Skip to main content
Category

Values

Ethics and ESG Investing

By Green Investing, Integrity, Principles No Comments

The first time I learned about ESG investing was during a social impact course my freshman year of college, one required by our university for all of us future business leaders to learn about the way corporations influence the communities around them. It was a concept that brought together environmental, social, and governance factors under one investment thesis. I remember thinking: “This is the future of finance that I want to be a part of.”

 

Accelerated by the many socially impactful events that have occurred since the start of 2020, it seems that the trend towards ESG has only been moving forward. Demand from both consumers and investors for more transparent and responsible business practices is louder than ever, and financial institutions are offering an expanding line of ESG products that just a decade ago hardly even existed. It’s a promising turn towards a more sustainable future for business and capital markets. However, with that seems to be coming a slow dilution of the true values that underlie ESG. 

 

ESG stands for environmental, social, and governance. It encompasses the way that businesses interact with society, measuring their impact and the ways that they give or take away from the good of the whole. In practice, ESG can be a tool for investors to screen for companies that don’t align with their values. Is this business negatively influencing changes in our climate? Does this one have unethical labor practices? Do they take advantage of any marginalized communities, or are underrepresented backgrounds not welcome at this firm? These are some questions that may come up when deciding how “ESG friendly” a company really is. Part of the reason that ESG has been growing in popularity as an investment thesis is that it isn’t just a feel good tactic. Studies have shown that ESG factors have a direct impact on a company’s long term sustainability and profitability. For example, an article written by Credit Suisse’s Global Head of ESG Strategy references a study done on the impact of the COVID-19 crisis on ESG and non ESG indices in European markets. Those that were ESG focused fared better than those that were not. If a company doesn’t take into account the implications of real world events on their business operations it adds a layer of risk for an investor. 

 

The problem is, there is no standardized way of measuring a company’s level of ESG integration. Every financial institution does their analysis differently, and so the criteria of the research can vary. Not only this, but currently the information that firms themselves report isn’t standardized in the United States. ESG disclosures are optional, making it hard for investors to perform their due diligence, and hard for people to really understand what they’re buying into. It also makes it easy for companies to greenwash – as in, build up an image of being socially conscious or environmentally sustainable through clever marketing and branding, when in reality, their operations say otherwise. ESG seems to have become a buzzword, along with “sustainable”, “green”, and the like.  Ultimately, there needs to be a way to strip away the fluff down to common measurements and metrics of a company’s ESG integration. Although it’s a challenge to figure out how to translate something as complex as the societal impact of a firm into comparable data, it’s necessary to help consumers and investors like myself navigate their way through the weeds and decipher who is really taking action to back up their words. 

 

On one hand, it pains me to see some businesses use ESG as a profitable tactic. Although there are many profitable companies driven by values of corporate responsibility, there are some that use ESG in a way that seems artificial, motivated by money rather than morals. On the other hand, I ask myself, does it matter why a company is doing it as long as they are? The argument can be made that even greenwashing brings awareness to the importance of a business’s impact on the environment, and ESG factors, even if only lightly taken into consideration, are better to be seen as a business tactic than not seen at all. 

 

I chose to pursue a career in finance because I see that money has the power to create change. In my short time as a student in the industry, I’ve met people, some with a lifetime of experience and some who have only just begun their careers, who give me a lot of hope for the future. They motivate me to hold on to my values in such a competitive space, whether it be understanding the impact of my actions or doing my best to work with integrity. My time at Scholars of Finance has also influenced the way I approach my career. I’ve become more sensitive to the motivations behind my decisions and the way I interact with others; this month’s value of humility has really reminded me of how much more I have to grow. However, I’m worried that there may be a balance that needs to be made between staying true to what I believe in and working alongside the motives of others in order to make progress towards a future I hope to see. 

 

As much as I’d like it to be so,  I don’t believe ESG measures will be implemented in every company simply because it’s good for society. Often, they will be implemented because they help a business appeal to consumers, or standardized requirements have been passed, or future costs of climate change, government policy, or dissatisfied workers make it too expensive not to in the long run. 

 

I can’t say if I think the implementation of ESG measures are a good or bad thing. All I can say is what I do believe: In the end, this earth, along with the people in it, are what support a business. With the ESG movement comes more visibility for this relationship, more pressure for companies to put their money where their mouth is, and more movement towards standardized regulation and reporting in the ESG space. We’re entering an age where companies can’t ignore their dependence on all of their stakeholders, and today, these stakeholders have more power than ever to hold companies accountable. It may be a necessary evil to accept that some won’t be motivated by the common good. Some may not even care to make changes past the surface level. But ultimately, that’s okay, because eventually, those will be the ones left behind.

Humility

By Financial Leadership, Humility No Comments

At Scholars of Finance, we have six core values that are at the center of what we teach: Integrity, Compassion, Humility, Curiosity, Impact, and Courage. Each month, our members vote on the “Value of the Month”, which helps focus our discussions on topics pertinent to that value.

Humility was our value for May and we spent a lot of time thinking and talking about it as a community, so I wanted to share some thoughts on this value as we enter the summer. Here are our epithet and principles for Humility:

Humility

Know thyself

  • Serve a purpose greater than yourself
  • Cultivate gratitude for what you have 
  • Recognize both your strengths and limitations
  • Ask for and share honest feedback regularly

In today’s society, “Humility” is often synonymous with “Modesty”. According to Merriam-Webster’s dictionary, Humility is “the state of being humble.” Both it and humble have their origin in the Latin word “humilis”, meaning “low.” The definition of “humble”, in the dictionary, is “not proud or haughty: not arrogant or assertive”. Many people think it means having a “low” opinion of oneself – that it is the opposite of “arrogance”.

