James Frazier graduated from Wharton, one of best business schools in the United States. He’s also a dj and used to throw some excellent dance parties. What’s the connection? That’s something I explored with him in this interview. Although he’s not throwing big dance parties anymore, he is using his smarts and his skills towards doing good for others. Instead of focussing on making himself wealthy, he’s become a Certified Financial Planner doing Sustainable and Responsible Investing. The Wharton School of Business is a top ranked school located at the University of Pennsylvania, one of eight ‘Ivy League’ schools. It’s safe to say that James could have been successful in whatever direction he’d chosen. Graduates from Wharton have very good prospects in the job market. According to a Fortune.com article from May 2, 2014 on Wharton undergrads, more than 80% of the graduating class of 2014, “…is expected to receive average signing bonuses of nearly $10,000, on top of annual bonuses at over $26,000 each, more than what many MBAs get”. Not all CFP’s are concerned with social and environmental issues, so I asked James to break his work down for us in this interview.
Daniel: Describe Wharton a bit: What’s the culture of the school? What are Wharton grads normally expected to do once they head out into the world?
James Frazier :When I was there in the mid-90s, it felt a bit like a factory for future Wall Street executives and big-company CEOs. Nowadays, from what I hear, they have integrated a lot of social entrepreneurship values, and they are seeing how business has the power and even responsibility to improve society and the environment. People still leave there and go to all sorts of high-powered jobs, but I like to think that the values are shifting, both there and in the business world as a whole.
Daniel: What lead you to go to school there and what were your beliefs at that time regarding the way the US economy was set up? You’re from DFW, an area that could be said to be the epitome of US consumer culture…
James Frazier: Coming out of high school, my only thought was that I wanted to do something that I had not done before and that would apply to almost anything. Business seemed like the perfect fit. Once I got in there, I gravitated towards the numbers side of business, which is finance. At the time I was lured by the thought of making money on Wall Street, for sure. But fortunately, college is a time when you do a lot of growing up, and by the time I left there, I was definitely more open to following my own path on Wall Street or elsewhere.
Daniel: You did a stint on Wall Street, correct? What was that like?
James Frazier: It was crazy. I did not end up at a fancy Wall Street firm, I got a job trading options on the floor of the American Stock Exchange. It was basically the belly of the beast of capitalism. Raw, in-your-face, turf struggles over money. It wore me down and spit me out very quickly.
Daniel: Why did you leave Wall Street? Judging by your current focus on sustainability and local economy, you seem to have moved away from being what might be considered the typical Wall Street guy. What happened between then and now?
James Frazier: After I left New York, I went back to Texas and took a job with a friend who had started up his own hedge fund. That fund did not end up working out, so we decided to start our own, and we realized that we could be anywhere. His wife was from Bend, Oregon, and he loved the Pacific Northwest. I took a road trip up there and decided that Seattle would be a great change of pace and a new adventure in life. I moved to Seattle in ‘99 and that’s where I really started changing. I quickly became exposed to health food, herbal medicine, permaculture, environmentalism, and activism. I got caught up in the WTO protests in downtown Seattle and realized that there is another side to the coin of global big business. Ultimately that led to my discovery of SRI (Sustainable, Responsible, and Impact Investing, formerly known as Socially Responsible Investing). When I left my hedge fund partner in 2007, I knew that was exactly what I wanted to do. I started studying to become a Certified Financial Planner focusing on SRI, in order to help people invest in a way that will create positive change in the world.
Daniel: Have you always had a counter-culture element to your personality or were there some epiphanies that moved you out of the mainstream? You were involved in the electronic dance music scene, helping put events together – what part has that played in your life?
