At the end of the day, whether you are a deeply spiritual person or find faith in God a bit silly, we all live by some moral code. I am a member of a newly chartered Rotary Club in my hometown. For those of you who are not familiar with Rotary International. Rotary is an international service organization whose stated purpose is to bring together business and professional leaders to provide humanitarian services, encourage high ethical standards in all vocations, and to advance goodwill and peace around the world.

During every Rotary meeting, we recite what is called the Four-Way test. Rotary says that the “Four-Way test is a nonpartisan and nonsectarian ethical guide for Rotarians to use for their personal and personal relationships.” If your anything like me I had to look up what nonsectarian means. In simple terms, it means that the Four-Way test is not affiliated with or limited to a specific religious denomination.

The following is the Four-Way test.

Of the things we think, say or do

Is it the TRUTH?
Is it FAIR to all concerned?
Will it build GOODWILL and BETTER FRIENDSHIPS?
Will it be BENEFICIAL to all concerned?

As I have recited this credo over the past few months, it struck me that we could apply the Four-Way test to our investment process. Most of my blogs have been about viewing our investment choices from a Christian worldview. However, while there is nothing wrong with taking this track, I think both Christian and non-Christian investors who applied the Four-Way test to their investment process would come to similar conclusions.

So, let’s start with part one. Is it the Truth? I believe this is where the investigate portion of investment selection starts. Do you know what you own in your portfolio? Are the fees and expense of the investments and financial advisor clear and understood? Do we understand what we own?

Next is the question is it FAIR to all concerned? When asked the question is it fair to all concerned I think of the business practices of the companies that we have the opportunity to own through our investments. Do these companies inspire you to want to be an owner of the company or do have to hold your nose and hope that you get good investment returns?

Will it build GOODWILL and BETTER FRIENDSHIPS? In an investment context are the companies building goodwill with all of the stakeholders. If you use the diagram to the left as a guide and look at the different stakeholders that a business interacts with and try to understand the business’s impact in each of these areas. Is it a net positive or a net negative impact. I am not sure that we would go as far as to say that that a business is building better friendships, but goodwill could be measured by how each of the stakeholders views the company.

Finally, the question Will it is BENEFICIAL to all concerned? This question is where the Business 360 approach can also be applied. Like in the previous question, this is the idea that you look at all of the different areas that a business has an impact. Is this business being a net positive to all the stakeholders? Is the company being a good community citizen in the city or town where they are based? Are they abusing their vendors? Is the company taking care of its employees and treating its customers fairly? Some may call this Conscious Capitalism. To me, it makes sense that there could be more to running a business than was taught to me in my MBA classes where the sole purpose of business was to create value for the owners or stockholders.

As I am writing this blog, I can feel the question asked of how in the world would I have time to do all of this research to know if the companies I am investing in meet the Four-Way Test? I can hardly get all of the things I have in my day already done, much less try to spend the time to research companies or mutual funds to find out this type of information. There is good news. More and more companies are creating Environmental, Social, Governance otherwise know as ESG funds. Faith-based investing is a subset of ESG investing movement. What does that me for you the reader? That you can allow your advisor and the investment firms to do a lot of the research that I talk about in my blogs, so you don’t have to. While this does not absolve you of all responsibility of knowing what you own and being a good steward, but it does remove a lot of the heavy lifting.

We close each Rotary meeting as I said before, reciting the Four-way Test. While it was not designed specifically as a screen for investing, I believe that it creates a good framework to start to narrow down the companies and funds that inspire you to own them. If you are interested in better understanding what you own in your portfolio, please reach out to me, and I will run an Impact Analysis on your portfolio.

As always I leave you with this question. What's in your portfolio?

4 Way Test