Putting values at the heart of advice

Produced in partnership with Russell Investments.

A person’s values are central to who they are, shaping their behaviour, decisions and relationships.

From major decisions like choosing a career, partner and friends to simple choices like clothing brands and coffee manufacturers, people are seeking values alignment.

Yet, when it comes to financial planning and investing, values aren’t always a key consideration. There’s a strong focus on a client’s circumstances, financial needs and goals, and rightly so, but values are often a secondary issue.

That is changing, according to Russell Investments head of distribution, ANZ, Neil Rogan, who has observed a sharper focus on values-based investing in recent times.

Increasingly, a core component of the advice process is understanding a person’s values and ensuring that they are reflected in their financial plan and investment portfolio, he tells Professional Planner.

“As values become a bigger part of the advice conversation, advisers need practical ways to reflect those preferences in client portfolios,” he says. “That’s where managed accounts play an important role, and partly why they have continued to gain traction across the advice industry.”

“We’re seeing a shift towards aligning values, particularly around sustainability and environmental, social and governance factors, with investment outcomes.”

While sustainable investing has been around for decades, it has experienced ups and downs in terms of interest.

Pointing to preliminary findings in Russell Investments’ upcoming Value of an Adviser report, Rogan says demand has “really picked up” and is broad.

“Early indications from our 2026 research suggest conversations around sustainable investing are broadening,” he says. “While younger investors have traditionally led these discussions, we’re seeing increasing interest across older generations as well, particularly among Baby Boomers. Advisers shouldn’t assume these conversations are only relevant to younger clients.”

The group’s research is also reflected in demand for its range of sustainable managed accounts, which were launched in 2022, and continue to attract strong interest from advisers and investors.

Embedded and integrated

Fortunately, governance and returns are not mutually exclusive. There is mounting evidence that they’re closely linked, particularly in developed markets.

According to McKinsey, companies with high ESG ratings consistently outperform the market over the medium and long term.

For example, in the United States, companies that displayed governance leadership consistently outperformed governance laggards by 2.7 per cent per annum between 2015 and 2023, based on data from MSCI.

Corporate boards and leaders are expected to actively manage risks and implement governance practices to improve transparency, accountability and outcomes for all stakeholders.

Investors and their partners, including advisers, asset consultants and fund managers, are increasingly embedding ESG considerations into their investment philosophy and processes.

Rogan says strong sustainability outcomes and strong portfolio construction can co-exist, pointing to the solid performance of Russell Investments’ SMAs.

The Russell Investments Sustainable Managed Portfolio “Balanced” and “Growth” options have delivered annualised returns of 8.5 per cent and 9.9 per cent respectively over the three years to April 30, 2026, before fees.

“Investors shouldn’t have to choose between upholding their values and achieving their financial goals,” Rogan says.

At Russell Investments, ESG factors aren’t just an overlay, they are integrated into the group’s manager research and manager selection process, and active ownership approach.

Russell Investments has been managing sustainable portfolios for over a decade. Initially, interest came from large purpose-driven charitable foundations and not-for-profit organisations, however, demand has steadily grown to include wealth managers and their clients.

“Consumer expectations are evolving and our research shows that younger retail investors are more values-driven,” Rogan says.

“Gen Z is leading the charge because they’ve had super since they started working and many will have pretty sizable balances by their mid-30s. They’ll expect their advisers to understand and incorporate their values into their advice.”

Preliminary findings in Russell Investments’ Value of an Adviser Report show that personal advice that is tailored to a client’s needs and values is the second most important attribute to clients, behind only trust. Furthermore, 25 per cent of investors list advice that “aligns investments to personal values” as a key reason for seeking advice. This is up from 18% in 2025.

Spotlight on decarbonisation                          

One of the biggest concerns for consumers and investors globally is the environment and sustainability.

Public awareness of the impact of corporate activities on the environment, such as the depletion of natural resources, biodiversity loss and pollution, is high due to media and social media coverage, public outcry and heightened regulation.

In Australia, environmental issues are more pronounced given the dominance of the mining and resources sector, says James Harwood, Head of Multi-asset for Russell Investments, Asia Pacific.

To support clients to build portfolios that reflect their values and achieve their long-term return objectives, Russell Investments has been building and refining a decarbonisation investment framework for over a decade. 

Last year, it released the third iteration of this framework, Decarbonisation 3.0, which is a “strategy that improves how portfolios align with the low carbon transition”. The latest instalment shifts the focus from gaining exposure to renewable energy to a broader, more measurable focus on “climate solutions revenue”.

“We’re taking a more holistic view and going beyond standard carbon reduction by integrating multiple signals that capture both climate risks and opportunities,” Harwood says.

“This more nuanced approach provides a better roadmap for investors looking to position portfolios for a decarbonising world without taking on unintended risks. Importantly, it enables portfolios to remain invested in the sectors that we believe matter most for change while actively tilting toward solutions that drive progress.”

That philosophy underpins Russell Investments’ Sustainable Managed Portfolio range. Rather than relying solely on exclusions, the portfolios seek to balance sustainability objectives with diversification, risk management and long-term return potential.

Beyond the ‘E’ in ESG, Rogan says ‘S’ and ‘G’ matters are getting more attention.

“Five years ago, there was a heavy focus on environmental sustainability but today the E is almost a given and we get more questions about the S and G because many high-profile corporate failures involve those areas,” he says.

As a funds management giant that operates in over 30 countries and oversees almost $1 trillion in funds under advice, Russell Investments has unique insights into global investment trends.

Globally, values-based investing is an emerging development that presents potential opportunities for Australian advisers, particularly as the intergenerational wealth transfer accelerates, Rogan says.

“We’re seeing more advisers include their client’s children and beneficiaries in the planning process and the next generation of clients are more values-driven,” he says.

“They want to invest in a way that aligns with their values and ideals, and they are looking for advisers and investment solutions that can help them to do so.”