Through the Fact Find, advisers can ask their clients what it is that is motivating them to invest sustainably and make a difference.
Such questionnaires can now move beyond the traditional negative approach of providing a list of company activities an investor might wish to avoid.
The investment tools are becoming available for investors to consider how their money is working to create good outcomes, rather than just helping them to ‘do no harm’.
Today, most consumers can make green, ethical or sustainable choices in the products and services they buy, for example, whether it is fair trade coffee, green energy or an electric car and clear labelling of these products is a very effective way of aiding consumer choice.
Specialist platforms and advisers
There are an increasing number of platforms for sustainable investments which aim to categorise and assess funds by risk, return and impact, and do so in a way that is accessible to advisers and their clients.
For example, Worthstone provides a specialist social impact investment service for financial planners, and acts as a focal point for those financial advisers and investment providers who share a desire to see the sector develop and grow.
They have recently published the first UK retail impact investing review for financial advisers together with specialist impact adviser 3D investors.
3D has developed a fund rating system and helps advisers to build portfolios which maximise positive impact.
3D’s review shows there is in fact a sizeable universe of funds available to UK retail investors that are targeting positive impact and across asset classes.
It also demonstrates that investors do not have to make a trade-off between investing for positive impact and achieving competitive returns.
There is a growth in support and guidance for those advisers looking to develop sustainable and impact portfolio services to help clients who are interested in this area.
For instance, EQ Investors provide separate options of low cost passive, active alpha and positive impact portfolios, recognising that clients want to broaden their choice.
Specialist wealth managers like Tribe Impact Capital have based their business solely around impact investing to aid longer-term relationships with clients who want to focus on values and financial return.
With more advice available and more products to select from, it is now possible to construct well diversified portfolios across asset classes that meet traditional client profiles for risk and return as well as impact.
How to integrate
In our view, those advisers that are successful have three key ingredients in their process.
Firstly, they believe that sustainable and impact investing serves a purpose, such as bringing about better real world outcomes and connecting people to them through their investments.
