Investments  

How to make the right choice

This article is part of
Guide to ethical investing

This prompted a mixed response from advisers; with some saying the figures were reflective based on their own client discussions, but others, including Claire Walsh, now head of advice strategy at Schroders, voiced dismay.

Ethical preferences

At the time, she said: “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.”

Perhaps some of this has played into the perception that an ethical approach is likely to be at the expense of higher growth. But this sentiment is now changing.

“Thankfully, there is a now a wide acceptance that this is not the case - that investors can have both a good investment as well as a strong social return,” says Greg Mullins, sales director at Rathbones.

He adds: “As the popularity of ethical or sustainable investing increases, our experience has been that there is no single demographic or ‘client-type’ leading the way.

“It is a true a mix, encompassing ages, backgrounds, risk profiles and personal circumstances.

“The common trait, however, is an increasingly active interest and desire to ensure their investments are aligned to areas and businesses that are not only doing good but crucially are not doing bad.

“Whichever you way you look at, it makes sense to align long-term returns with those long-term interests that affect us all.”

Apply the basics

Meanwhile, perhaps the overriding message for advisers operating in this space is to apply the basics; asking the right questions and then applying the resulting knowledge into selecting the appropriate products and fund.

The situation with ESG funds is no different. And although some intermediaries are yet to dip their toe into the sector, their inherent skills should leave them well-placed to navigate any potentially tricky parts.

There is other help available too, as Mr Kenny states.

“The various options which can help a client meet these objectives then need to be carefully weighed up and explained.

“When it comes to applying these requirements to fund selection, there are a number of sources and independent consultancies which have increased the information and guidance available on funds in this arena and in some instances have grouped these types of funds together in lists of investable vehicles to enable quick identification.

“The key point is to understand what the client is looking for to help them understand the options available.”

craig.rickman@ft.com