Learn how investment advisor and senior financial planner Fatima Iqbal utilizes Islamic guidelines to assist Muslim clients, and how the Foundation partners with the Muslim American Society of Minnesota.
Minnesota is home to one of the nation’s largest Muslim communities, and it is important for advisors to understand the diverse needs of their philanthropic clients.
Ahead of our May Insider Briefing, “Planning Considerations and Opportunities for Partnering with Muslim Donors,” we spoke with presenter Fatima Iqbal, investment advisor and senior financial planner of Azzad Asset Management, about what professional advisors should keep in mind when working with Muslim clients.
“If their clients are interested in following Islamic guidelines, halal investing becomes really important,” said Fatima. “For example, that means screening out companies that have significant revenue coming from certain lines of business such as interest, alcohol, gambling or tobacco, and exceed certain financial ratios, such as excessive debt.”
Azzad Asset Management ties together faith and socially responsible investing to best serve its Muslim clients, which includes Zakah and purification calculations. Sometimes an insignificant and unintended portion of a company’s revenue may come from revenue associated with activities that don’t always ethically align with the Muslim faith. This amount, known as purification, must be used for charitable giving.
“We’re actually just going through that cycle right now because it's Ramadan,” Fatima said. “We provided clients with help to understand how their zakat and purification may be paid and what organizations would be perhaps eligible for those types of giving based on faith-based guidelines, as well as how to disperse the money and from what accounts.”
While often advisors are concerned with how to retain assets, charitable giving can be a priority when working with Muslim clients. The zakat requires under Islamic law that an annual payment is made or used for charitable purposes.
“Here there's a little bit of a different kind of mindset, where clients are actually actively giving,” said Fatima. “Because of zakat, they are going to be giving this money regardless, so it's up to us as advisors to figure out a way for them to give that makes sense and works with their planning as well.”
Islamic finance doesn’t have to be limited to Muslim clients. These values can also be applied to work with other clients. This involves making sound investment decisions, such as your clients finding positive ways to make change with their wealth.
Regardless of your clients’ faith, it is important to keep in mind their values. That’s one of the reasons Fatima enjoys partnering with the Saint Paul & Minnesota Foundation on our Sharia compliant investing.
Partnership with the Muslim American Society of Minnesota
The Muslim American Society of Minnesota (MAS MN) and the Foundation began our partnership in July 2017 in the aftermath of the firebombing of the Dar Al Farooq Mosque in Bloomington, Minnesota.
The idea for the Muslim Community Endowment Fund, and wishes to grow that fund through gifts, grew out of MAS MN’s goal to change societal narratives about the Muslim community.
After joining forces, the Foundation immediately entered a learning phase to develop the knowledge needed to best serve this relationship. The first outcome of that phase was identifying investment advisors who practice Sharia Compliance to manage the assets of the Muslim Community Endowment Fund. That is where Azzad Asset Management comes in.
Benefits of Sharia Compliant Investing
“When it comes to Sharia compliant investing, we've also been successful in having a solution for the Foundation,” Fatima said. “It [the Fund] has performed very competitively so that no one really has to sacrifice on performance just because we want to maintain Sharia compliance.”
Often advisers think they may be eliminating a large portion of the investable universe for clients or wonder how they are going to potentially get a competitive performance when it comes to Sharia compliant or socially responsible investing.
“But if you really look at track records of different investment solutions, you'll find that they actually offer competitive performance so you don't have to sacrifice when you align yourself with those values,” said Fatima.
The Saint Paul & Minnesota Foundation does not provide tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors regarding your individual situation before engaging in any transaction.
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