Thrivent Financial

Part
01
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Part
01

Case Studies

Faith-based financial companies have shown resilience in the wake of national crises, with product-focus, messaging and marketing communication staying true to the faith-based values that are critical to the company. With 'stay the course' as the most prominent strategy observed post-crisis, these firms have also showed support for their customers in meaningful ways at these times, remaining accessible to a broad base of users, offering financial support and incentives, and even providing hurricane crisis support to the most needy. Below are three examples of faith-based financial firms and their strategies, messaging and actions after significant national crises.

EVENTIDE ASSET MANAGEMENT

Company Overview

  • Eventide Asset Management is an investment management firm launched by Robin John in the midst of the great recession in July 2008, just prior to the US Government bank bailout in September 2008.
  • Eventide invests only in companies who work to the benefit of others, including external stakeholders, such as customers, the environment, and communities, and internal stakeholders, such as employees and suppliers.

Approach to 2008 Recession Challenge

  • Despite the challenging environment, Eventide launched with a faith-focused objective supporting 'biblically-responsible investing", and has remained consistent and committed to their investment strategy, messaging, and marketing approach since 2008.
  • In the days leading up to the US Government bank bailout in September 2008, Eventide felt that sub-prime mortgage lenders were exploiting their customers and demonstrating 'dishonest practices.' As a result, they avoided investment in these companies.
  • They otherwise maintained the core messaging supporting their mission and vision, with a tagline 'investing that makes the world rejoice'. Their vision is focused on "providing high-performance investments that create compelling value for the global common good".

Client Communication and Marketing

  • Their tagline, 'investing that makes the world rejoice', with its roots in investing in those who put others' interests in front of their own, has been consistent from its founding at the outset of the great recession in 2008, to today. Their target focus and communication has also been consistent since its founding, emphasizing accessibility to the average investor (with a relatively low minimum investment of $1,000).
  • Their marketing is founded in the communication of their biblically-responsible investing philosophy, with the strong performance of their funds a core element of their communication since 2008. Specific marketing vehicles include their website, which showcases their investment expertise and investment philosophy, interviews with faith-based publications to discuss their investment philosophy, distribution partner press releases, and financial reporting PR, which allows them to tie their investment philosophy to their performance.
  • An analysis of Eventide Funds' website communication between 2009 and 2011, in the wake of 2008 recession, showed Eventide remained consistent with their original messaging, with the home page in both years highlighting a 'values-based approach to investing.'
  • While the original article is unavailable, World, a biblically-focused news and current events' news site, referenced their 2009 coverage of Eventide, 'Investing by the Book', which focused on Eventide's promising investment approach.
  • Eventide also showcased their expertise and philosophy through their website blog ('faith and business'), which now highlights their insights across numerous topics associated with faith-based investing.

Outcomes

  • New York Times ranked their flagship fund, the Eventide Gilead Fund, as the top-performing mutual fund with over $50 billion in assets for the 5-year period ending September 30, 2013. The fund produced a 5-year annual return of 21.31%, compared to a 7.57% annualized return for the S&P 500 over that period.
  • Their messaging has resonated among investors, with one early investor, Jeff Rogers, citing the appeal of the business for investors who do not want to choose between 'investment excellence and morality'. Instead, he offers that 'with Eventide, you get both'.

AVA MARIA MUTUAL FUNDS

Company Overview

Approach to 2008 Recession Challenge

  • Ava Maria's messaging between 2007 and 2010 did not waver: "Ave Maria Mutual Funds is the country’s largest family of Catholic mutual funds, designed specifically for investors looking for financially sound investments in companies that do not violate core values and teachings of the Catholic Church."
  • In the year just prior to the great recession of 2008, a press release from the company announcing a merger of the Catholic Equity Fund with Ava Maria's Rising Dividend Fund, highlighted Ava Maria's diversified mutual funds that align with Catholic moral values. In the wake of the 2008 financial crisis, in 2010, Ava Maria issued a press release noting benefits to their current and prospective clients, including the launch of a new equity fund, and the reduction in management fees for two of their existing mutual funds.
  • Ava Maria has a significant focus on long-term investing, with their investment adviser, George P. Schwartz, CFA, commenting on their investment philosophy with respect to external factors, such as economic or market conditions: "In over 50 years of investing, Warren Buffett says he has never made, or not made, an investment based on economic outlook or the general level of the stock market. He focuses on fundamentals and valuation, which is exactly what we do. We focus on good investment opportunities for the long-term".

