really interested in this idea of rhetoric and Jesus in the New Testament. And so we we talked about the intersection of kind of an Aristotelian model of rhetoric in the New Testament. The way that Jesus communicated is you might know just from the fact that probably no one listening to this has actually read the book. It did not sound like a purpose-driven life. And so that set me off on my career journey. I had to keep my day job. But, you know, it kept me writing in about 10 years ago. I developed a relationship with a publisher called Harvard Business Review, and I was in school at the time at HBS in 2009. Actually, when we wrote our first book with them, we published a book on next generation leadership called Passion and Purpose. And that started me on this topic of purpose first as an investigation. And then secondly, writing with HPR. And they were really kind to kind of let me partner with an editor there. I’d write maybe five or six articles a year for NPR online, all about leadership and personal development, professional development. They’re extraordinary at those topics. And in 2015 or so, I started writing about what I thought of as kind of a new way of thinking about purpose. Right? The idea that you don’t find your purpose, you build it or you craft it, that it’s not some pot of gold at the end of the rainbow that you wait for, but it’s something that exists in all parts of your life that you need to take responsibility for. Those articles became really popular. And so as I was talking to my editors about writing another book, they asked if I’d flesh those out into what became a book called the HPR Guide to Crafting Your Purpose. So if you’ve been through the airport and you’ve seen the little guides that HPR puts out, it’s one of those in the whole book is kind of a practical approach to how people who aren’t getting a great enough sense of meaning in their personal and professional lives can rethink the way that they view purpose and begin to craft it more in their lives and live more fulfilling lives, both both at work and away from work.

Luke Roush: What I love about the book I love a lot of things about the book, but I love the fact that it moves from being sort of this like passive. While I hope I find it someday to being an active kind of shaping, reshaping and a continual discovery. We talk a little bit about it being actively faithful versus willful in that movement to more of kind of an activity that individuals and leaders are engaging in. I think was really impactful for me as I went through the book.

John Coleman: You know, that’s at the core of it, Luke, is to help people restore a sense of agency. You know, I think it is easy these days, especially you work in a big corporation or you’re in a country where you don’t feel in control and you can lose a sense of agency. The idea that you actually do have some say in the way that your life turns out that you do have some control over it. Not in a negative, prideful sense, but in the sense that you can take actions that can improve your life in the way that you experience life. And obviously, as a Christian, I believe that every single life has extraordinary value. Right? We are all created in God’s image. We’re endowed with this dignity as a result that everyone has, that they have a purpose and a mission for their life. And I think unfortunately, through popular culture, we have been induced to believe that purpose is a thing that you find that it’s passive. Right? It’s I think of it as like the Hollywood version of purpose, which is actually kind of romantic when you see it in a movie, the kind of destructive when you’re trying to incorporate it in your life. And what I mean by that is there’s this great Mark Twain quote that’s attributed to him. I don’t think it’s actually his quote that the two greatest days in your life are the day you’re born. In the day you find out why. Right? And you’re like, Oh, that’s really romantic. But on the other side, it induces a ton of angst, right? Because you’re just waiting for that one day to find out why you were born. Right? We can talk about there’s a faith interpretation of that. That’s different, but that’s not what Twain is talking about, I think. And you see the movies, right? It’s Luke Skywalker kind of live in a boring life until he finds out he’s a Jedi or neo living in The Matrix in. It’s disrupted and, you know, a purpose falls in his lap. And so there are all these people out there looking for that one thing to fall in their lap to change their lives. But in doing so, they’re getting a lot of angst about finding that one thing. And so instead, you know, the core of my message is threefold. One is purpose isn’t a thing that you find. It’s something you built, right, that you have agents and you have control. Purpose exists all around you. It’s up to us to take control of that and build a life that’s meaningful. The second is that purpose isn’t singular that one thing you’re waiting for, but plural. Right? Most of the people have a lot of angst about their purpose, already have a lot of purpose in their lives. They’re just not seeing it right. It’s your kids. It’s your family, it’s your wife, it’s your friends, it’s your community. It’s the homeless shelter down the street that you serve soup in. It’s your hobbies. It’s all this beautiful stuff in your life that if you’re too anxious about your professional purpose, you can lose sight of and even in your profession, it can be multiple things like relationships with colleagues, etc. So it’s plural. And in the final myth I deconstruct is this idea that purpose is a single thing, you know the two greatest days in your life for the day you’re born. In the day, you find out why. It’s like one thing that will change your life forever. And instead, I think that purpose changes over time. Right? Our purpose is a high schooler or as a college student. It’s different than when we’re young professional. It’s different than when we have a family. It’s different than when you retire and move into our second mountain, as David Brooks describes it. And then instead of feeling anxious about that or like, we’ve wasted time that we would just embrace those shifts of purpose. And so really, in those three ways, I encourage people to fundamentally rethink the way that they view meaning and to embrace their agency in terms of how to achieve that.

Henry Kaestner: John talked to us about the role that we, as investors, can play in helping entrepreneurs craft their purpose and just in different leaders in the marketplace. What’s that dynamic so that we can get involved earlier on in a Luke Skywalker career and earlier on and working with Keanu Reeves? Just refine it a bit more.