The Scholars of Finance view of humility, however, which we have been taught by our mentors and leading thinkers, philosophers, and spiritual teachers, actually places humility at the center of a spectrum between modesty and arrogance. It’s not thinking too highly or too lowly of oneself. That said, we believe humility can be summed up in two practical ways: 

  1. Accurate self-appraisal; and 
  2. Overcoming our ego. 

David Brooks captures both points beautifully in his book The Road to Character, when he writes, “Humility is accurate self-awareness from a distance. It is moving over the course of one’s life from the adolescent’s close up view of yourself, in which you fill the whole canvas, to a landscape view in which you see from a wider perspective, your strengths and weakness, your connection and dependencies, and the role you play in a larger story”. We view humility as overcoming our ego so we know the truth about ourselves holistically. I’ll unpack this using our epithet and principles.

Know thyself

In order to know ourselves, we need to see ourselves clearly. Our egos can be fragile, and fragile self-perception often gets in our way in life. 

When we read David Brooks’ writing, we see a few ways in which it is difficult for us to know ourselves. It is difficult to face our strengths and our weaknesses. We hear people say they are “self-made”, having difficulty acknowledging how everyone in their lives leading up to that point played some role in who they are now. Often, when we see “the role we play in a larger story” it can throw some of us into an existential crisis, facing how infinitesimal our lives may be in the grand scheme of things – in a world of eight billion people and in thousands of years of recorded history. 

The principles of Humility outline four critical components of a “system” that helps us to know ourselves, empowering us to overcome all of these potential obstacles. 

Serve a purpose greater than yourself 

To diminish the ego, we need to work against self-centered tendencies. The primary way we can do this is by focusing on serving a purpose greater than ourselves so our daily life is not “all about me”. Doing so keeps us focused on the bigger picture, so we don’t become self-obsessed or begin to think we are the center of the universe. When we focus on ourselves too much it can feed our egos. Conversely, a focus on others reinforces altruism and selflessness. It is the antidote in (and through) action. 

Cultivate gratitude for what you have

Greed, as we often discuss, is one of the largest risks to our character that we face in the finance industry, and the cause of many of the problems in the system we have seen throughout history. We do not believe “Greed is good”. Greed is thinking “I need more” or “I don’t have enough”, when we have more than we actually require. On the contrary, Gratitude is feeling, thinking, and/or knowing “I am content with what I have” or “I have enough”. Gratitude empowers us to experience contentment – this repels fear and anxiety, which can often be self-centric. Gratitude is our day-to-day shield against a relentless pursuit for more.

Recognize both your strengths and your limitations

Our ego – our sense of identity – often needs to protect itself, so we run from the less convenient realities about who we are. However, being open to even the hard truths about ourselves keeps us attuned to reality. Embracing these hard truths stops us from falling into a fragile-ego-protection trap, where we are blind ourselves to our own limitations. By recognizing both our strengths and limitations, it keeps us in the center of the spectrum we opened this post with and allows us to have an accurate sense of self. It ensures that we don’t become too modest or arrogant either. We have a full and balanced view of ourselves. 

Ask for and share honest feedback regularly

Lastly, we can only see a part of the picture of ourselves. Because we are an interdependent social species, how others perceive us is also important. While our self-esteem should be intrinsically sourced, others can and will often see strengths and limitations, realities about ourselves, that we won’t see on our own. They help us see blind spots and tell us how our behavior impacts others. By asking for and sharing feedback, it creates an environment where others will help us to stay in touch so our egos don’t blind us to difficult truths.

Conclusion

At Scholars of Finance, we need to take a wider perspective because of the impact investments have on the world. There are several truths about ourselves we need to remain constantly aware of. 

  • If we achieve our goal of instilling stewardship and integrity in the finance leaders of tomorrow, we will be managing billions of dollars one day and have great influence. We need to take this very seriously. 
  • We are in a culture and society that venerates wealth – in a system that has perpetuated increasingly divergent socio-economic disparity – and we can easily be influenced by our environment. 
  • Focusing on our own needs is healthy inasmuch as it equips us to be our best, but too much self-centric focus can stop us from seeing the bigger picture. In Wall Street, greed can easily creep in, slowly, gradually over time, almost imperceptibly, and can undermine our better intentions and desire to help others. 
  • Our success in finance can get to our heads, our egos get inflated as our sense of self swings toward arrogance, and we become more prone to selfish behavior, greed, and ethical lapses.

Preparing for those risks is at the core of our mission at SOF and Humility is a value that requires a lifetime of constant cultivation. We never “arrive”, we only constantly improve (sometimes face setbacks), and continue to develop humility. It’s a plant that needs to be watered regularly to grow and thrive. So, our community encourages you to test the four principles. 

As we begin to enter the summer season and many of you begin new internships, or for the investors reading, you prepare to close deals, go back to the office, and continue to advance your careers, we invite you to join us in thinking about how you are exemplifying humility in your life and work. 

  • Revisit your mission and values – are they bigger than yourself? Do you have them written down and does your greater purpose resonate and feel real and personal?
  • Express daily gratitude, whether it be alone, with friends, or even by asking people during gatherings, listing 5 things you’re grateful for every day.
  • Take an inventory of your strengths and your weaknesses, perhaps with 15 minutes of journaling time this week.
  • Ask 10 people in your life for 360 feedback. Find out what your mentors, family, friends, and other peers think about you holistically. 

Doing these things will help you play to your strengths and manage your weaknesses, will strengthen your relationships, and will help you to do more good and make a greater impact on people. And in the spirit of humility, these practices will help us know ourselves so that we can overcome ourselves and be true stewards. 

As we venture into June and our value of the month is “Curiosity”, I would love to hear what you learn. Feel free to reach out and share your thoughts or questions. At SOF our greater purpose is to inspire character and integrity in the finance leaders of tomorrow. We’ve made progress but still have so much to learn. We would be grateful for your honest feedback.

