Thoughts and Questions on Anti-Capitalist Financial Planning

If you’ve found this piece of writing, I’d be willing to bet you’re the kind of person who values justice, fairness, and equality more than accruing as much money as possible just to use on yourself. Maybe you want average workers to have more power in the economy than they do today, and you probably put human well-being over corporate or personal profit. If so, welcome to the anti-capitalist club! (The “less capitalist club” just doesn’t have the same ring to it, but that might be a better name for it?) Have you, like me, just joined in the past few years? As a former libertarian, this is the last place I thought I would meet you, but then real life happened: unpaid maternity leave, gross inequality in compensation in the corporate world, a divorce from misogyny both in my marriage and in my religious beliefs, and voila! Ayn Rand has been replaced in my repertoire by Tricia Hersey and bell hooks. 

Who else am I besides a divorced (remarried), exvangelical, non-libertarian (politically independent) mother? I’m a CERTIFIED FINANCIAL PLANNER™ professional (we have to write it that way) with a Master's degree in personal finance. In my financial planning business, Reverie Wealth, I help progressive, mid-career women and their allies with all areas of their money: saving and investing for goals, planning for retirement, budgeting, debt, insurance, estate planning, charitable giving, etc.  I’ve been doing financial planning for 20+ years now, first in traditional settings working with those who already had a lot of money and then in “fintech” (financial technology), using technology to make good financial advice affordable and accessible to anyone. I know pretty much all the ins and outs of traditional personal finance - what accounts to use, how to pick investments, what debts to pay off first and how to refinance, how to minimize taxes, where to find the best interest rates on savings, the legal structures you can use to start businesses or pass on what you own more easily to your loved ones, etc, etc. In other words, how to individually, one person at a time, make the most of your money inside a capitalist system. 

What I’m just now starting to learn after 22 years in this career is how to think about achieving those goals outside of capitalism. I feel like a brand new baby financial planner all over again!

As I start down this new path, I’m questioning everything I thought I knew about personal finance and money. For example, what is the opposite of capitalism? It’s NOT necessarily socialism, marxism, or anarchy. It’s community - valuing the good of the community over the benefit of individuals. So how do we, as anti-capitalists, use a community lens to plan for financial goals in a world driven by money, profits, consumerism, and individualism? As a new anti-capitalist club member and long-time participant in the financial services industry, this has become one of the most important things to ask myself. To be honest, I still have more questions than answers, but asking questions is how we begin moving away from capitalism towards a new economy that can be more equitable and regenerative. 

So together, let’s figure out what this means and start to explore the idea of how to reach our goals when we fundamentally oppose the economic systems we are living in today. 

Redefining Wealth

First, we need to question the definition of “wealth”. I talk about this with my kids all the time - wealth isn’t just about money or assets. Wealth means that you have plentiful valuable resources. Maybe that means a bountiful garden, or a large supportive community who can step in to help if things get tough, or lots of hilarious friends who can make you belly laugh - all plentiful, valuable resources in their own ways. Pause here and think: what resources are the most valuable to you? To put it another way, what things make your life better and enjoyable? Social connections? Personal fulfillment? A thriving natural environment? Equality of opportunities? Education or access to information? Cultural expression or artistic creativity? Good health? Time to spend on rest or hobbies? Comfortable shelter? Delicious, healthy foods? When we think about planning for retirement, or more generally, covering the costs of a life in which we value community, these resources are what we are actually trying to achieve - not a dollar amount or account balance. 

Meeting Resource Needs Without Money

Once you redefine wealth and understand what resources matter most, you can start to look at how you can achieve them beyond using money. So what would it take to obtain those resources without using money? Can you grow your own healthy food? Invest time and energy into building strong social connections? Start a lending library with friends or visit the one in your local community? Trade services with someone else? 

Now, I know it isn’t always possible to totally avoid money given current economic structures, especially in the US - you probably need money to buy shelter, or at least to keep shelter, like paying property taxes or rent. This is where you can get creative with alternatives, especially ones you don’t see a lot of yet. If you can’t grow food yourself right now, can you trade your services or something you own with someone who can grow food? Can you live together with multiple people to reduce your costs or trade landscaping services for a reduction in rent? Is it possible for you to use public transportation or human-powered transportation like a bike instead of owning or using a car? (Shout out to Hannah and Dave, and Bryna and Joe, who very purposefully have one vehicle per family and use bikes or public transportation instead!)