Client Communication and Marketing

  • Ava Maria's messaging highlights their key points of differentiation. These include an investment philosophy which eliminates companies in that are focused on pornography, abortion, embryonic stem cell research, or companies that support Planned Parenthood in any way. They highlight their award-winning investment process, which targets investors who want to align their financial goals with their moral beliefs.
  • The company has a zero-tolerance policy for companies that do not uphold Catholic values, which has been consistent since their founding.
  • The strong performance of the company in the wake of the 2008 financial crisis is attributed to commitment to their values (in terms of companies they will not invest in, such as those related to pornography or abortion), as well as their investment philosophy, which focuses on company valuation and growth potential.
  • Most of the specific communication surrounding their marketing and communications to both their customers and externally appears to have been conducted via press release and their website. Their communication in the years before and following the crisis demonstrates their commitment to their values and services for their current and prospective investors.
  • In 2010, fees were reduced on two funds, while an additional fund option was launched that offered their investors exposure to global markets. The specific messaging around these benefits focused on the value for their shareholders: "“we believe lower fees on two of our funds and access to investment opportunities worldwide through our new fund makes Ave Maria Mutual Funds an even more compelling choice for shareholders.”

Outcomes

  • Ava Maria's rising dividend fund dropped only 22.8% in 2008 (compared to a 37% decline in the S&P 500), and outpaced the S&P between 2009 and 2014, rising 17.2% annually over that five-year period. This fund was recommended by Kiplinger as a top-5 fund for faith-based investors.

GUIDESTONE FUNDS

Company Overview

Approach to 2005 Hurricane Katrina Crisis Challenge

  • In the wake of Hurricane Katrina in September 2005, GuideStone published an official response to the crisis, which emphasized that GuideStone was 'standing by to assist you in this time of uncertainty.' Following, in November 2005, they continued to emphasize their response and client support: 'we are standing by to assist you during this difficult time'.
  • In both website communications, they highlighted that GuideStone was 'your guide for life.'
  • By December 2005, GuideStone was not featuring their crisis response as prominently in their website communications; instead, focusing on ministry donations.
  • GuideStone also offered support to the New Orleans Seminary in the wake of the crisis, as highlighted in this press release. Chuck Kelley, the president of New Orleans Seminary, said, "We are profoundly grateful to GuideStone Financial Resources for the great assistance they have given us in making it possible to continue benefits for our faculty and staff. They will be doing something very significant for us.

Client Communications and Marketing

  • GuideStone offered support for their clients impacted by Hurricane Katrina, including continuation of retirement plan benefits, waiving or delaying insurance payments, and simplifying paperwork and approval for victims of the crisis.
  • The Baptist Press News also highlighted the efforts by GuideStone in supplying emergency grants, between $500 and $2,000, to help pay insurance deductibles, provide cleanup assistance and food, and provide support in rebuilding parts of recipients' homes. One grant recipient, Mary Hodges, noted that, "the check makes the difference in what I am able to eat, compared to what I could have without it.

Outcomes

  • Fund performance for some of GuideStone's funds in 2005 and 2006 appeared to be solid, with growth observed in several of its mutual funds in the years following the crisis.
  • Currently, GuideStone has a 98% participant satisfaction rating.
  • Testimonials surrounding clients' relationship with GuideStone before and after the crisis, reinforce GuideStone's strong commitment to its values, support for its clients, and growth.
  • The previous president of the international mission board, Jerry Rankin, highlights the growth of both organizations over time: "Our relationship with GuideStone goes back more than 60 years. In the intervening years, we have both grown exponentially. With growth in personnel and plan assets, our partnership has expanded. Yet GuideStone's commitment to the IMB, to understanding and serving the unique needs of our people, has been a constant. As a consequence, it is fulfilling for me to see our personnel reaching and moving into their retirement years better informed and better prepared than ever before."
  • John Konnerup, Mission Director for Baptist Bible Fellowship International (BBFI) says, "We are pleased to offer our affiliated churches access to ministry retirement and financial services from an organization with a proven track record. GuideStone Financial Resources shares our values and heart for ministry".

