Ep 198: B-Corporations
[00:00:00] Good day. This is Gabriel Shahin, certified financial Planner and your host of More Knowledge, more Welcome. You're on every weekend talking about all important topics of personal finance. My no goal is to give you the knowledge you need to increase your wealth. Now to the listener, you can always reach out to myself for any one of my colleagues here at Falcon Wealth Planning.
[00:00:54] Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon. Like the bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for sure, and go visit the knowledge center on there where you can get this episode and a video cast of it. And in addition to that, you can go look at our knowledge center on YouTube where you can get so much important information that really help answer questions that you may have and learn new topics.
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[00:02:03] With that. And every week I go over just interesting topics. Obviously it's income and, uh, finance and tax related, but I really wanna focus on a unique one that came up. And this is about B corporations. Now, B corporations are kind of like a new thing. They consider themselves a high standard of corporations.
[00:02:25] I'm gonna look this up as we, I'm gonna get you the exact Google definition. If you were to, uh, Google it here. Uh, what does a B Corp mean? Uh, a certified B Corp or B Corp are companies verified by B Lab to high standards of social and environmental performance transparency. And accountability, guys, I, that sounds like a whole lot of fluff to me.
[00:02:49] There is no tax benefits, there's no difference on, uh, the setup of the accounts, depending on the state that you're in. It's just talking about putting themselves into a high standard. This is interesting. They're saying some of the benefits of this could be to cra uh, recruit better talent, so on and so forth.
[00:03:08] I don't know. I just think it's a little bit weird. It's almost like this whole e s G thing. Now Tesla started off saving the world. And you know, these cars are great. It's not gas, it's not polluting the world. It's cleaner. They're faster, their cooler cars are safer. Um, and, and they were kicked out of e s G, the environmental, social, and government.
[00:03:29] Uh, And governance. Uh, they were kicked out of that exchange of that indices, of that grouping in May of 2022. Now, they just did get added back in June of 2023. Back in, they added them back. I mean, this, the crazy part is, is you have like Hyundai, Mazda, Mitsubishi, Nissan, all in there. Majority Gas con combust engines, vehicles, those are mostly in there, but not Tesla like that's, that's as silly as Biden having an ev, which stands for electric vehicle.
[00:04:01] An EV conference invited the CEOs of major car manufacturers to the White House. But not Tesla, who sells more electric vehicles than all of them combined. It just doesn't make sense. I don't understand it. It's not logical, but this is the reality that we're in. We're seeing more silliness if I may add more and more and more.
[00:04:26] So I mean, and then it's like where do you draw the line? Let me give you an example. So Wells Fargo's made it very clear they do not support abortion. Okay, but you know who they do support is United Way. They give $5 million to them. Okay? Now the interesting part about that is United Way supports Planned Parenthood.
[00:04:50] So you could see the confusion here. So like there's so many contradictory items. So you could be moving forward towards this E S G concept, but it may not be logical that it's achieving the end goal. I mean, I'll take it another step forward. Philip Morris, you know Marlboro, the cigarette company, alcohol company, you know, these companies outweigh yet again, a Tesla.
[00:05:19] I, I don't understand. You have Nike that out. Remember Nike, they were making shoes in sweatshops with kids, putting him together. In Asia, like I, I don't understand how these are ranked higher. I'm not here beating up and saying, I love Tesla by any means. That's not the case. Now, I do drive a Tesla, but I can care less.
[00:05:37] My point is, is they're cleaner vehicles now. Now it goes even deeper. Let's even have more fun. Well, the amount of co emissions of creating these, uh, lithium batteries is bad for the earth. It's actually worse to have it. It's like really? Like, what are we gonna go down this, this spiral now? Like, and it's almost like if that's the case, all these people that are pro, what's the word?
