Fight the Oligarchy With Your Retirement Portfolio

Worried about how your retirement portfolio is holding up against Trump’s chaotic trade policy this month? It’s understandable, as volatility and a looming recession rampages through Wall Street. These recent crashes aren’t just happening to rich people and investors; you may be watching the balance of your retirement account freefall in real time. And while you might despair in the face of what you can’t control, as an investor you are not actually powerless.

Several decades ago, American companies looking to cut costs started pulling back from pensions and sponsoring 401(k) retirement plans. There was some initial outcry, but eventually all the good worker bees got on board. Studies have since concluded 401(k) and similar employee-sponsored plans may actually contribute to income inequality. 

However, by 2022, it was too late to stop the momentum. At that point, 54 percent of American households had a retirement account tied up in the market either as a 401(k), IRA, or similar investment plan.

This move to investment portfolios to fund retirement has turned into an Achilles’ heel, politically speaking. American ire directed at the current administration’s market hijinks is increasingly vacillating between despair and outrage. As mutual fund firms get wealthy off managing our retirement assets, we’ve literally tied our individual financial futures to the success of stock in companies owned by the same oligarchs that oppress our rights and are trying to seize control of the levers of government.

Andrew Behar, CEO of As You Sow, a non-profit foundation that promotes shareholder advocacy, explains that Americans live in a system of captured capitalism where workers have handed over the power of their money to wealthy investment firms. Unbeknownst to us, those firms often use those hard-earned dollars to prop up companies that perpetuate ecocide and human-rights abuses.

But, as Behar points out, it certainly doesn’t have to be that way and you don’t need to withdraw your money from the market and miss out on employer-contribution benefits to change it. “If we aggregate that power (and it’s up to us),” Behar insists. “Each individual person simply can say, I’m taking it back. It’s mine. I earn the money.” 

Here’s how to harness the power of your retirement portfolio to fight the Trump regime’s destructive policies, what tools exist to help you become your own financial advocate, and how you can start flexing your fiscal muscles against the oligarchy.

Ethical Investing 101

You may have heard a bit about ethical investing in the form of green mutual funds, sometimes referred to as Environmental, Social, and Governance Investing, or ESGs. This is a set of factors that provide a framework measuring how ethical or sustainable a company and its practices might be.

The idea is that by investing in socially and environmentally responsible companies, we can make sure the money we have parked in the market is supporting our values and driving change. It’s a great ideal, but in practice it often falls short because there are no laws currently in effect that stipulate the criteria an ESG fund must meet.

Behar says this is exactly why the As You Sow website exists. In addition to other shareholder and investor tools, it has a free database to look up your mutual funds or individual stocks and see what your money is supporting. Often, even if your company’s retirement plan offers an ESG, the results on the As You Sow scorecard can be discouraging.

“For instance, the Black Rock Life ESG has got 331 fossil fuel companies,” says Behar. “So the ESG label is just marketing. I know that that’s hard to take because the various funds who actually do ethical investing like Calvert or Green Century are really ESG. You have to go and look at the scores.” 

For investors who want to weed specific stocks out of their portfolio, this can still be an exercise in futility. For instance, even high-scoring ESGs can be full of things like Tesla stock because they prioritize green investments. But you can do your research and seek to minimize your portfolio’s exposure on a range of issues from fossil fuels and deforestation to tobacco and prisons.

It’s also important to address a common misconception, which is that in return for embracing sustainable and socially responsible values, ESGs have a trade-off in performance. Behar pointed out by comparing the market performance of several ESG funds with high scores against those with lower scores in the As You Sow database that isn’t usually the case. In fact, several studies have shown that sustainably focused funds tend to provide higher returns and lower risk for investors, especially during a market crisis.

Using the Power of Your Retirement Portfolio

While you don’t have to be a victim of the stock market, chained and doomed to become a casualty of capitalism, it can still seem a far cry from controlling your own financial destiny. Here’s what you should do to start clawing back the power of your portfolio bit by bit:

Step 1: Know your investments

Knowledge is power, so start on As You Sow and figure out what you’re already invested in. If you have an IRA, that mix of funds is probably visible to you in your retirement account. If you have a 401(k), it may be harder to decipher, which is why the As You Sow website profiles and scores more than 70 of the most common employer-offered retirement plans.

Step 2: Understand your rights as a shareholder

When you own individual stocks, you get to vote as a shareholder. Behar says while many people receive proxy statements and ballots, it can be confusing to know how to vote. That’s why As You Sow created an As You Vote tool to help individual investors vote their values.

If you’re invested through 401(k) plans or an IRA, it’s important to understand that the asset manager or mutual fund advisor may be voting on your behalf in some cases, but for other types of funds you may have access to proxy voting. You should visit the fund website to determine what your rights are and if you’re eligible to vote as a shareholder.

Step 3: Decide what your priorities are

Before you know where to park your money, you need to decide what matters most to you. You may not be able to entirely eliminate exposure to companies that participate in fossil fuel development, but maybe you can minimize it.

Review some of the most common issues highlighted through an ESG score such as plastic pollution, pesticide use, racial justice, or gender equality and decide what matters to you. Conversely you can also use As You Sow’s The Clean200® list for a quick snapshot of which companies effectively balance people, planet, and profits.

Step 4: Research your index and mutual funds

If you’re invested in an IRA, you may have a wider range of mutual or index fund products to choose from. And while you might have some hesitancy about balancing the risk of your stock portfolio, remember that financial advisors aren’t infallible.

“Everyone is still afraid to mess stuff up and then came the financial advisors with that whole kind of condescending, don’t worry your pretty little head about it attitude because people are naturally frightened,” Behar says. “I don’t wanna muck it up, but I mean, look what’s happening now.”

If you’re invested in a 401(k), it might be a little harder to move into different index or mutual funds. Your system administrator controls what’s offered to employees through your retirement plan so you’ll need to work directly with them if you’d like your money to be invested in a fund that isn’t offered.

Step 5: Talk to your 401(k) plan administrator

Here’s where the rubber meets the road. You know what you’re currently invested in and what you’d like to invest in instead. If it’s not a fund offered through your employee-sponsored plan, it’s time to start gathering your people and advocating for yourself.

Behar says As You Sow has an email template on the site that you can send to your administrator expressing concern about the investments offered and requesting they consider alternatives, but first he recommends gathering strength in numbers. A plan administrator hearing from just you is going to feel very differently about the request than if it comes from several dozen or a hundred other employees.

It also pays to go into these conversations armed with facts. “You might ask your 401K administrator to add this and they would say, well, no, it doesn’t have fossil fuels,” Behar explains. “And you say, yeah, but it outperforms. So you’d be breaching your fiduciary duty by not offering it to us.”

Keep Looking for Ways to Exercise Your Shareholder Rights

Coincidentally, As You Sow is offering a new program called My Money, My Vote that could enable every employee to direct fund managers of their 401 (k) plans how to vote proxies according to their preferences.

“This is the most fundamental expression of democracy, to respect the agency of each of your employees to vote their values and send a signal to the companies in their portfolio how to reduce material risk and increase long-term sustainable growth,” says Behar in the official press release.

While it’s a small thing you can do right now in a sea of chaos, being able to vote on how a company is governed and conducts its business can combat climate change, fight the oligarchy, and empower labor unions. Many Americans don’t understand they have power not only as employees but as shareholders, let alone how to wield that power. It’s time we embrace controlling our retirement portfolios as one of many financial tools, alongside strikes and boycotts, that can bring power back to the people.