Modern Integrity and Impact

By Impact, Integrity, Principles No Comments

“Something came up.” This is perhaps the most common requiem sung on behalf of failed commitments and unfulfilled responsibilities. And, perhaps relatedly, it is often one of the least heart-felt. Sure, it’s unfortunate that we had to abnegate our duties — but we had no choice. Unforeseen circumstances required us to take extraordinary measures in order to be present in some other space. While the failure is unfortunate, it does not reflect on our integrity or moral character. We did the best we could.

 

Perhaps. I want to argue that the sense of integrity which is not injured by such a decision is running on an antiquated operating system, and desperately needs to be upgraded to reflect our modern world. Such an upgrade to a fully modern interpretation of integrity will not only allow us to better keep our commitments, but will also feed into our ability to impact the world around us more generally. This modern integrity will ask much of us—I’ll leave it to you to decide whether it’s worth the while.

 

So what is “something came up” integrity? Well, to use the framework of human development pioneered by Harvard psychologist Robert Kegan, often it is a sort of integrity which presupposes a stage-3 communal self. This version of the self identifies as a set of relationships, all of which impose potentially unlimited obligations on us at all times. According to the communal mindset, integrity comprises in meeting whichever one of these infinite obligations presents itself in the moment. If multiple obligations happen to present simultaneously, we break the tie between infinities by following our emotions; i.e. we planned to give a talk, but then our friend’s goldfish died, and, well—something came up. Because we’re always under these infinite obligations, any commitment we make comes with a laundry list of asterisks attached—it becomes provisional.

 

This might sound reasonable—after all, even the most cold-hearted would probably agree that there are some unpredictable events in life that do indeed impose obligations that overwhelm the ones we formed in previous commitments. We probably should not walk over someone dying on the street in order to make it to our meeting on time. But, it can be overused, with dire consequences. How many marriages failed because “work came up” on one too many date nights? How many companies failed because personal matters came up for one too many mission-critical workers at the wrong place and in the wrong time? How many careers sputtered because “something came up” and impeded one too many crucial actions? Many of the best things in life depend on commitment, and I challenge you to think of one which hasn’t been jeopardized for someone you know by something that “came up” which wasn’t truly enough of an emergency to warrant it. Once you look for it, you’ll hear its somber tune all around you. We sing it every day.

 

Fortunately, there is an alternative. According to Kegan, the next stage in human development is the stage-4 institutional self. Here, obligations depend on context, which for all but a few is non-global. We might be a parent, child, boss, subordinate, friend, partner — but we are not subject to unlimited obligations coterminous with each role at all times. We can leave our work phones on silent while bonding with loved ones and tell our bereft goldfish-keeping friends that we will console them after our mission-critical work meeting. It might seem cold to draw boundaries like this, and perhaps even uncaring. But is the best way to communicate care to someone really the extent to which we’re willing to neglect duties that third parties are relying upon? As long as we keep boundaries firm all-around, no one should get shortchanged, and everyone will be able to count on us. Our voice will be one fewer added to the morbid chorus of something-came-up dirges.

 

Life will become more predictable, which is a prize of its own. The communal model of self is perfect for a small hyper-egalitarian community whose time constraints on work do not bind — exactly the kind that dominated before the invention of projectile weapons and agriculture. But in a world characterized by complexity where time constraints bind tightly, it’s simply not a viable way to make an impact. If we follow Professor of Neuroscience Karl Friston’s model of intelligent agent action and consider cognition to be guided by a process which seeks to minimize surprisal (free energy), we can get a clearer picture of why this might be.

 

Under a Fristonian model, there are two main sources of surprisal: goal-related and means-related. We can think of goals as expectations; we expect to eat every day, and if we didn’t, we would, at some level, be surprised. To ensure we don’t encounter this surprise, we take actions; we might go to a restaurant with some friends. Of course, this introduces potential surprisal as well — what if the restaurant turns out to have a pest problem, or a fight breaks out at a nearby table? As long as the expected surprisal penalty you incur by the means is less than the surprisal you’d suffer from not eating, you’ll take the trade. If it’s not, you’ll probably find yourself skipping lunch — and perhaps minimizing surprisal some other way, maybe by scrolling through social media.

 

What does this all have to do with impact and integrity? To the extent that actions are downstream of obligations, a sense of self guided by obligations which are clear, pre-determined, and context-dependent will pre-potentiate predictable actions. When we are able to fully commit to future actions, the amount of variance — expected surprisal — that those actions will “cost” is drastically reduced. Eventually, it might become so low that we take the actions almost unthinkingly; habits are the epitome of non-provisional commitment. While most of us can’t live a life constituted 100% of unthinking habits, we can extend the fundamental principle they depend on: that the derivative of success with respect to expected action surprisal cost is negative. 

 

This is a principle we all intuitively know: when we want to finish a big project, we might write down all the necessary tasks into a list, or maybe even vividly imagine ourselves completing them. We set clear expectations and align on goals and strategy. Computationally, it’s (not-so-simple) arithmetic. Predictability means less action cost means more goals met over the long run. If we wish to make an impact, the answer is clear: ditch stage-3, and embrace stage-4. If our goal is to change the world for the better, we can’t accept a life whose soundtrack is that oh-so-familiar song on repeat, whose commitments are provisional and wherein we pay out the nose in terms of expected surprisal for the actions we need to take to achieve our goals.

When we have a second to reflect, let’s ask ourselves: Do I show that I care for others by carving out and defending quality time with them, or by reneging on my commitments to third parties when something comes up for them? Do I let myself off the hook a little too easily when I don’t follow through? Do I minimize the expected surprisal cost of the actions I need to take to get things done, or do I vainly blaze a new trail through the jungle of chaos and unpredictability every day? Do I ever fail to reach my potential because I’m unsure, uncertain, or uncommitted? These are tough questions, but all we have to lose is our expected action surprisal cost — and an old earworm.