[00:06:05] Uh, environmental and then then the CEOs and these people that are saying all this stuff is private flying. Private, which emits way more c o two emissions than commercial. Airlines. So it's the hippo hypo, uh, hypocrisy of the whole thing. That's just ridiculous and it's just, it's just really starting to bother me.
[00:06:30] Okay. By the way, folks, you're just joining me. You're listening to Gabriel Shahin, certified financial Planner and you're host of More knowledge, more Wealth. You're an every weekend, and we're trying to talk about all important topics of personal finance, and we're talking about these indirect ways of trying to solve the world.
[00:06:44] Okay. Indirect ways of donating, uh, or investing in a company that says they're E S G highly rated, that donates for a United Way that supports Planned Parenthood, that brings you back to square one where you're still not happy because now they're supporting abortion. I. I just, it, you know, there, there's direct and indirect ways to help and if you have a, cause, something that's important to you.
[00:07:07] So the indirect way is doing things like this, trying to invest your money in something that is unproven. And quite frankly, E S G seems like a fraud to me. Now, I'm not trying to say I wouldn't do it for a client. I'm not trying to say I don't have my own morals. There's things I avoid certain stores because I don't like, and certain brands, 'cause I don't like how one person, the c e o acted.
[00:07:29] Okay, so I'm, I'm fully on board with you on that, or I don't like what they stand for. I, I'm fully on board. We're entitled to our opinion and all right. So I will purposely root against him. I'll purposely go on my, my a different social media feed or I'll purposely log into a different site just so I don't give them the ratings you get.
[00:07:50] So, I'm with you, I'm with you. Turn on a certain channel, right? I I'm with you. I comment is that's indirect. Okay. So like, let's put it that, for example, if I go watch a different channel, am I now missing out on the content that I could have watched? I. I'll take it a step further. If I decide to exclude 15% of the companies in the s and p 500, 150 companies, let's call it, okay if, or excuse me, 75 companies.
[00:08:17] If I were to exclude these 75 companies from my investments, will I make more or less money? Most likely you're going to make less money and you are excluding a segment that is important. That could help long term. It could help offset losses or it could help make more. So that is an indirect decision you are making to make less money potentially for your values or whatever it may be.
[00:08:46] Your your, your focus. It could be from a religious point of view, it could be from a morals and values point of view or whatnot. So let's just say I'm making this up. You get a 1% less return on your investment. Over a 10 year period on a million bucks, you get $10,000 less a year, and that's 10,000, maybe 11,000 a year after 12,000, a year after.
[00:09:11] And you compound that over, it's 120, $130,000 that you missed out on over a 10 year period. Maybe the thought is, instead of trying to do this indirect way, which sometimes doesn't even make sense, uh, you're, you're investing in Chevron that's highly ranked on E S G. And Tesla's not, you know, you know what I mean?
[00:09:34] That does solar and so on. Um, so, which doesn't seem logical, but whatever, instead of just trying to choose whatever these E s G people are determining is appropriate, which we all can argue, as I am highlighting, maybe you take that additional 1% return, assuming that's the case. That 1%, that X job will call it simple, a hundred thousand dollars over a 10 year period, and you directly invest it.
[00:10:00] You directly contributed to your religious organization. For them, you directly give it to that nonprofit charity organization that can make the direct impact. You directly give it to a family in need. You directly give it to those that are underprivileged neighborhoods where you create maybe a scholarship or a foundation in your name, which could be a legacy.
[00:10:23] And in addition to everything that I'm saying, oh, by the way, could be a tax benefit to you. So, yeah, you're making more money, but then you're giving it back and you're getting a tax and benefit versus going the e s G route to make an indirect impact, which might be opposite of what you're actually wanting to have happen.
[00:10:42] This is the part that irks me folks, and this is the world that we live in. We're listening to this garbage that's out there that's telling you it's good for you and you're doing the right thing and you're feeling warm and fuzzy, and when in reality it's actually doing and supporting what you're not wanting to have happen.