John Coleman: Oh gosh, I’m the new kid on the block, so I hope you too will chime in. You’ve been at this even longer than I have, and you’re extraordinary at it. Henry, you might even say that you wrote the book on this, so I hope you’ll all weigh in as well.

Henry Kaestner: You know, I would look for riding the Ford. No, but we collectively wrote the book. And by collectively, I mean, there are lots and lots of people in this movement that and I think about Chip Ingram, I think about Tim Keller, I think about Andy Crouch, Dave Blanchard there. A whole bunch of different people who are really fired up about this concept of what is cultural change look like in our entrepreneurs. Indeed, the tipping point the point end of cultural transformation in the marketplace was that look like and I may be one of very many authors in that collaborative book, but this is a movement. Aslan is on the move. A whole bunch of people are waking up to this. You did so much so that you left this incredible job in Invesco. But what role does an investor and whether they invest in a firm like a faith driven investment fund or they do individual angel investing? What is the call to working with these entrepreneurs and leaders?

John Coleman: Yeah, I see it a couple of ways. And look, I’d actually love to hear you riff on this a little bit, too. One is, as you said, to help encourage an entrepreneur, you know, be an entrepreneur or a CEO is a remarkably stressful job. It is a remarkably stressful job. There are a ton of constraints on your time. You’re responsible for a lot. The world moves quickly, you’re working very hard, and it is easy to get sucked in to this idea that your identity is your job and that you either fail or succeed as a person based on the success of your job. You know, in the book, I talk about this in the context of one reason it’s important not to have your purpose be a single thing is because when that single thing falls apart, your company fails. You lose your job, you lose even a relationship. Your whole identity fails if it’s not anchored in something broader. And I think in the Christian context, what you articulated, Henry, you know, the one thing we can be certain of is that the thing that won’t fail is our identity in Christ. And so that is probably the one thing that you can anchor to that can be certain won’t fail. And then that can exhibit itself in multiple ways. And so I think helping entrepreneurs to anchor themselves in that identity and the dignity that they have in Christ. And then is an outflowing of that in this idea that they are whole people, right, that they have families, that they should have families, that they have a faith, that they have communities that they’re investing in and that their entire identity doesn’t rise and fall based on the company. The second is that they can shape the values of the company in a way that they know to be true aligned with their values. I think many people feel very shy about that, bringing their personal values and morals to work. And I think instead, it can be the good news of shaping a company. And then third is encouraging those folks then to take that seriously enough to help the individuals within that company also craft their own purposes, also find their own identities. And also live more full lives, just as the investors are encouraging the entrepreneurs or CEOs, and so it had this ripple effect where if the CEO or the founder of the entrepreneur is that way and can help everyone within the company live that way, you know, they’re then a witness to everyone else that they come into contact with and you can impact thousands of lives.

Henry Kaestner: So, John, one of the things that we do in all of our podcasts, of course, is to point people back, just as you are doing with these entrepreneurs to God’s work, believing that the Bible is alive, God speaks to us through it, and it doesn’t necessarily need to be something this morning, but maybe something recently about something you’ve read through God’s word that has really impacted you and that you might offer up as an encouragement to others that might also continue to seek out God through time and scripture as well.

John Coleman: Yeah. So one of my favorite verses that I encountered again the other day is quite a popular one, so I won’t claim points for originality. But it’s Micah six eight where God commands us to do justice, to love mercy and to walk humbly with God. And I think what’s convicting about that for me is there are so many ways to overcomplicate our faith and our Christian walk, right? And it’s such a simple command which is just to do the right thing to love mercy, not just practice mercy, but love mercy, to feel joy in giving mercy to others and to receiving mercy and to walk humbly with God, right, which is to submit yourself to him and follow him. I felt that acutely when we were visiting the garden to get Simone, where Jesus submitted himself to God’s plan and humility and to think, Oh my gosh, how much easier for me to see myself in humility than it was for him the burden that he was taking on. And so that verse has really resonated with me lately just because of its simplicity in kind of giving a command for how I should live my life. That can be incredibly practical. It’s the way that I deal with myself and others.

Henry Kaestner: Yes, no points for originality. I’m glad you didn’t go with John 3:16, although John three six. Amazing, but you did a great job. You did a great job of unpacking Michael six eight. And that is really cool, and I’ll jump on your bandwagon. There is something really special about going on to the Holy Land, and it shouldn’t be a requirement because I know their faith traditions might have is a requirement. And yet you kind of understand and appreciate why they might. There’s something really special about being where these different stories that we read about goes by will actually happen, and I think that God speak to us through his word. I’ll never forget reading the Beatitudes with my father overlooking the Sea of Galilee from this sermon on the Mount from the Mount. Yes, thank you for sharing. It’s awesome to have you with us. I’m so excited about your leadership and hosting on FDE. I am grateful that we gave our audience a chance to learn a bit about you. And God bless you, brother.

John Coleman: Thank you all very much. Great to see all today.