When I build financial plans for clients who want to move away from capitalism, one of the things we talk about is how to reduce their need for income or money both now and in retirement, so there’s less need to try to grow their money by investing in companies that exploit other humans and damage our environment. To live a less-capitalist life, we need to work towards finding happiness and fulfillment with less material consumption, and towards having needs met and helping others meet their needs through community. 

Getting Money More Fairly

Since we know we can’t always meet our current and future resource needs without using money (yet), let’s now turn our attention to getting it. How do we get money fairly and equitably without exploitation or degradation? Whew, I really don’t have all the answers to this question yet, but there are a few things I can think of to try. 

1) Instead of businesses having structures where all the profits flow to the owners at the top, we can move towards cooperative models that prioritize democratic ownership and decision making, distributing the profits among all the workers fairly and equitably, or use non-profit or “public benefit corporation” structures where it makes sense. 

2) We can decide on how much money is “enough” to meet our resource needs and aim for that amount. Then, if we make or have more, we can consider redistributing it through mutual aid requests or nonprofits to others who aren’t getting their needs met. 

3) We must advocate for policy changes that will promote economic justice, such as universal healthcare, better social safety nets, and fair labor practices. Yes, this means getting involved in politics, which I really, really have never wanted to do. (Guess who kind of accidentally just got elected to my City Council three months ago? 🙋🏻‍♀️ Guess who now gets to help allocate hundreds of thousands of city funds towards childcare and the unhoused, among other things? 🙋🏻‍♀️) We need folks who care deeply, like you, to get involved, especially those who have traditionally been excluded in US politics, and especially at the local level. Run for school board. Put yourself up for consideration for a vacant committee or council seat. Write letters/emails to your local leaders. Show up to speak about your beliefs at important local events, like city council meetings or hearings on new laws being considered at the state house. 

4) Reject consumerism and live minimally, with intention. Avoid advertisements. Look for dopamine from moving your body or helping others, instead of shopping. Set criteria for every purchase, like you must expect it to last XX years and it has to be made ethically and without plastic. The more you decrease your lifestyle needs, the easier it will be to meet your needs without money.

5) Move towards responsible investments whenever possible. 

Responsible Investing

This is a big one, so let’s dig into it as the next question to ask ourselves. How can we invest our money in a way that is more environmentally, socially, and governmentally (ESG) responsible? Let’s say you have followed traditional financial planning wisdom and have contributed to retirement accounts like IRAs or 401(k)s. Once the money is in there, you need to choose where to invest it - most people don’t want their money to sit and earn nothing over time. (Side note: if we are truly aiming for regenerative economics, we need to talk about degrowth, which is planning for negative returns over time. More on that in a few paragraphs!) 

Responsible Investing in an IRA or Brokerage Account

So how do you choose investments that will better align with your values? If you have your own IRA or brokerage account, you can usually pick from the whole universe of mutual funds, exchange-traded funds (ETFs), or individual stocks or bonds. For non-ESG investing, it’s super easy - you just pick a target date fund with low fees that lines up closely with when you need your money. For ESG investing, there are target date funds out there that claim to be “ESG” responsible, but they often have problematic holdings. One example is Tesla, which claims to be more environmentally friendly but has a history of worker abuse and is owned by the world’s richest billionaire who is known for fighting policies that would lead towards fairness and justice. Another is Microsoft, who checks a lot of ESG boxes but has many issues with diversity, equity, and inclusion, including numerous sexual harassment lawsuits, and has close ties to the Israeli military. 

For these reasons, I don’t recommend ESG target date funds to my clients, and instead I’ve created a heavily researched portfolio of mutual funds and ETFs to minimize those problematic holdings. Until better ESG-filtered target date funds or robo-advisors become available, the best way to find these kinds of ESG investments is to work with an investment advisor who specializes in them - and yes, you’ll have to pay a fee to do so, usually about 1-2% of the investments they manage for you with a minimum account size of $25,000 at the lowest end (that’s my minimum, and my fee is 1%). If you don’t meet those minimums, like most of us don’t when we are first starting out, progress is better than nothing, so check out some of the different ESG target date funds available here.

Another option for those with bigger IRA or brokerage account balances (typically above $100,000) is to use individual stocks and bonds - this is almost always done through an investment advisor unless you’re an investment professional yourself. I currently have my clients who want this kind of portfolio choose between two different sub-account managers, VADIS through First Affirmative and Ethic, who each use values-related data on companies (like CEO-to-worker pay ratios and private prison involvement) to include or exclude companies that meet my clients’ criteria for what they want or don’t want in their portfolios - even down to the company itself, like clients who want to make sure they never hold Amazon or Lockheed Martin. Another interesting, less-capitalist way of investing that some investors think about using is called a “community development financial institution” or CDFI - this kind of investment would take the place of individual bonds in traditional capitalist “asset allocation” structures. 