[00:10:59] And you see this all the time in propositions when it comes to voting. In November, you think you're voting for something, but there's like nine double negatives in there. You're like, okay. It said, no, never. Not. Yes. No, don't, won't. No. Guys, this is crazy. Sometimes you vote for the thing, you never want it to pass because you don't understand the damn thing.
[00:11:26] This is the world we live in. Folks, if you have any questions, if you do have a moral stance, whether, whatever it is, we had, somebody recently had something that was Catholic focused. We had one that was Islamic investing focused, whatever it is, and if you want to cross check it to see the reality of it, and if it's actually true and truly, if you did want an E S G fund versus taking a look at your situation, your tax situation, and drawing a line with the stand.
[00:11:49] Directly with you. Give us a call. We can help. We're offering a free financial assessment where we'll give you one to two meetings, one to two times, uh, hours of our time at no cost. Folks. Our phone number is (855) 963-2526. That's 8 5 5 9 6 Falcon, Mike the bird. Folks, if you have any questions on this, you wanna email us directly, please send it to radio@falconwp.com.
[00:12:14] Folks, we're gonna be right back after a few words.
[00:12:16] This is Gabriel Shahin, certified financial Planner, your host of More Knowledge, more Wealth. That's on every weekend. We're going over all important topics of personal finance. We're going over retirement planning, making sure you're prepared for retirement, social security and strategies, real estate taxes, avoiding them now and in the future, investments reducing.
[00:12:35] Fees, commissions, and so on. Insurance and estate planning. Folks, we are offering a free financial assessment that you could take advantage of. We have offices all across Southern California, including the Inland Empire. Give us a call to take advantage. Our phone number is (855) 963-2526. That's 8 5 5 9 6.
[00:12:53] Falcon like the bird, or visit our website, falcon wealth planning.com. That's falcon wp.com for short. Enjoy the show. We look forward to serving you.
[00:13:03] Welcome back folks. This is Gabriel Shahin, certified financial planner and your host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance. And today we were just talking about these B corporations, which seems like, in my opinion, yet again a facade.
[00:13:18] There's no benefits of doing this outside of getting some attention by some governing body saying that. You are approved to be calling yourself a B Corp, which is probably something you just publicize 'cause people do like to help people. So in the first segment, I really just bash the indirect model and really try to promote the direct model.
[00:13:36] But the opposite, uh, excuse me, the argument of what I'm about to say is, well, if you are to invest less money, that does affect their share price. 'cause everything is supply and demand. They have less people buying their company that does affect their share price. Makes 'em less profitable, makes 'em less exciting.
[00:13:53] Let, makes them less investible. So I do understand the value of that completely. I'm not going to discount that at all. So I get it by taking a stance, somebody taking a stance to move forward in that direction is respectable. What I'm saying is this whole E S G world seems a bit shady to me and there's a lot of e s G funds.
[00:14:14] E s G that the s e C is saying and deeming, they're not. They're like, this isn't E S G. Where are you deciding the investments in this portfolio? How are you making the decisions behind it? The s e C has shown that these aren't even accurate. So there's a lot of people investing in E S G that in reality is no different than a normal index fund.
[00:14:33] And yet again, that is my point. I don't understand how in June of 2020, uh, excuse me, in May of 2022, Tesla gets cut out of E S G. Then in June of 2023, they get added back. While at the same time, during that time, Enron and Chevron. Were ranked higher and in E S G, where they weren't including Philip Morris, including other car manufacturing brands, almost every other one that was out there from Mazda, Mazda, Nissan, Ford, and so on, but not Tesla Gas Con combustion engines, not Tesla oil and gas companies, and not Tesla, Philip Morris, like which people have had problems with them for a long time.
[00:15:15] Like I just don't get it. Uh, maybe I'm old school and I know I'm an old soul. I get it. But the reality is, is people are trying to play this facade on you to make you feel good, because making you feel good, just you don't, I think as much people make mistakes in investing, investing their money with people and end up being taken advantage of through affinity crimes.