Research Strategy

We began by reviewing financial publications (such as Kiplinger), religious news organization websites and publications, and faith-based financial organization websites to identify case studies associated with previous national crises or tumultuous times. Since there were no readily-available case studies linking the company's specific actions, marketing and messaging to the events, we then turned to individual faith-based financial firms who had measurable positive results since the 2008 recession, were recommended or reviewed by financial news organizations, and whose messaging, communication and marketing trends we were able to analyze before and after the 2008 crisis. This approach resulted in our first two case studies, Eventide Asset Management and Ava Maria Mutual Funds.

For our third case study, GuideStone, we were able to leverage resources that allowed us to view historical communication post-Hurricane Katrina in 2005. Additionally, there were a number of press releases available through religious news and press sites post-Katrina that provided further visibility into their actions post-crisis.

Marketing and messaging analysis focused on benefit communication, press releases surrounding specific actions initiated by the organizations, specific marketing tactics, and vision and mission statements, as available. Outcomes were measured broadly, including growth in investments post-crisis, recommendations by financial experts post-crisis, awards provided to the organization post-crisis, customer and grant-recipient testimonials, and the health of the organization to date.




Part
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Part
02

FBI Marketplace Trends

Trends in faith-based investing include its overall growth, the rising importance of Shariah-compliant investments, and a growing number of affinity frauds in the sector.


Growth of the Sector

  • In the last five years, faith-based funds' assets under management (AUM) grew by 33%, despite the overall decrease in AUM among active managers.
  • At the moment, the industry comprises around 150 funds that have $28 billion in assets under management. They are present in 38 fund categories, especially debt and equity ones.
  • The growth is driven by rising interest in FBI investments. This urged the companies to widen their offerings.
  • Examples of funds that have outperformed in 2019 are The Ave Maria Dividend Fund that gained 20.8% (compared to 15.7% average in its fund category) and the Timothy Plan Israel Common Values Fund that gained 25.1% (with the category average of 13.3%).

Shariah-Compliant Investing

  • Shariah-compliant investments are trending according to multiple sources, including Investopedia, The Startup, and Wahed.
  • It is difficult to pinpoint the exact size of the sector due to the large number of investments "occurring through private placement."
  • However, PwC predicts that a Shariah-compliant fund can grow 15-20% a year.
  • According to the consultancy, the main driver behind the popularity of Shariah-compliant investing is the large Muslim population, which accounts for a quarter of the global population. At the same time, a very small percentage of financial assets are Muslim-compliant.
  • An example of a US-based Shariah-compliant fund is Amana Growth, which grew by 29.8% in 2019.
  • While the Muslim population in the US is smaller, it is predicted to grow fast. Also, there is a growing number of Shariah-compliant funds with "abnormally loyal investors."
  • Even though the trend is usually described as global, all the articles give examples of US-based funds and reference the US market specifically. Also, The Startup's article focuses mainly on the US FBI sector.


Rise of Affinity Frauds in Faith-Based Investing

  • According to CNBC, affinity frauds in religion-based investing are increasingly common.
  • Gary D. Halbert, an investing expert, also thinks they are on the rise, noting that security regulators name them one of the leading issues.
  • As people are more trusting in a religious environment (such as religious organizations and churches), they are more eager to respond to investment proposals that claim to be based on principals related to their faith. At the same time, it makes them more vulnerable to scams.
  • Only in the state of Utah, the FBI is investigating affinity frauds worth $2 billion. The majority of Utah's population is Mormon.
  • The church itself issues warnings to the people. Also, the local government is implementing measures to fight such scams.
  • There are many examples of recent affinity frauds across the US, with their worth ranging from several to several hundred million.
  • Investing experts think that such frauds tend to have Ponzi or pyramid schemes, which tricks investors into thinking that they are successful.

Research Strategy

Information on trends in faith-based investing was scarce in investing, business, and finance media. We tried to choose the trends based on at least two mentions in such media, supported by quantitative data. Please note that while we used one article that was published on a personal website and one that was published on Medium, we verified that both authors are investing experts.

Part
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Part
03

2020 Impacts in Finance and Insurance

Examples of factors affecting or expected to affect the financial and insurance sectors include the COVID-19 pandemic, the US election, climate change issues and policies, COVID-19 relief package, and changes in regulations and policies.

COVID-19 Pandemic

  • With over 873,000 confirmed cases globally and over 43,000 deaths, the pandemic remains a key concern with no end in sight.
  • The uncertainty about when the virus contained, closure of borders and shutting down of economic activities in the US and beyond have negatively impacted the financial and insurance sector.
  • Global stocks have lost about $11 trillion in value, and Euler Hermes estimates that coronavirus will cost $320 billion of trade losses in each quarter this year.
  • Insurers invest about half of its assets under management in government bonds and the US "10-year bond yields have more than halved since the end of 2019."