Integrity: You Only Have It When You Know You Don’t

By Integrity, Principles No Comments

At Scholars of Finance, we have six core values that are at the center of what we teach: Integrity, Compassion, Humility, Curiosity, Impact, and Courage. Each month, our members vote on the “Value of the Month”, which helps focus our discussions on topics pertinent to that value.

Integrity was our value for March. Here are our epithet and principles for Integrity:

Integrity

Do what’s right

  • Do the right thing, always
  • Build trust through transparency and accountability 
  • Honor your responsibilities and commitments
  • Speak the truth at all times

We utilize integrity in both a moral sense and as a barometer of trust. It both calls us to do what is “right” while also calling us to be trustworthy. These are mutually reinforcing. There are millions of pages written about what is “right”, which have culminated in an abundance of religions and moral philosophies informing how we collectively act. However, I will unpack the question of how to “define what is right” in a later blog post. For now, I will offer one example that I think is not overly controversial, builds trust, and happens to be one of our principles – to speak the truth at all times.

Many people I’ve spoken with over the years have shared that integrity, or honesty, is a core value of theirs. We rarely meet someone who claims they need to become more honest. And while I hope that this is simply a result of surrounding myself with honest people, I often wonder if this actually reflects a lack of self-awareness? Or something even worse, that our collective standard for honesty or truth is diminishing? According to the Pew Research Center, I’m not alone in wondering, as a majority of people (51%) think that misinformation online is a problem that won’t be fixed.

However, speaking the truth at all times, for many of us, seems like a “given”. It is presumed that we will do this and that we already do this. If we were a liar, how could we live with ourselves? Yet, taking time to reflect on this principle and just how profound and radical it is, opens our eyes to just how much room we have to grow in honesty. Dinner with a friend, his niece, and a couple of her classmates recently got me thinking about this. Since “Speak the truth at all times” was the principle we spent the following week reflecting on there was a timely opportunity to dig into it with our organization as well.

The young woman was a senior in high school. I was visiting my friend when she and her friends also happened to be visiting him as well (he’s a cool uncle worth visiting). They explained to me that their classmates cheat on tests rampantly. Everyone turns off their cameras on Zoom, gets on a group FaceTime, and they take the exam together. It’s become commonplace. I was a bit shocked.

As I felt myself begin to judge, the maxim “judge not lest ye be judged” came to mind. I realized that I am not one to judge because I am not perfectly honest. As I started to think about my own shortcomings, a couple of Zoom-related “white lies” that I have told struck me. I started talking to our students and some of my friends about these and many of them reported doing the same things. 

For one example, have you ever been distracted on a Zoom call, whether with work or email, been asked a question, and said something to the effect of, “Sorry, my (audio, wifi) cut out (or insert other technical difficulties), can you say that again?” I’ve done this more than once. When I ask this question on Zoom calls, almost everyone smiles knowingly or nods. 

When I shared this with one of my teammates last week, they shared an example of a small concession of the truth in their own lives too. Notably, one person shared that they will sometimes do 10 push-ups in the morning just to be able to tell people they worked out that morning – to seem productive and disciplined. But they acknowledged that the statement “I worked out this morning”, while true, generally implies they spent at least 20-30 minutes exercising, which was not the case.

Personally, I was hardly even aware that I was making small concessions of the truth. It reminded me that we stray from the truth in small ways, oftentimes almost imperceptibly. This can lead to much larger concessions of the truth over time. Simon Sinek talks about this snowball effect in his recent book The Infinite Game, which my mentor Anthony Paquette sent me – the phenomenon is called ethical fading. Ethical fading is a well-studied process by which we “slowly and gradually make moral or ethical concessions sometimes unconsciously which compound into increasingly significant ethical failures.”

This concept implicates us in a high-stakes relationship with honesty. We need to be thoughtful and diligent about cultivating integrity. Especially if we are going to be finance leaders and investors – making decisions with millions of dollars – where the upside to being dishonest has lured many down the wrong path (and into jail). Every one of us can benefit from taking the time to introspect on our integrity. If you’re reading this and thinking, “you’re wrong, I’m completely honest and none of this applies to me”, just set aside 30 minutes and ask yourself these questions:

  • Have there been any times in the last month where I have not been 100% honest, even in small ways?
  • Is there something I’ve been holding back from saying to someone that needs to be said?
  • Have I been 100% honest about how I feel about things with the people close to me?
  • Does my language sometimes imply more about what I’ve done than I actually have?
  • Has someone said something to me recently that made me defensive? Could there be some truth in their statement that I am overreacting to?

None of us are perfect, and that’s ok. What’s important is that we are willing to own up to the times when our integrity lapses. It’s how we approach these moments of ethical fading that can either lead to a slippery slope of low integrity decisions or a career built upon trust that is rightfully earned. 

I believe that all of us doing this in our own lives can inspire many more to do the same. Just like talking about mental illness can break the stigma and fuel recoveries, talking about ways our honesty has slipped can break the stigma of failure and fuel deeper relationships, whether with loved ones or teammates. Counterintuitively, it builds trust with others as people recognize your self-awareness and conscious effort to hold yourself to a high standard of integrity. 

With that, I hope you haven’t judged me as you’ve read my confession about my own shortcomings (being honest about this stuff does feel vulnerable!) and I also hope that you’re feeling even just a little motivated to examine areas in your own life where you can grow in integrity. And, if you’re really inspired, I hope you’ll talk about it with others to get accountability and grow with them too.

Impact and Decision-Making: Analyzing the Economic Impact of the American Rescue Plan Act of 2021

By Financial Leadership, Humility, Impact No Comments

As an active member of Scholars of Finance, I have learned about the importance of having core values in decision-making and everyday life. One of our core values at Scholars of Finance and our Value of the Month for February was Impact. As the COVID-19 pandemic drags on, Congress recently passed a $1.9 trillion stimulus known as the American Rescue Plan Act of 2021. President Biden signed the bill on March 11th and it acts as another COVID-related stimulus that will impact the lives of American citizens and influence our economic trajectory.

