There are a number of different approaches you can adopt when it comes to client fact-finding for responsible investment.
You could choose to integrate several new questions into your existing fact find or you could adapt an additional questionnaire that would allow you to capture your client views in a more consistent way. Simply put, there is no single best approach here.
You could argue that the most robust approach is to think about integrating a number of open questions into your standard fact find. That allows you to record your clients’ responses as part of your standard advice process. For those clients who then express an interest in responsible investment, you could then use an additional questionnaire to gauge their preferences, but ultimately, that is a firm-level decision.
Use open instead of tick-box questions
Rather than adopting tick-box questions like asking your clients whether they want to avoid investments in a specific sector or company, you will get more value by using questions that generate an open conversation. Using more open questions along with your soft skills can further explore the client’s values and help you get the right responses.
A good opening question is something like, ‘What are you trying to achieve with your savings?’. You are likely to get some very varied responses to that question but that can then lead you into a broader conversation, which would allow you to ask more defined questions relating to different environmental, social and governance (ESG) issues.
Open question examples:
- How concerned are you about the world you will retire into?
- How strongly do you feel about environmental factors such as climate change, and a company’s environmental footprint and activities?
Probing responsible investment questions should be framed in the right way so that your clients can express their own view without your views inadvertently intruding.
Probing question examples:
- How important is it to you to invest in companies aiming to deliver a net benefit to society?
- Why do you feel uncomfortable investing in different types of stocks?
These examples tug at clients’ preferences towards different responsible investment approaches. Once you have probed these preferences, it then might be helpful to think about grouping clients into different responsible investment segments.
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