James Frazier: I was definitely not counterculture growing up in Fort Worth Texas. Yet, I had a major rebellious streak, as those that know me would attest. I’ve always had a love of adventure, new frontiers, new perspectives, and that eventually got channeled into throwing big dance parties, of all things. All-night dance parties were a huge eye-opening experience for me. In the purest form, they are all about celebrating life, feeling the joy of simply existing, connecting with people in a more meaningful way, and for a moment at least, shedding the societal constructs that we have all been given. It can be an extremely positive transformative experience for some people, as it was for me. I basically dedicated my life to it for quite a while there. I still am dedicated to it, but with a family, it’s not taking the form of big dance parties for now. I’m still a DJ though, and still love the music.
Daniel: Permaculture has long been an interest of yours. Tell us about that.
James Frazier: I see permaculture as a way to live more responsibly and fruitfully on the earth. It’s a way of building plant-animal-human-water-energy systems that help everything thrive. It’s an ongoing practice and I figure I will always be a beginner. I’m very happy to practice permaculture with my wife, Rainie. Between the two of us, we have things covered. She is the gardener, and I am the infrastructure guy. I like to build, fix, design things. It’s what gets me out of the house so I’m not on the computer all the time. That, and hiking. And Ultimate Frisbee.
Daniel: What’s your current take on investing and how does it differ from the standard model?
James Frazier: Well, I do exclusively Sustainable and Responsible Investing. That means that every investment has some kind of purpose beyond just making money. It could be a bond that finances affordable housing or community development. It could be the stocks of cutting-edge companies that are on the frontier of creating our new green economy. Helping entrepreneurs in the developing world, supporting the fair trade movement, funding renewable energy projects, the list goes on and on. There’s so much potential for good with our investments. We are just beginning to see what’s possible. I love being in this field.
Daniel: Why should people care about the kind of investment strategy you offer? How do your investment strategies pay out compared to the equivalent standard strategies… Or is there a direct comparison?
James Frazier: Lots of people start caring when they see the stocks of companies they detest in their portfolio, such as Monsanto or Exxon. It gets them thinking about alternatives, and if they’re lucky, they’ll find someone in our part of the industry who will help them green up their portfolio. Regarding performance, it’s been proven to be roughly the same as conventional investing over the long run. There are periods of underperformance and periods of outperformance, but in the long run, we believe that investing this way should not cost our clients anything, relatively speaking. Perhaps we’ll see a day when we get consistent outperformance. Although, to be fair, the fees charged by the funds that do SRI are slightly higher overall. That’s because, in addition to all the financial research that everyone has to do, they also research all the social and environmental implications of every investment. That’s a lot of extra work, and it ends up costing a very little bit more for each investor. Our clients are obviously happy to support it anyway.
Daniel: Talk about the LIRC and the importance of local economy?
James Frazier: The Local Investing Resource Center is a nonprofit website project that is dedicated to advocating and educating on local investing. We want to help investors connect with local small businesses and nonprofits in their own communities and support them with their investment money. There’s no reason that people should only invest in global corporations. In fact, that’s not very diversified in my view. It takes a little more work to invest locally, because you have to get to know people, learn about their businesses, do your own research. You can’t just click “Buy” on your computer screen. So it ends up building community, funding businesses that wouldn’t exist otherwise, creating jobs… As long as investors diversify, work together, and use their common sense, it seems like a really good thing for everyone. Since there’s essentially no information out there on the Internet about how to do it, this project is about filling the gap and providing high-quality guides about all aspects of investing locally.
Daniel: How did you get started with local investing?
James Frazier: Just after I had rededicated my career to SRI, while I was living in Port Townsend, I heard about a bunch of local people that were getting together, talking about how to invest their money locally. I got involved and helped create the model that ultimately became the Local Investing Opportunities Network, or LION. Thanks to the other cofounders and subsequent members, we grew the group considerably and were ultimately responsible for over $3 million being invested in local small businesses and nonprofits. We started getting attention from around the country, with people asking how they could replicate our model and learn about other ways of investing locally. A couple excellent books were written that mentioned us, but there was no high-quality online resource explaining how to invest locally. I wanted to fill that gap and that’s how the Local Investing Resource Center project came about.
Daniel: How can people support local economies even when they aren’t investing with you?