On the surface, a bill intended to help others during a time of need sounds like it would receive bipartisan support after a year-long crisis. However, for the American Rescue Plan Act of 2021, that is not the case.

Primary Provisions

The American Rescue Plan Act of 2021 aims to address many issues ranging from unemployment, small business assistance, vaccine rollout, education, and a range of others including:

  • $1,400 direct payments for individuals making up to $75,000/year and couples making up to $150,000/year (being phased out at $80,000/year and $160,000/year)
  • An extension of $300/week in unemployment benefits up until September 6th
  • Household relief of up to $3,600 per child for families with children
  • $350B in state and local aid
  • $15B to assist small businesses through the Emergency Injury Disaster Loan Program
  • $125B in aid to K-12 schools to reopen
  • Tens of billions in funding for a nationwide COVID-19 vaccination program
  • And many more

However, the bill sparked debate in Congress over the enacted shortcuts and its $1.9 trillion price tag.

Political Opposition

The road to legislation for the American Rescue Plan Act of 2021 was far from smooth. The bill faced opposition from Republicans and some Democrats citing their disapproval of Democrats’ use of the budget reconciliation process bypassing the Senate filibuster to pass the bill and its expensive nature. Senate Minority Leader Mitch McConnell (R-Ky.) has stated that the proposed stimulus is “wildly expensive” and “largely unrelated to the problem”. Jared Golden, a House Democrat from Maine, voted against the bill, defending his vote stating, “I won’t support trillions more in funding that is poorly targeted or in many cases not necessary at this moment in time”. The high cost of the bill has been the main issue Democrats faced in getting it passed, however, the bill received a lot of support from the Democratic party.

Democratic Support

Despite Republican opposition, most Democratic leaders voiced their support for the bill. Senator Bernie Sanders (I-Vt.) has described the bill as “The most significant piece of legislation to benefit working families in the modern history of this country.” House Speaker Nancy Pelosi (D-Ca.) also stated that the bill “Goes a very long way to crushing the virus and solving our economic crisis.” Democrats who supported the bill cited its significance after a year-long crisis and as a preventative measure for the future.

Next Steps

On March 6th, the Senate passed its version of the bill – which did not include the initial $15/hr minimum wage proposal after it was struck down by the Senate Parliamentarian – in a party-line vote. Democrats then successfully passed the bill in the House with another primarily party-line vote on March 10th, and President Biden signed the bill into law on Thursday, March 11th. With the current round of unemployment benefits from December’s stimulus running out in the next couple of weeks, President Biden aims to “Get checks out the door starting this month to the Americans that so desperately need the help” in what will be the third round of stimulus checks since the pandemic started. 

The Effects on the Economy and Markets

With the economy still recovering from the COVID-19 pandemic that caused an economic shutdown about a year ago, the purpose of a stimulus such as this one is to accelerate economic and GDP growth to get the economy back on track. In addition to the stimulus bill, Chairman of the Fed, Jerome Powell, stated that the Central Bank does not plan to raise interest rates (currently at a record low 0.25%) any time soon. However, the proposed stimulus coupled with a relaxed monetary policy from the Fed has raised some concern about inflation and its spillover effects into the bond and stock market. 

One voice of concern comes from Former Treasury Secretary Lawrence Summers. Summers recently stated in an Op-Ed article that “The proposed Biden stimulus is three times as large as the projected shortfall. Relative to the size of the gap being addressed, it is six times as large”. His article raises a cautionary warning of inflation which has been reflected in the rising yields of treasury bonds in recent weeks and a decline in tech stocks. However, Nobel Laureate, Paul Krugman, responded by stating that the recession caused by the COVID-19 pandemic should be considered “A natural disaster than a normal recession,” and that any fiscal stimulus should be viewed as necessary “Disaster relief”. Krugman additionally argues that concerns over inflation are exaggerated, as stimulus checks are likely to be saved and not immediately spent, therefore providing consumers with stability and expanding their capabilities for future spending. 

On Wednesday, March 10th, the Dow Jones Index reached new highs breaking 32,000 showing signs of delight at the bill’s passage in the House, and continued to reach record-highs on Thursday. However, the effects of the stimulus on the economy will not be immediately observable. In the coming months, economists will be on the lookout for several indicators such as unemployment, treasury yields, inflation, vaccine rollout, and many others. Monitoring these trends will influence whether or not the Fed will have to take action and raise interest rates earlier than anticipated if inflation gets out of control.

Conclusion

Is a $1.9 trillion bill a necessary relief needed to provide citizens and the economy with the support they need, or should the inflationary concerns take precedence? As we have seen, it is up for debate. 

Nonetheless, as a member of Scholars of Finance, I know that my decisions impact those around me. Although they may not be as large-scale as those of politicians and financial leaders, having a values-based approach has undoubtedly helped guide my decision-making. Learning how to implement the values of Integrity, Compassion, Humility, Curiosity, and Courage into my decision-making has enabled me to achieve another core value — Impact. For politicians deciding on the American Rescue Plan Act of 2021, reflecting on their values and their responsibilities as public servants to citizens hopefully helped guide them in their decisions and best serve the country. By upholding the values of Curiosity and Compassion, politicians can seek to understand society’s needs and act accordingly. With Humility, they will be able to reflect upon the responsibilities they accepted and their role to serve on behalf of the greater good of all people. Through Courage and Integrity, they can build trust through honesty and speak up for what is right. Altogether, enabling them to have a positive Impact on the people they serve. As the world and society continue to evolve, I urge everyone to reflect on the impact they have had, wish to make, and the legacy they want to leave behind.

 

“I believe I have a personal responsibility to make a positive impact on society.”