Responsible Investing in Work Retirement Plans

If you have money in a retirement account through an employer, like a 401(k) or 403(b), your options are probably more limited. Most employer retirement plans have a “menu” of investment options that you can choose from, and most of them are not ESG-filtered. In this case, you may have to use funds with potentially harmful companies inside them, which can be really disappointing. You can try to talk with HR about including additional options that are ESG-filtered, but often this is difficult to get changed. However, the more people talk to HR about adding ESG funds, the more likely they are to do so. Remember, “There is no social change fairy - there is only change made by the hands of individuals.” - Winona Laduke. 

If you’re lucky, your employer's retirement plan might have what’s called a “self directed” option, also called a “brokerage window”, instead of forcing you to pick from a limited menu of investment options - as of 2021, about 40% of plans allow this. You might be able to choose from most mutual funds, or from all mutual funds and ETFs, or all mutual funds, ETFs, and individual stocks, depending on the company that runs the plan for your employer. For example, I have several clients at the University of New Hampshire who have a self-directed 403(b) option through Fidelity that allows them to pick from most of the available mutual funds out there. It can be painful to set up (lots of digital paperwork and complex navigation to get to the right places to do it), but once it’s ready to go, my clients can use mutual funds I’ve identified for them that are truly ESG responsible even in their retirement plans at work! 

Accredited Investors Have Different Options

Outside of retirement accounts, you will have different options for ESG investments depending on whether you are an “accredited investor” (to be accredited, you have to have high income, >$1 million in net worth excluding your primary home, or certain financial licenses or jobs). If you’re NOT an accredited investor, you can use the same investment options and strategies as I mentioned above for IRA accounts. If you ARE, you can start to consider alternative or private investments that aren’t available to others: things like investing directly into businesses or startups, farms, real estate, and more. Some folks with a lot of money who want to redistribute it through nonprofits do so through “charitable remainder trusts”. Beyond these, there are always new ways of investing that are becoming available, so hopefully we’ll see more with anti-capitalist values that are truly ESG responsible. 

Degrowth and Investment Returns

We’ve already covered a LOT, but there is at least one more big thing we need to ask ourselves in order to start moving away from capitalism when planning for our financial goals: What should we expect to get for returns on our money if we invest it? If you need money to fund something and you are trying to save up or invest towards it, usually you would think you’d get some sort of “return”, whether you put it into a savings account with a bank or into investments. When building financial plans, I almost always assume some sort of positive growth over time on savings and investments - otherwise we’d all need to set aside WAY more into savings and investments in order to pay for future lifestyle needs with money. You’ve also probably heard that the most powerful part of investing is “compounding”, which means growth upon growth upon growth. 

But is unending compound growth sustainable or regenerative for future generations? What will happen if the world's population keeps growing and we all keep aiming for growth in our savings or investments?  We’ll eventually run out of resources, right? The only way for us to move towards regeneration and away from destruction is to use less and less, and/or to have the population decline over time - this is the concept of degrowth. Ultimately, if we truly want to be anti-capitalist, we should be working towards an expectation that our resource needs should shrink over time, including needing and having less money available to pay for things that can’t be made, found, or traded for ourselves. 

Where Do We Go From Here?

I’ll be honest - I’m not there yet. I do know that if I start showing my clients financial plans where they have to save 30-50% of their income just to replace a lower-cost lifestyle than what they have today because of degrowth, most of them will stop being clients and I will no longer have the money I need to provide valuable resources to my family. I know that I’m too comfortable with and addicted to all the luxuries of middle-class America, like on-demand hot showers and clean water, the option to travel (almost) anywhere I want at any time in my car, and air conditioning when I’m hot. I know that I don’t grow most of my own food, and I can’t always trade with folks who do. 

But instead of giving in to ‌current systems because we can’t be perfect in our anti-capitalism, let’s aim for progress instead. Ask yourself these questions I’ve posed to you today and then go beyond them to ask even more questions! (Share them with me if you come up with good ones!) Let’s aim to get 1% better every day, or every week, or every year. Because THAT, friends, is a compounding power that can truly change our world for the better 🌍 🌎