Tammira Philippe President, CEO, and Head of Strategic relationships at Bridgeway bio image

Tammira Philippe, CFA

As we kick off this new year, like many of you, I have been thinking “how do we turn more ideas into action?”, and I am looking forward to doing that with relational investing in 2021.  In September 2020, in our Open Letter on Relational Investing, I shared how Bridgeway is a leader in this modern approach to investing.  Our approach to relational investing is statistical and evidence-based motivated by a passion for servant leadership and global impact, which we accomplish by donating 50% of our firm’s earnings to organizations making a positive impact for humanity. 

Relational investing is a different approach to investing that bridges the gap between results for investors and returns for humanity.  To help everyone who wants to adopt a relational investing approach, we have identified five principles for success: 

  1. Be intentional
  2. State where you stand
  3. Invest in your outcome
  4. Discover power in the paradox
  5. Stay curious

So, how do individuals, financial advisors, and institutional clients put relational investing into action?  We believe investors can turn these five principles of relational investing into action by enhancing the four-step planning process that they typically already follow.

The best investors that we know follow this four-step plan for investing: 

  1. Structure an asset allocation plan that matches your goals, investing time horizon, and tolerance for risk (getting help from a qualified financial advisor or investment consultant, as appropriate)
  2. Write the plan down
  3. Implement the plan
  4. Rebalance to the plan approximately annually (or as lifestyle changes occur)

Practicing relational investing with this four-step plan is simple but not easy.  Be intentional by structuring a plan that matches your intentions (e.g., goals, investment horizon, risk tolerance, liquidity needs).  Get help when needed from a professional to clarify intentions and take the next step to state where you stand.  Write the plan down.  Third, invest in your outcome by implementing the plan, and discover power in the paradox yourself or by using investment managers that practice relational investing, an approach that bridges the gap between results for investors and returns for humanity.  Finally, stay curious– rebalance to your plan and revisit your intentions at least annually and as lifestyle or other changes occur.  This four-step plan aligned with the principles of relational investing works for individuals and institutional investors and is shown in the image below.

At Bridgeway, we have put these principles of relational investing into action with how we run our organization and an investment philosophy that drives our portfolios to produce results for investors and returns for humanity.  Here is some of what we have learned about each principle: 

Be intentional – The best investors put this into practice by developing financial goals and understanding their willingness and ability to take risk before making any investment decisions.  At Bridgeway, we do this in our investment portfolios through a disciplined research process that drives every investment decision and a mission statement that guides every business decision. 

State where you stand – Relational investors state where you stand by having a clear plan and writing it down.  As leaders in relational investing, we have found that to state where you stand requires candor and kindness.  Stating where we stand allows us to attract clients who we can truly help and colleagues who can thrive and serve at their highest potential in our organization.  We state where we stand in our mission statement and by investing according to a statistical, evidence-based process rather than the opinions or whims of the day of an individual.  We also state where we stand with a commitment to donate 50% of our company’s profits since inception to organizations making a positive impact for humanity. 

Invest in your outcome – For institutions and individuals, investing in your outcome requires avoiding behavioral pitfalls and staying the course.  In relational investing, investing in your outcome includes investment results and returns for humanity.   Returns for humanity can take many forms and each relational investor decides what those will be.  We have learned that the discipline of relational investing often frees time to invest in your outcome in other aspects of life too – like relationships with family, friends, and community organizations.  At Bridgeway, we invest in your outcome by always putting client interests ahead of our own and focusing on stewardship, which we define as having the passion and the discipline to care for an asset for the benefit of others.  For us, investing in your outcome is also about knowing why investment returns matter for clients and keeping a broader perspective on the world.   

Discover power in the paradox – Relational investors see power in the paradox that spending less time acting on investments often leads to better outcomes not just in portfolios but also in the world.  This is where relational investing differs the most from other types of investing.  By focusing on results for investors and returns for humanity, outcomes are multiplied.   

Stay curious – Staying curious is about measuring progress against goals and being open to new ideas.  At Bridgeway, we stay curious about the principles that drive our investment portfolios, about client needs, about how to learn and grow with our colleagues, and about how we can make more positive impact in the world. 

We see the world differently at Bridgeway and believe that principles are the foundation of prosperity.  Prosperity is more than financial success; it also includes a wealth of relationships. Relational investing is grounded in strong relationships – in the data and with clients, colleagues, and community.  It is an approach that any investor can adopt by following key principles.   As leaders in relational investing at Bridgeway, we bridge the gap between investment results and returns for humanity by taking an innovative approach to asset management. Join us. 

DISCLOSURES
The opinions expressed here are exclusively those of Bridgeway Capital Management (“Bridgeway”). Information provided herein is educational in nature and for informational purposes only and should not be considered investment, legal, or tax advice.