401(k)s to Match the Mission

When everyday savers are asked if they want to invest in line with their values, they often say yes—particularly among younger generations.

A 2023 U.S. Bank study, for instance, found that more than half of Generation Z (65%) and Millennial investors (59%) are motivated to invest in companies they care about, with more than half that group even willing to accept lower than average returns to do so.

But survey answers do not always translate to the real world, particularly when it comes to defined contribution plan investing. According to a Callan Institute survey of U.S. DC plans released in March, only 15% of plans include environment, social or governance funds, and 9% are considering them; 76% do not have them and have no plans to do so.

George Guerrero

This March, Just Futures Advisors LLC entered the responsible retirement investing scene with a proposition to try and increase uptake: turnkey 401(k) and 403(b) retirement plans designed around social justice causes ranging from racial inequality to climate change.

CEO George Guerrero says the firm began with a hunch that many nonprofit workers, in particular, lacked access to a workplace retirement plan that aligned with the values they brought to work every day—a theory he says a 2022 “listening tour” with some 200 organizations bore out.

“When you ask a nonprofit professional what’s important to them in a retirement plan, values alignment is right there at the top,” he says. “This is what they talk about, simply because of the nature of the work that they do, and, in many cases, investment dollars run counter to the mission that they are looking to further.”

From there, the Just Futures team went on to design qualified plans that would both minimize investments in sectors counter to social equity issues and would meet the fiduciary standards and long-term objectives of a qualified plan. The plans screen for companies the firm identifies as being “complicit” in climate change or involved in areas such as prisons, immigration detention, weapons manufacturing, predatory or discriminatory lending or with asset managers or shareholders that voted against resolutions supporting racial justice.

Currently, the firm is working with about 24 nonprofit and mission-driven organizations in the U.S., with Guerrero noting that startup firms are open to initiating their plan with the social values backdrop.

“This is not about hugging trees,” he says. “This is about balancing within the regulatory constructs that we have to provide transparency [in retirement plans] that has not existed.”

Founded in Diversity

Just Futures was founded in 2022 by Alex Saingchin and Steve Choi, both of whom had worked in the nonprofit sector and noticed a lack of workplace investment options that matched their world views. From that basis, the two decided to build a firm that would make “it easy for nonprofit administrators to offer benefits and that could serve as a vehicle for shifting their hard-earned wages away from the extractive economy and toward regenerative investing.”

The firm is led by a group diverse in both color and gender, Guerrero notes, and is incorporated as a public benefit company. The diversity mission is both internal for the company and external in terms of aiding people of diverse backgrounds to invest in companies and firms that support their communities.

“When we think about the opportunities that don’t exist for people of color within the investment industry, for one, and how that experience can feed into investment choices, for two,” Guerrero says.

Guerrero came to the firm with executive experience at major financial services firms, including asset management and insurance. He was first brought in as an adviser, but after he and the founders started working together, was made CEO.

His interest in the firm came, in part, from feeling his work in corporate finance was “a little soulless.” When his family made a geographic change, Guerrero joined a financial technology company catering to nonprofits that support people with special needs to build out their investment portfolio. Seeing the “impact on people’s lives” from his work, he wanted to continue in socially responsible work.

Value Add

Guerrero says Just Futures builds its portfolios using investment value-screening from firms including As You Sow, but the process is not separate from creating top-quality investments that meet fiduciary standards.

“The value screen layer in our investment process represents an integral aspect of our fiduciary practice with respect to management: identifying business practices that have the potential to impair the valuation of public companies,” he says.

Just Futures is partnering with digital 401(k) provider Vestwell on its offering, a decision Guerrero said was made in part due to its ability to offer a tech-forward retirement plan that is user-friendly for both plan sponsors and participants. He noted that nonprofit professionals are often juggling many different responsibilities, so the firm wanted a partner “with more of a turnkey solution” that “eases administrative burden.”

Right now, Just Futures is focused on getting in front of nonprofit plan sponsors, not retirement plan advisers. In the future, however, Guerrero says the firm will reach out to the adviser network as “another leg of the stool that we will add on,” noting that, “frankly, a lot of advisers don’t do this, and they may have clients that come to them asking for it, and we can be the provider for them.”

Going forward, Guerrero says the firm wants people to know Just Futures exists and a value-aligned retirement plan is available and meets regulatory standards.

“We’d love for values-aligned investing to become a thing—we know that it already is among younger investors, and that’s not going to change as they age and move ahead in their careers,” he says. “One of the things that we’re really happy to have heard throughout our initial client uptake: When we meet with potential clients, they say, ‘We’re so glad you exist; we’ve been waiting for something like this.’”