— Dr. Anthony Fauci

 

Sources: 

 

Impact: How Excellence Unlocks Change

By Impact No Comments

At Scholars of Finance, we have six core values that are at the center of what we teach and strive to lead with: Integrity, Compassion, Humility, Curiosity, Impact, and Courage. Each month, our members vote on the “Value of the Month”, which has increasingly been at the center of discussions we have at both undergraduate chapters and among our national team.

For the month of February, our Value of the Month is Impact. Some of our members asked me to share a brief background on why Impact was selected as one of our core values and how it helps us achieve our mission at SOF. So, I am going to walk through the value, its “epithet”, and the 4 principles we believe reflect this value. I hope to explain the rationale behind them and provide you with some examples and questions to help you consider how these may apply to you personally. Here they are:

Impact

Do excellent work

  • Accept nothing less than your best
  • Develop credibility through consistency
  • Operate patiently and think long term
  • Live a healthy and balanced life

We use the term “Impact” interchangeably at the organization to mean two things. Most commonly, we use  “making an impact” to mean doing excellent work that advances our mission. Secondly, we “make an impact” on others, our organization, and the world by doing good, making a difference, or making lasting, positive contributions to society. The latter has become incredibly common today. We believe our mission of inspiring character and integrity in the finance leaders of tomorrow will make an enormous impact on the world in this sense. Ultimately, It will change how billions of dollars are invested and allocated – toward solving problems, improving communities, and helping people thrive.

Do excellent work

We define Impact as “doing excellent work” because we believe that is integral to making an impact (the “doing good” kind). Our vision is a future where all finance leaders steward the world’s capital to serve the greater good. This requires several components. First, we need ALL finance leaders on board. Yes, they need to view themselves as stewards – as fiduciaries who are entrusted with capital on behalf of others in a role of service. They do need to be motivated by improving the world around them, rather than self-gain, greed, or power. Accordingly, at Scholars of Finance, we often emphasize developing “highly principled” future leaders as the means of achieving this vision. But a clear reality is that we also must be the “highest performing” future leaders as well if our members are to enter finance, succeed, and ascend the ranks of leadership and reach a level of seniority where they can make a significant impact. They need to do excellent work to get in the door and then climb the ladder.

So, with that in mind, let’s break down our four principles for Impact, which we believe define the behaviors that reflect this in action – and also discuss why they are so important.

Accept nothing less than your best

Finance demands this from us. The gravity of our future decisions demands it. We believe members of Scholars of Finance will one day allocate millions or even billions of dollars. That’s an enormous responsibility and deserves our very best effort because those decisions can influence thousands of lives – and many more. I sometimes reflect on the precision that engineers at NASA or SpaceX have to employ in their work, and I genuinely believe investors should apply the same level of rigor in trying to allocate capital to its highest purposes – where it can do the most good. Practically, today, this looks like being detail-oriented, doing thorough research, and thinking critically. It’s putting in the extra effort.

Develop credibility through consistency

Finance is largely a relationship business. Our ability to bring projects to fruition or deals to close requires that others trust and respect us. Large and complex projects also require the collaboration of many people, so we need to consistently build credibility, across teams, companies, and contexts. We need to be consistent so people know they can count on both our word and our work. They need to know we will deliver. Many of our speakers and mentors share that they only want to work with people they trust, and in Wall Street, expectations of excellence are incredibly high – trust has to be earned constantly. Ralph Acampora, one of our Advisors, who is renowned on Wall Street, often says “it took me 50 years to build my reputation, and it could take me less than 5 minutes to destroy it”.

Operate patiently and think long term

Short-termism has been argued to be one of the largest hindrances to advancing society as quickly as we are capable of through investment in innovation and moving capital toward businesses and products that are in our collective, long-term best interest. For example, many have argued that short-term profit pressure has slowed our transition to renewable energy sources, leaving us with the prolonged effect of pollution and carbonization of our atmosphere – all of which are creating growing costs we will have to pay for years from now. In addition to the need to be patient with our investing to unlock progress for society, we need to be patient to advance deals, as they are often complex and take time. For example, I spoke to the former CEO of a top investment bank that had once acquired another sizable firm, and the CEO said that they had been building the relationships needed to close that acquisition for more than a decade.

Live a healthy and balanced life

This may seem counterintuitive, and to some, almost tone-deaf considering what we hear about the lifestyle and workload of investors. Our members pursuing roles in investment banking dread the 80-100 hour work weeks they’ve heard horror stories about. Rightfully so, because that kind of lifestyle drives burnout and sleep deprivation, which can lower our moral awareness and, not surprisingly, dramatically reduce our cognitive performance. In finance, the stakes are often high, with millions of dollars on the line. Tending to our mental, emotional, physical, and spiritual health is critical for our decision-making under those intense circumstances. Excellence requires us to operate at our highest levels, so sleep, nutrition, exercise, relationships, and every aspect of our lives need to be in order. Becoming an executive is also a multi-decade journey, which burnout would halt before we even get close to the “finish line”. We need to operate sustainably.

Conclusion

Hopefully, this begins to paint a picture of what Impact means to us at Scholars of Finance and why it’s important. Like most, we think it guides us toward making a difference in the world and people’s lives. And we also believe it entails holding ourselves to a high standard of excellence in the process. 

In the months ahead, with members, mentors, and speakers, we will dive deeply into each of these principles. We hope that, as February winds to a close and you reflect on your impact, you can identify a few ways to do even better work – excellent work – that advances a mission that’s important to you. 

Ask yourself: Are you doing your best work or spread so thin everything you produce is just “good enough?” Are you building credibility through consistency or creating for yourself a reputation for underdelivering? Are you thinking long-term or only thinking about this quarter, this month, or even this week? Are you living a healthy and balanced life or are you stressed, anxious, eating poorly, and barely sleeping? 

Taking a bit of time to pause and soberly face these questions will almost always yield actionable insights. I hope that you’ll set aside even just 15-20 minutes sometime after reading this to ponder these questions, and ideally identify 1-2 things you can change in the week ahead to make more impact. 

