FTAdviser Advantage  

Cluster of clients interested in ethical funds

Cluster of clients interested in ethical funds

Ethical funds and investments are popular among less than 20 per cent of an adviser’s clients, according to the latest FTAdviser Advantage poll.

Jason Hollands, managing director at Tilney, said he was not surprised by the results of the poll “as they indicate that active interest in ethical funds is clustered among a small number of clients and in many cases there is never any discussion about ethical investing with clients”. 

Among those advisers who responded to the poll, 45 per cent said ethical funds were popular with less than 20 per cent of their clients, while 33 per cent responded these types of funds were never discussed with clients.

Mr Hollands said: “I suspect the biggest driver behind this is demographics. There are some indications that younger people are more interested in the idea of ethical investment than mature investors, but they are a demographic group that are typically very unrepresentative of most advisers client bases. 

“It will also be the case that ethical investment is sometimes discussed only when specifically requested by prospective clients, rather than proactively raised as an option.”

But Claire Walsh, chartered financial planner at Aspect 8 expressed her surprise at the 33 per cent figure.

She confirmed: “I regularly have clients ask about these. In fact, most of the potential clients I’ve met with recently have asked about ethical investments.”

Ms Walsh added: “In any case, as advisers, we have a duty to discuss these things and I find asking people if they have any ethical preferences on how their money is invested is very easy and then you can discuss more broadly if they are interested.  

“I’d say the majority of clients who ask where we do invest money, they do invest this ethically.”

The poll, which ran during Good Money Week, a time used to promote ethical investing, found only 11 per cent of advisers said ethical funds were popular with more than half of their clients and another 11 per cent acknowledged clients often asked about them but do not invest.

Mr Hollands cited data from the Investment Association which showed over the past 12 years, just £14.4bn has been invested in ethical funds out of total assets under management in funds by UK investors of £1.2trn – a “disappointing” 1.3 per cent share of industry funds under management.

Andrew Parry, head of sustainable investing at Hermes Investment Management, said sustainability was no longer an option, but an “imperative”.

“We live in an uncertain world that is undergoing profound transformations in technology, demographics, geopolitics and in the climate,” he explained. 

“These forces are disrupting the way we live and have the power to change life on the planet. As investors, individuals and businesses, we have a complex series of impacts on society and the environment that we need to manage if we are to provide a more resilient and equitable system for future generations.”