Finance Minister

Private wealth advisor Jim Ryan ’76 converted to a socially responsible approach and found that spiritual values don’t have to be sacrificed at the altar of return on investment.

Author: Patrick Gallagher ’83

If there are no atheists in foxholes, are there any faith-consistent investors during an economic crisis? Jim Ryan ’76 knows there are.

In the first couple months of the COVID-19 pandemic, Ryan and his Bank of America Merrill Lynch team devoted to socially responsible investing (SRI) heard from clients, often religious institutions, concerned about the potential financial fallout. Those conversations, Ryan says, were “more focused on fulfilling the ministry.” They knew that to fill the food pantry or meet increasing demand for scholarships, “they might have to eat into endowments to cover needs,” but they did not talk about changing their investment values.

At the same time, “We reminded them that in addition to screening out companies, our managers take environmental, social and governance factors into account” — a common SRI approach and one Ryan says resonates with Catholic social teachings. “This results in buying stronger companies,” he adds, “and stronger companies are better able to withstand this downturn.”

Ryan, left, and classmate Jack Swarbrick before the 2018 Notre Dame-USC game in Los Angeles.

While clients might have held their breath as they reviewed performance, they could exhale when they saw they were keeping pace as best as could be expected under the circumstances. “With us,” Ryan says, “nobody is paying a price for having faith reflected in their portfolio.”

Compared to previous economic shocks, when computerized trading in 1987 or the mortgage industry in 2008 could be singled out as culprits, “this time it’s more like an act of God,” Ryan says. “The economy has stopped due to health concerns so the market dropped, but there’s less finger pointing this time. Everyone knows someone who is affected, or they’re concerned for their own personal health, and that might be taking precedence over portfolio health.”

Ryan’s approach to investing also prioritizes spiritual health. It might be too much to call his awakening to the importance of SRI a conversion experience, but an “aha” moment about a dozen years ago transformed his career. It turned into a stimulating business move and a satisfying religious one.

His shift occurred when a Trappist monastery asked Ryan to review its investments. He found two problems. “It was a bad portfolio for their return goals,” he says, “but they were also investing in bad companies as far as Catholic teachings are concerned.” He realized that, in addition to fiduciary responsibility, Catholic institutions had an obligation to invest in a manner consistent with their faith.

Thinking about how to meet both return and mission goals, Ryan’s team studied the choices available for Catholic investors. There were some mutual funds, “but the investment profile wasn’t strong using those options,” and Ryan didn’t want the monastery to have a “second-class” portfolio.

He also worried that relying on those mutual funds would tie the monastery to someone else’s definition of Catholicism, not its own, requiring the monks to “outsource their conscience.” So he decided his team would establish “as strong and diversified a portfolio for a Catholic client as for a secular one.”

In developing this approach, Ryan visited with someone who’d had success with it. “I’d known Scott Malpass for years, so I consulted with him,” and the Notre Dame chief investment officer, already following an investment strategy with the University’s endowment that aligned with Catholic values, recommended customized research to vet individual stocks. So Ryan hired a firm that evaluates 8,000 companies worldwide based on adherence to Catholic principles. He also credits Malpass ’84, ’86MBA with providing the moral support “that I could make this work.”

The new focus took off. Now Ryan does about 60 percent of his work for faith institutions, including all of his new clients over the past five years — dioceses, parishes, schools, religious congregations.

Investing wasn’t even in Ryan’s initial career plan. Graduating in 1976 with a degree in government, the Bronx native worked for charismatic New York state assembly member John Dearie ’62. He also worked in the U.S. General Accounting Office as one of the first Presidential Management Interns hired by the Carter administration.

His turn to investing began during a New York City Notre Dame Club mixer where “half the people were lawyers, and half worked on Wall Street,” Ryan says. “I didn’t want to go to law school, so I hung out with the other group.”

He got an MBA from Cornell University and has since made his own mark on Wall Street. Since joining what is now Bank of America Merrill Lynch in 1981, Ryan has been named to both Barron’s and Forbes’ Top Advisors lists multiple times.

Socially responsible investing has existed in America since colonial Methodists and Quakers refused to invest in the slave trade. Today, the Forum for Sustainable and Responsible Investment estimates that a quarter of professionally managed assets in the U.S. — $12 trillion in 2017 — follow SRI principles, a fourfold increase since 2010.

When Ryan meets with a new Catholic client, he starts with the United States Conference of Catholic Bishops’ “Socially Responsible Investment Guidelines.” The “touchstone,” as he calls it, identifies six areas of moral and social teachings to guide investing — protecting human life, promoting human dignity, reducing arms production, pursuing economic justice, protecting the environment and encouraging corporate responsibility.

Ryan walks clients through the document to illuminate how their portfolio reflects their religious values. Most “never really looked at investments through a lens of faith,” and they’re surprised. It’s a process, he says, that leads them to “take more ownership of the portfolio.”

The most common SRI tool is a screen, which can exclude stocks of offending companies or allow only those with minimal revenue from activities inconsistent with a client’s values. He stresses that the bishops’ published guidelines are not commandments. Some clients may not follow them entirely, others may go beyond them, specifying industries or companies to exclude.

In addition, the guidelines promote “active corporate participation,” such as through proxy votes. “Our clients now vote their proxies on corporate resolutions in a manner consistent with Catholic social teaching,” he said. “About 20 percent of the votes they cast are different than a secular investor would vote, mostly on labor and environmental issues.”

In 2017, Ryan launched the Faith Consistent Investing Forum for “practitioners, staff or investment committees of Christian organizations — people who might go back and have to make investment decisions.” One attendee, James Ambrose, a Merrill Lynch advisor in Omaha, says Ryan “has plowed the furrow that many of us walk in and with our clients today. Jim has taken up the yoke to prove to clients that with advancements in technology and portfolio construction, they can have their Catholic faith and values reflected in their portfolios without giving up returns.”

A dozen years after that eye-opening moment with the monastery, Ryan’s faith-consistent investing practice has been a satisfying success. “Yes, this is good business,” he says. The approach addressed “a nascent demand that was not being met adequately. I enjoy being in the vanguard of advisors who are helping clients incorporate the faith into their portfolio.”

On another level, “It also allows me to be a witness to my faith in my work. I had never done that before, and I appreciate it,” but he stresses, “I’m a witness, not a preacher.”

Ryan has never needed to preach to clients, even during the financial stress test coronavirus has imposed. They share a faith in the compatibility of investment value and spiritual values.

Patrick Gallagher lives in Aberdeen, South Dakota, where he works for a statewide philanthropic foundation. Jim Ryan can be reached at