Investor interest in responsible investment (RI) is booming, so how can you integrate RI advice into your practice? Megan Lewis talks to some advisers who know.
Offering responsible advice on responsible investing as part of your practice has some definite advantages. According to advisers who’ve elected to set up dedicated RI advice practices, it provides higher levels of job satisfaction and deeper adviser-client relationships. As more investors look for investments that are environmentally and socially sustainable as well as profitable, an RI advice offering can give you a competitive edge.
CONSIDER THE BENEFITS
“The great benefit of building a business about RI is that it engages clients at the level of their core values – so that it is a much ‘thicker’ relationship than one based on just financial objectives,” says Ethinvest managing director, Trevor Thomas.
“For our staff as well as our clients, operating in the RI space has provided additional levels of satisfaction – not just the pleasure from doing something well, but the knowledge that what we are doing has value for our client and beyond them for the society and the natural environment.”
DEALER GROUP OR INDEPENDENT?
Ethinvest has been operating as an advisory practice offering ethically screened investment portfolios since 1989. As such it was the first specialist RI practice in Australia and has been operating under its own licence since 1989.
Thomas says having its own licence means Ethinvest can be “in control of its own recommended list and can move nimbly when required to adjust that list”.
‘People who may have initially said that they were not interested have come around’
“Ethinvest has always focused on direct equities and having our own licence has facilitated that. It also puts us in control of our marketing strategies and has allowed us to build a good niche brand. It has also allowed us to pursue broader goals, such as shareholder activism, without needing to seek approval from a licensee,” he says.
Another specialist RI group, Ethical Investment Advisers, has been operating under its own licence since 2004 and offering RI advice since 2006.
According to an adviser with the group, Karen McLeod: “Our founding directors wanted to have an independent licence. This removes any conflict of interest and allows us to recommend the most appropriate investments for our clients.”
“When working as part of a larger dealer group I often found that clients with strong ethical values were not catered to on our approved product list (APL). By having our own licence we are able to cater to these investors because we research a much wider range of RI funds.
“I also believe that by having our own licence we can act more swiftly than a larger dealer group to add or remove investments from our approved product list.”
Other RI advisers are confident they can build their specialisation and stay part of a bigger, mainstream dealer group.
Steven Putt, managing director of Viridian Wealth Management, has developed a practice that specialises in RI but has elected to stay under the umbrella of Charter Financial Planning.
He’s been offering RI advice for a total of five years – the first six months with another dealer group.
“I left there due in part to the inability to offer RI advice, and the reluctance of the management to consider it. I was told at one point to ‘forget that hippy s**t’,” he says.
Charter has a range of RI products on its APL, according to Putt, “and they allow us to use products that are not on the APL if they are in the best interest of clients, and have a quality history and research”.
Rather than seeking to get additional RI products on the APL, Putt takes a case-by- case approach which gives him an “edge” when researching and deciding what to recommend to RI clients.