John Ledford's socially responsible strategies lead to maximum returns for his clients - not to mention overwhelming success for his business. Here's how he's making the boomer portfolio profit from doing good.
Sitting in an open-air restaurant in the seaside Honduran town of La Ceiba, John Ledford offers business development advice during a traditional Central American lunch of pork rinds, rice and beans in a tortilla.
"I hold networking meetings with a select group of my top clients," John Ledford says in between sips of Fanta orange soda. "Each week, a different client will give a presentation about his business, and we try to look for synergies among the meeting attendees. You could do something similar in your weekly meetings as well."
As the 2008 Socially Responsible Advisor of the Year, Orlando-based Ledford, president of Ledford Financial and a Commonwealth Financial Network-affiliated rep, has just come from a weekly meeting with the Adelante Foundation. It's part of the trip he was awarded for his charitable efforts. The foundation is a micro-lending organization that distributes money to poor women in rural areas to help them start businesses.
"It's interesting," he notes. "It doesn't matter if you're dealing with clients with a multi-million dollar net worth, or women building a second-hand clothing business at the grassroots level. The same concepts apply, whether it's superior service or ensuring your price points are competitive."
Granted, his meetings usually don't take place in cement-block buildings without doors, windows or indoor plumbing. But the content of the Adelante meeting tracked almost exactly the same. The lecture featured information on just-in-time inventory and the proper extension of customer credit - concepts found in any graduate level business administration program.
So why was Ledford chosen for the award and trip to Honduras? We'll let him tell you.
"We donate to local charities, including the churches of all of our staff members and local ministries with whom we have a relationship. These efforts also include Restore Orlando, the Central Florida YMCA, several local schools and the Special Olympics. Five years ago, we began sponsoring a golf tournament to raise money for a local ministry called Orlando Children's Church, which provides food, clothing and love to disadvantaged youth in the poorest parts of Orlando. They drive multi-colored buses all over town and we had the pleasure of helping them buy those buses. We give away or re-invest a significant amount of annual revenue into our community. In the past five years we've contributed over $100,000 to local charities. We routinely invite our clients to do the same, not as a one-time planning event, but to develop a lifestyle of giving. We've become very interested in micro-lending from studying Muhammad Yunus and reading books like A Billion Bootstraps. I recently spent a week in the Dominican Republic with Hope International. Since the beginning of this year, we've invested 1 percent of our gross revenue into micro-loans, and we're to expanding this internally in our organization."
Got all that? Ledford recognizes baby boomer clients aren't stuck in the 1960s; they're continually reinventing themselves and moving forward. But he also realizes they retain their flower-power sensibility, and they want to leave a lasting, positive legacy on the world around them. It's for this reason that he immerses himself in effective charitable giving techniques and socially responsible investing - and lives it himself.
And it's working. Ledford Financial has $130 million in assets under management. He requires $1 million in investable assets before he'll work with a client personally and $1 million dollars in net worth before he'll commit other advisors at his firm. He's the big fish in the Orlando pond, and was recently named one of Orlando's top financial advisors by Orlando Magazine. His giving expertise is paying off for all involved - his firm, in clients and the charitable organizations they partner with. Call it a win-win-win situation.
The micro-lending concept to which Adelante and Ledfors subscribe was first developed by Grameen Bank founder Muhammad Yunus in Bangladesh in the 1970s. Frustrated by the extreme poverty he saw of his fellow citizens (especially women) and what he believed was extreme incompetence at the World Bank and other formal aid organizations, he challenged conventional notions of poverty and high-risk lending by distributing small increment loans small (typically less that $100). Playing off the "teach a man to fish" parable, he decided to make the poor accountable in business, rather than simply giving them handouts.
And since women were the hardest hit by the cycle of poverty, he focused on them exclusively. The combination of accountability and self-empowerment worked, and today micro-lending organizations have distributed $133 million in 99 countries. Adelante is one such organization; think of it as the micro-lending franchise in Honduras. Micro-lending organizations average a repayment rate of 99 percent - try seeing that anywhere else in the current economy - and Yunnus received the Nobel Peace Prize in 2006 for his efforts.
Over the last five years, according to Rural Poverty Portal (www.ruralpovertyportal.org) the micro-finance sector has grown at an average rate of 25 to 30 percent. It reports that 65 of the world's top micro-finance institutions had an average rate of return of 2.5 percent of total assets, comparing favorably with returns in the commercial banking sector. Unfortunately, self-employment constitutes 50 to 70 percent of the labor force among the poorest populations, and it is estimated that 500 million people run micro-businesses. Yet fewer than 10 million of these people, or about 2.5 percent, are able to obtain loans from traditional lending institutions. The need is there, and one which micro-lending is rapidly filling.
As mentioned, accountability is a major theme, and loan recipients are required to attend weekly meetings of the type Ledford witnessed. The women are assembled into teams, with each team member accountable to each other, and the group as a whole, when making loan payments. The meetings also serve as an educational forum where topics ranging from self-esteem to business administration are discussed. One member had an issue with domestic violence, and the team requested it be the topic of discussion at the previous week's meeting. Ledford sat in on the business administration lecture, and is now busy with suggestions that work well in his own business.
"Our latest project involves setting up a micro-lending fund of our own," he says. "And it is set to launch in the next few weeks. I see a great opportunity to connect clients with something bigger than themselves. It's something they want, and there's no cooler way to do it then through micro-lending. We can export hope in $100 increments."
Which is sorely needed in places like rural Honduras. Ledford notes the lack of national unity that he's observed since arriving in country.
"It's something that took me by surprise. There seems to be a complacency about their lot in life, as if they don't have a sense of what's possible.
"But seeing the type of work micro-lending organizations are doing, and observing the excitement of the women at the weekly meetings, it's incredibly powerful. Many of the women had children with them, and they saw their mothers in these positive, affirming roles and making their businesses work. That's what struck me; that they have a real shot at a future before them. And my business and my clients can have a role in that."