[00:15:36] Affinity crimes and investing issues come from people maybe that you met with, coach of a softball team doing business with them, somebody at your local religious organization like their church or synagogue. Like this could be a reason you decide to invest in somebody with reality. You don't do your due diligence 'cause you feel good, you feel comfortable.
[00:15:57] You may see them all the time. Heck, people think the same thing when they go to their local Bank of America, Wells Fargo, chase US Bank and they do business 'cause they've been banking for 30 years. They do their investments with them for 30 years. I'm not saying they're gonna be fraud and take their money, even though uh, certain banks like Wells Fargo have been sued multiple times, including their advisors.
[00:16:15] When you look up, uh, that up. All. All I'm saying is you make a decision based on comfort, and all I'm saying is make a decision B based on strategy, based on what you want to have happen for you to make a indirect decision that could affect, let's just say 1% of your portfolio over a period of 10 years could cause hundreds of thousands of dollars.
[00:16:41] You don't know what the impact of E S G is. By the way, it could be positive or negative, but you don't know. There's not a lot of research on here. There's not 20 or 30 years of relevant data to tell you and suggest that you're gonna make more money. Heck, there's enough data to show you're gonna gonna make less money.
[00:17:02] Now I get it yet again, you're making a determination to saying yes, but it's better for the world. It's better for people and I feel better about it. But as I was explaining earlier, this e s g doesn't even logically make sense when you have companies like Wells Fargo saying, I do not support. I, I feel like I'm picking on them today, but I do not support abortion.
[00:17:22] And then they go and give $5 million to United Way, which oh, by the way, gives money and supports planned. Parenthood folks. It's, it's, it's just a crazy world that's out there. All I'm suggesting is if you have e s G or if you have a need, or if you have a goal, or if you have want an investment that you want excluded, folks, give us a call.
[00:17:39] We can help determine, number one, what you're doing, number two, if it makes sense. Number three, are there any direct alternatives that could be financially beneficial for you? We would love to help. Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon like the Bird, or visit our website@falconwealthplanning.com.
[00:18:02] That's falcon wp.com for sure, and visit our website@falconwealthplanning.com. That's falcon wp.com where you can go and set an inquiry right there on the front page of the website where we can help reach out because we got offices. All over folks, and we would love to do that. By the way, folks, if you're just joining me, you're listening to Gabriel Shahin, certified financial planner and your host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance.
[00:18:27] And today I just was found out about this B Corp that one of my clients was asking about. And on one hand, I, I was kind of happy. I, I didn't know what they were talking about. Um, so I, I was able to learn something that day. And the more I read into this, I'm like, this seems ridiculous. I, I see the value. I mean, hopefully every company has some type of give back good syndrome in their D N A.
[00:18:52] For example, here at Falcon Wealth, we support cancer causes through City of Hope. Uh, we do religious organizations. Ronald McDonald House, uh, there is a handful of things that we like to participate in other races for, uh, cats and dogs rescues. Uh, and we're proud to be a part of that. We're part of, be a part of the community as well.
[00:19:13] Uh, but at the end of the, and education as well, and a financial literacy campaign that we do. Nationwide, some aspects internationally. My comment to this is it, but to, to change your organization, to claim that you fall under this, this governance of better social and economic, uh, form of doing business.
[00:19:37] It just seems a little, uh, convenient. Uh, borderline disingenuine. Are you in business to make money or not? It's okay to give money back, but make it direct. Don't just say, I'm a B Corp, be very transparent. I will give 10% of my profits to A, B, C, or X, Y, Z charity that's direct. Or you know what? This product is made by this third party or this third world country and these individuals in this village.
[00:20:03] That's understandable. But to, to take and hear and in the same world of the e s g in part of this B corporation, it, it just seems weird to me. That's all I'm saying. It just doesn't seem, uh, fair. It doesn't seem accurate, and quite frankly, it just seems confusing. Like, let me ask you this, what if it was a, a cannabis company, like could they qualify for a B corporation if it was a tobacco company?