As I do the same, I am raising a virtual toast to you and to all of the long-term impact you’ll unlock as a result. 

A Call to Character Amidst a Defining Moment

By Compassion, Courage, Curiosity One Comment

Dear Scholars of Finance,

After reflecting on the events that recently transpired in the U.S. Capitol, I am writing to offer some encouragement and guidance on how we can grow and act as leaders in a time when our leadership is more important than ever.

On Wednesday, January 6th, millions of people went online and watched violent rioters storm the U.S. Capitol, witnessing the chambers of democracy being desecrated and looking on in suspense as the very principles the U.S. was built upon were challenged. The character of this nation was threatened. The House of Representatives and Senate reconvened safely that evening and completed the election certification. The democratic process prevailed over violence and intimidation. 

Following this day of infamy, five have been reported dead. The FBI has identified dozens of rioters to be prosecuted for egregious crimes. The current President of the United States has been banned from Twitter and Facebook indefinitely, and impeachment is under consideration. 

We’re living through a moment that will define our generation.

Many of us have felt scared or confused by what has in some cases been portrayed as the unraveling of the safety and security of democratic processes and institutions. Many of us were shocked or deeply disappointed that people would so recklessly defile the halls of Congress. Many of us are angry about the obvious inequality and inequity displayed, recognizing that several Black Lives Matter protests were treated more harshly, leading us to question how Capitol police would have responded had the rioters not been predominantly white. Some are not even surprised by the events, given the divided state this nation has devolved to and the vitriolic rhetoric of the current President. Some simply don’t know what to think or what to say.

The moment continues. With a presidential inauguration approaching and the deep division of our nation becoming increasingly apparent, it may last for weeks or months, maybe even years. 

Many of us are asking ourselves what our role is in this moment. What can we do? What should we do? The problems can feel so much bigger than us. The solutions can seem far out of our reach, lying in the hands of national officials, courts, or political leaders. How do we make an impact? Can we?

Yes we can. We can take action within our circles of influence, whether we only reach our family members down the hall or we reach hundreds or thousands. We can do something now and we can make a difference.

Our mission is to inspire character and integrity in the finance leaders of tomorrow. We may wonder what action we can take while still so early in our paths to becoming finance leaders and investors. What role does finance play in all of this? 

Eff Martin, a former Partner at Goldman Sachs and a close friend of SOF, once told us that “you need to build character now, so that in 15 years, when you’re put to the test and your decisions carry much more weight, you have the character to do the right thing.” One day, some of us will make decisions with millions of dollars and impact many, many lives. So, in this moment, as future finance leaders, we seek to examine how we can act with character to prepare ourselves for our future impact. In doing so, we can also make an impact right now.

I encourage all of our members, and anyone else reading this, to consider our core values of Courage, Curiosity, and Compassion and how to apply each of them in the weeks ahead. Here are a few thoughts to help you get started with your reflection and next steps:

Courage — There is deep division in the world which threatens the foundations of our society. Help solve this large and important problem. The situation in our country may get better from here, or, for a period of time, the state of affairs may get worse. Remain calm. Maya Angelou said, “Without courage, we cannot practice any other virtue with consistency. We can’t be kind, true, merciful, generous, or honest.” Courage overpowers the fear that resigns us to this new status quo.

Curiosity — There will be many debates about what has happened, is happening, and will happen. First, seek to understand, then to be understood. We will naturally bias toward talking about these events only with people who share our worldview. Embrace diverse perspectives. Abraham Lincoln, who led the U.S. through arguably the most divided time in our national history, said, “Those who look for the bad in people will surely find it.” Curiosity extinguishes the flames of anger between us.

Compassion — There are people severely affected by what’s happening. Show empathy to those suffering. There are people who view this situation differently than we may. Show them respect and kindness. People will say things that initially offend us. Extend them forgiveness. Martin Luther King Jr. reminded us that, “Love is the only force capable of transforming an enemy into a friend.” Compassion is our primary antidote to the divisiveness that plagues us.

Again, one day, many of us will be leaders in finance who help shape the economy and our nation’s political agenda. It is incumbent upon us to practice these values now to help heal our nation and prepare for the days when our actions have far greater implications. My sincere hope is that the last week and the months ahead can become one of the greatest periods of growth in our lives to date so that we can help avoid events like these from happening again, and that in the process, we help shape this moment into a foundation for a brighter future.

If you have questions, need someone to talk to, want to discuss how to uphold these values in more detail, or perhaps want to be a resource for others seeking clarity through this period, you can always reach out at hello@scholarsoffinance.org and a member of the team will be grateful to talk with you.

Best,
Ross Overline
Co-Founder, CEO

A Lesson in Curiosity, Humility, and Courage

By Courage, Curiosity, Humility No Comments

Next to the entrance of every Sam’s Club nationwide is the consumer electronics section. In this section stands a sales representative dressed in a suit promoting the store’s latest deals. To adult shoppers, the consumer electronics department is their go-to place for discounted TVs on Black Friday or a new phone when a family member needs a replacement. For children, this section offers the most captivating gadgets to play with while parents complete their weekly grocery run. The consumer electronics department in Sam’s Club was my home last summer.

Like many high school graduates, I pursued a summer job in the months before heading to college. This opportunity was the ideal time for many of my classmates to earn some spending money from a stress-free retail or tutoring job. For my friends, my decision to sell DirecTV and AT&T plans for the summer was a complete mystery. I was an introvert; in the classroom, I did not draw attention to myself by jumping to answer questions. Every action I made was carefully calculated until I was sure I could succeed. The sales rep role was the complete opposite, as conversion rates averaged only 5%. Why would someone like me take a job that required me to seek out attention and rejection from disinterested shoppers? The answer was simple – I had never done it before. This split-second decision only took 5 minutes of courage, but it made a world of difference.