US ELECTION

  • The US election is another example of a key issue expected to affect the financial market this year.
  • A majority of financial industry bosses interviewed by the Financial Times consistently mentioned uncertainty about the US election as a key factor that will impact the financial industry this year.
  • This view is also echoed in the 2020 financial outlook information compiled by Bloomberg based on expert analysis from over 500 leading financial institutions.
  • According to US Banks analysts, "in any given 12-month period, analysts saw equities generally providing gains of about 8.5 percent — but in the year leading up to a presidential election, gains totaled less than 6 percent. Bond markets provided similar results, with returns of around 6.5 percent in the year leading up to a presidential election, compared with their more typical 7.5 percent in any given 12-month period."

Trade War

  • The China-US trade war is another key factor is expected to impact the US financial and insurance sector.
  • A majority of the financial industry bosses interviewed by the Financial Times consistently noted that the US-China trade war/negotiation is a key factor that will impact the financial industry this year.
  • This view is also echoed in the 2020 financial outlook information compiled by Bloomberg based on expert analysis from over 500 leading financial institutions. Financial institutions such as BMO Capital Markets, Bank of America, Goldman Sachs, Northern Trust, Schroders, among others all mentioned trade war as one of the key factors that will affect the industry in 2020.
  • According to a Wells Fargo analyst, the impact of the trade dispute on the financial industry may "become larger as the US-China tariff dispute extends into 2020 and further impacts manufacturing companies in the domestic economy. For example, direct signs of economic stress may rise as lending slows.

Coronavirus Relief Aid

  • The $2.2 trillion Coronavirus relief package is another example of a major factor that will have a huge impact on the financial and insurance industry in 2020.
  • In the wake of the devastating effect from the Coronavirus, Congress passed a $2.2 trillion relief package to help businesses and Americans survive the period.
  • Big banks in the US such as Bank of America and JP Morgan had sought a relief package from the federal government to enable them to cope with the impact of Coronavirus.
  • The relief bill also authorizes "the Federal Deposit Insurance Corp. to revive its crisis-era program backstopping bank-issued debt and noninterest-bearing transaction deposits that exceed the FDIC's $250,000 limit."
  • The signing of the bill into law by Donald Trump resulted in the Dow surging 1,352 points.

Climate Change

  • Climate Change is another key factor expected to impact the finance and insurance industry in 2020.
  • According to analysts, economic losses due to natural hazards in 2019 was worth about $150 billion in 2019.
  • There is a growing concern among industry experts on the ability of the insurance industry to afford flood risk in 2020 and beyond. The US National Flood Insurance Program (NFIP) owes the US Treasury about $20 billion, despite the fact the federal government forgave $16 billion in NFIP debt recently.
  • In 2019, only $13 billion of the total $82 billion in flood risk was insured globally but that is expected to change in the coming years.
  • Some analysts in the finance industry also predict that central banks may expand "their mandates to incorporate climate change policies."

Regulation and Policies

  • Federal government regulation and policies are examples of factors that could greatly impact the financial and insurance industry.
  • Financial industry bosses interviewed by the Financial Times state that potential regulatory and policy change in the US will have a significant impact on the financial industry this year.
  • According to a research paper provided by Deloitte, the impact regulatory changes may have in the US insurance industry in 2020 "will likely span a wide range of areas, including product offerings; conflicts analysis; producer compensation and incentives; various client disclosures; documentation to support producer recommendations; and supervisory and compliance policies, procedures, monitoring mechanisms, and record-keeping."

Research Strategy

Our research team relied on interviews of experts and industry analysis from reputable firms such as Bloomberg and Deloitte to select examples of factors that are expected to significantly affect the financial and insurance sectors.
Sources
Sources

From Part 01
Quotes
  • "The Eventide Gilead Fund ( NASDAQ : ETGLX ), a mutual fund practicing values-based investing, was ranked as the best performing mutual fund with over $50 Million in assets by The New York Times for the five-year period ending September 30, 2013 based on total returns. "
  • "The Fund totaled $187.6M in AUM and generated a 5-year annualized return of 21.31% compared with the S&P 500 Index return of 7.57%, an annualized outperformance of 13.74%."