[00:20:33] Could they, an alcohol company, a pornographic, anything company? Like could they qualify just 'cause maybe they give 10 to 20% of their profits away. I don't know. I really don't know. It's not very clear. I so just be careful. You may hear something that sounds fantastic. I heard the other day a contractor, a contractor that said they're going to donate 50% of their profits to charity.
[00:20:59] I think it had something to do with children. It. I mean, they can say what they want with all due respect, but seeing it as something else, actually doing it as something else, putting it in writing as something else. And even then, who's gonna hold them accountable and who's gonna verify it? You need to be in a more transparent world.
[00:21:19] And my point is, especially when you're putting your money, they say, put your money where your mouth is. In this case, invest in globally diversified portfolios is my recommendation. Don't try to get too fancy and too personal with it to try to avoid certain things. I'm not saying don't do it, I'm just saying you don't have the understanding and either do.
[00:21:37] Certain advisors, they don't have the understanding of what they're actually investing in. It just says E S G on the title. They really don't know. And on top of that, even if they do know, there's the indirect methods of you really not knowing, because there's so many different layers. If I was you, I'd forget about the whole thing.
[00:21:57] Not saying it's not important. What I'm telling you is do direct impact. Direct impact is huge, and you get to see your money go to work. You get to get the thank yous directly, not just the confirmation. Thank you for donating the money. You get to see it directly and your investments, you don't have to worry about the hoo-ha and the SS e c getting involved saying that this fund is not in fact an E S G fund.
[00:22:22] It's too new and it's the wild, wild west. And as we've determined, there's too many stickiness to it. And like I'm saying, if you need help with this, if you have any questions, give us a call. We would love to help. Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon. Like the bird, all this craziness that's going around right now, it's just we're not in a transparent world if we're not in a transparent industry.
[00:22:48] What you see on TV is not what you get. When they incorporated the rating systems in the nineties, it really screwed things up on the way we get our news. We've heard the term fake news a lot in the past five to seven years, and it's true, and we see what's going on in social media. You are getting fake information all the time, and now they're highlighting when it's fake information.
[00:23:11] And then sometime there's a lot of truth to it, but there's some fakeness to it. So how do you determine that? Now we're working on third parties like Facebook, Instagram, which is the same company, Twitter and so on. Who? Who are they to tell us what's right or wrong? Who's, who are they to tell us what we can see a Nazi, but this is the world that we're in.
[00:23:32] I'm just trying to tell you to be in control. This isn't a rant show. It's a show to help you about finance, personal finance, and guess what? Finance is sometimes more personal than finance. And my job is to hear, talk to you, tell you what you should be doing. And what you should be doing is getting a plan custom for you, not a cookie cutter plan.
[00:23:53] Not just buying the SS P 500 and saying you're gonna be fine, but making sure you are staying globally diversified, having an exposure to everything. 'cause that will prevail long term. It's prevailed over the past 20 to 50 since pre great depression years, and it's going to prevail going. Forward because nobody, and I mean, nobody knows what's gonna happen.
[00:24:15] And if any professional tries to tell you, they do run away because they're either lying to you. Or they're crazy because nobody knows. Folks, that was a fast, fast show. I wanna thank you for tuning in with me this weekend. You could always reach out myself or one of my colleagues at 8 5 5 9 6 3 25 26.
[00:24:37] That's 8 5 5 9 6. Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com. For sure and go to our knowledge center and look up where you can get this episode, any one of our previous episodes as well. And you can go to see a bunch of YouTube videos of great financial strategies as well.
[00:24:56] And if you have a question you want us to answer it on air, please send it to radio@falconwp.com. That is radio@falconwp.com for sure. Folks, I want to thank you for tuning in. I want you to have a fantastic week and God bless.