This display of courage led me to a week of sales training where I was taught to smile, laugh, make conversation, and recite a sales pitch. Too quickly came my first day “in the field.” I leaned against the phone display waiting for customers to pass the station. As they walked through the sliding doors, I straightened my blazer, stood up straight, and took a few steps forward. My heart pounded and I opened my mouth to greet them.

“Hi y’all, who’s your TV provider? We’re doing a promotion to–,” I was cut off by a quick wave of a hand and they turned brusquely away. My first rejection. Another one came a few minutes later. Then another. And another. I didn’t make a single deal that day, or even in the first week. I finished my week in the field dejected and began to echo the doubts of my classmates. I thought, “maybe my personality just wasn’t cut out for this role.”

Motivated by my less than satisfactory performance, however, I wanted to improve. My courage had allowed me to take the first step in stepping out of my comfort zone, but I needed to continue growing in that direction. To achieve this, I utilized humility and curiosity. I knew the bounds of which I still had yet to learn and sought the resources to do so. Over the course of the next two weeks, I arrived at weekly check-ins early and stayed later to work with senior executives. They threw every possible scenario at me while I practiced navigating client interactions. I also remained curious about each team member’s unique sales strategies and learned how to apply their sales “personas” to my own. As I improved my communication skills, I also gained confidence. My poor first week stemmed from being so focused on closing deals rather than genuinely engaging with customers. After overcoming this obstacle, I returned to the consumer electronics section with a newfound excitement. My goal would be to connect with people, and deals would come naturally.

Monday morning came around and I once again waited for the first customers to come through the sliding doors. Using a tone similar to that of talking with an old friend, I greeted, “Good morning, y’all, how are you doing?” The members started to talk about their day and I learned about their kids, gardens, and pets. Immediately, I noticed a difference in my sales. I had formed personal connections with customers and even if they did not need a TV or phone right then, they gave promises to return. My first day back, I closed two deals.

My experience as a DirecTV sales rep was a lesson on the importance of courage, humility, and curiosity, and it transformed my perspective on life. Although I still am an introvert, I learned to utilize courage and take risks in order to grow. In pursuing a role that starkly contrasted my personality, I broke through my own doubts that introversion made me unfit for a sales role. Today, I continue to seek opportunities to make genuine connections and meet new people with diverse perspectives. I also strive to help others, promote positivity, and remain humble and curious in each relationship, whether it’s with friends, colleagues, or mentors. It only takes five minutes of courage to venture beyond your comfort zone and exceed your limits, and I challenge all of you to find that moment. What’s something you’re afraid of that’s holding you back from where you want to go?

A Brief Reflection On Courage…

By Courage No Comments

Following Courage being voted as the value of the month, I began thinking about everything that’s taken place over the last several months, for myself and for the rest of our community here at Scholars of Finance.

We’ve all been faced with a lot.

Undoubtedly, the elephant in the room is the COVID-19 and navigating its effects, but in addition to that we’ve had an election, several friends and family members pass away, and a wave of civil unrest in the United States to name a few things. 

While these examples don’t encapsulate everything we’ve faced this year, they serve as a testament to how courageous everyone in our organization has been.

Watching this all unfold from a bird’s eye view, it’s been inspiring to see how boldly our entire organization has acted.

We’ve all remained focused on our team goal of creating a future where all finance leaders steward the world’s capital to serve the greater good. Not only that, but several members of our community, from all walks of life, stand up for what they believe in and speak up when they felt something wasn’t right.

Most of us have been online for the majority of the semester and have been secluded from our chapters and classmates. Some of you are living internationally and have to wake up at 4am to attend class, others were forced to either stay home or leave home, and others have certainly had family members be furloughed or laid off because of the impacts of COVID-19. Regardless, the two themes that I’ve seen have been endless uncertainty and relentless courage from you all to combat that uncertainty. 

It’s difficult to know what’s going to happen tomorrow, much less next month or next year. I can personally say I’ve been inspired by how quickly everyone in SOF has adapted to this new normal. Watching chapters mobilize and make progress while being fully remote, seeing you all put forth your best effort even when it’s much easier to get distracted and multi-task, and hearing about how many of you have found new interests and internships have been just a few of the ways that I’ve been inspired to keep learning and keep moving forward. 

With everything that’s in front of us now and in the future, I’d encourage you all to focus on courage for the rest of November. Work toward solving the world’s biggest problems. Stand up for what you believe in. And most importantly… stay bold.

Richard Davis is Joining Our Advisory Board!

By Values No Comments

 

We have some very exciting news to share as an organization. Richard Davis, the former Chairman, President, and CEO of U.S. Bank has joined our Advisory Board!

Richard is a luminary of ethical finance leadership. He has more than 30 years of experience in financial services, including spending 2006 to 2017 leading U.S. Bank, the fifth-largest commercial bank in the U.S. Under his leadership, the institution became recognized as one of the World’s Most Ethical Companies by the Ethisphere Institute in 2014, an award it’s received every year since.

Richard also has an impressive track record of governance and nonprofit leadership. He is on the Board of Directors for many large for profit companies, including MasterCard, and several leading nonprofits, including The American Red Cross. After leading U.S. Bank he stepped in to become the CEO and President of Make-A-Wish America, where he serves today.

More important than his accolades, Richard exemplifies the character and values we stand for at Scholars of finance. Every time you interact with him his genuine humility, integrity, compassion, curiosity, and courage all shine through.

Looking back on his career, we can say with confidence that Richard has helped make finance a force for good, and we are very excited to have him join our Advisory Board to help all of us at SOF do the same.

To learn more about Richard and the experience and values he brings to our board, you can check out his profile on our website here

If you’d like to extend Richard a warm welcome into the Scholars of Finance community, you can do so by sending an email to hello@scholarsoffinance.org, and we’ll forward it along.

Thanks again for all of your support and, in the meantime, we hope you have a great rest of your week.

 

Cheers!

The Scholars of Finance Team