James Frazier: Spend money at local businesses, particularly at farmers markets where you can get healthy at the same time, deposit your money at local banks and credit unions, and keep your ear to the ground for worthwhile local investments in your area. That could include business startups or expansions, crowdfunding campaigns, you name it. Check out our site at local-investing.com to learn everything you need to know. If we don’t have it, we link to some place that does.
Daniel: I’ve long believed our money is a more powerful vote for the world we want to see than the ballots we cast in any given election: I think we vote every time we spend money. What’s your take on that?
James Frazier: I totally agree. In fact, we are buying the elections as well, so even that is no exception to the rule. Sometimes I feel like the choices that are available to me do not match up with what I really want to see in the world, so I just have to do my best with what I’ve got, and try to be satisfied with that. And at the same time, help push the envelope so we get better options going forward.
Daniel: What do you think of consumer debt? Should people use credit cards (in general) or take loans to start a business or buy a home?
James Frazier: Debt is a really tough thing to pay down. It’s easy to take the money, but to pay it off, you have to overcome the burden of taxes, personal living expenses, business overhead, you name it. You get locked into payments which can then lock you into your job, reducing your freedom. I’m not necessarily against debt, but it’s absolutely essential to go into it with your eyes open. It can be very empowering in the right situation, and very debilitating in the wrong one.
Daniel: In the last decade (especially) we’ve seen an increase in the production and availability of ‘organic’ products in the US – from food to fabric. As consumer awareness of environmental issues has grown since the 1960’s, so has the market for organics. Is it safe to say that the grassroots movement for organics has its roots in local economy but has become a force in the national economy? Organics took a share of the national market to the degree that the USDA set national organic standards and we now see mainstream corporations involved in organics – it could be argued whether this is for the better or worse, but what are your thoughts?
James Frazier: The organic movement has paralleled what many grassroots movements have done when they gain mainstream approval. Everything gets co-opted by the powers that be. People in the underground, the grassroots, are always 10 steps ahead. Did you know that local is the new organic? Seriously, local food does not have to burn a ton of fossil fuel to get to you, it’s fresher, less likely than conventional food to be doused with pesticides or herbicides, and you get to support your local farmers, who will be there for you if the trucks stop arriving with all the food. There are so many benefits to local food that what we call “industrial organic” pales in comparison, especially when it comes to taste.
Daniel: Do you see the investment strategies that you represent in the same way the organic movement was 20 or 30 years ago? In other words, is it something that’s considered to be on the fringe when it’s actually a forerunner for our future economy and will play a role in defining the world we see? The organics market came out of many concerns like 1) the wellbeing of ecosystems potentially affected by agricultural chemicals or 2) personal health related to the ingestion of those same chemicals. Do we need your investment strategies the way we needed organics?
James Frazier: I think that our way of investing is certainly the future, or at least is a step in the right direction. But, just like any one thing, there is no magic bullet. We need to be building a toolkit of progressive, resilient, smart lifestyle practices that includes sustainable and green and local investing, but also integrates local food, natural medicine and nutrition, renewable power, do-it-yourself repair and fabrication, the sharing economy, and much more… I’m sure many things we will be depending on in the future haven’t even been invented yet. It’s an exciting time to be alive; we’ve already seen so much and yet the generation behind us, the Millennials, are poised to completely remake society while we are on this planet. We are their elders and it would be wise of us to reach out to them, connect and mentor them as much as possible. We are the bridge between the old and new.
I’d also like to see sacred practices of all kinds return to this planet. We all need to get better at doing our inner work and respecting ourselves and one another. It’s so basic but I think that’s where there is the most room for improvement, where we can vastly improve the quality of life for everyone and everything on this planet just by learning to be more kind and loving. Above all, I hope to see a revolution in that during my lifetime, and if I do, I can leave here not wanting anything else.
Thanks for the great, thoughtful interview, Dan. Much respect and love
To explore investing w/ James, check: http://www.naturalinvestments.com/advisors/frazier/
Thank you, James. I’m humbled.
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