If you want to make sure your money isn’t invested in tobacco firms, weapons makers or companies that support oppressive regimes, how do you find a financial adviser to help you? Read on for my tips:
Finding an expert
If you’re trying to find an independent financial adviser (IFA) who specialises in ethical and green money the good news is that they are growing in number.
SAVVY TIP: The bad news is that virtually any IFA can say they give advice on green and ethical money but it’s no guarantee that they’ll know what they’re talking about or will have much experience in this area. There are several areas of financial advice where the adviser has to have specialist qualifications, but green and ethical finance isn’t one of them.
Questions to ask
John Ditchfield, an independent financial adviser with the UK’s biggest sustainable and green financial advice firm, Castlefield, recommends asking the following questions:
– Is ethical investment an add-on? How much of the overall investment business that you do involves recommending green, sustainable or ethical investment investments/funds?
– Does your firm have its own corporate social responsibility policy? If so, what does it involve?
– Do you hold any relevant qualifications beyond the basic exams?
– Can you firm recommend any investment product that’s available in the marketplace? Or does it only recommend funds from a limited range?
Letters and logos to look for
As there’s no specialist qualification, the best advice is to go for someone with a track record who’s signed up to some of the organisations that are designed to promote sustainable/responsible investing.
– Ethical Investment Association An IFA who is
a member of the Ethical Investment Association has to include a question about whether someone wants to invest their money ethically as part of the standard questionnaire they give to clients when finding out about their current financial circumstances and what they want from their money.
SAVVY TIP: Advisers must also have a dedicated questionnaire designed to find out exactly what’s important to you. It should ask whether you want to avoid certain companies and, if so, what you don’t want to invest in, whether you’d like a fund that positively selects certain companies or sectors or one that ‘engages’ with the companies it invests in (which means it tries to persuade them to improve the way they do business).
– UKSIF has a list of independent financial advisers who are members of their organisation.
SAVVY TIP: Anyone who joins UKSIF has to sign up to a statement of principles (which includes things like improving consumers’ understanding of ethical investment and acting with integrity).
– Yourethicalmoney.org is a one-stop shop for green and ethical information, has compiled its own financial adviser directory. In order to be listed, the IFA has to have put more than £100,000 of business into ethical funds in the last financial year, or have put more than 40% of their business in ethical funds in the last financial year, or have completed and passed UKSIF’s training course on green and ethical investment.
– Unbiased.co.uk is a website that’s paid for by independent financial advisers to promote the benefits of independent advice. The site lets you select an IFA using different criteria, including whether you want advice on ethical investments.
SAVVY TIP: Be aware that there’s no specific check on IFAs who say they advise about green and ethical investments and no ‘quality threshold’ — so there’s no guarantee they’ll be experts.
What should the adviser ask you?
Don’t be daunted if the IFA wants to ask you a lot of questions about your ethical preferences — this is a good sign. The more detail the IFA goes into about your green and ethical preferences, the better.
For example, some IFAs might ask you if you’re against animal testing. You might be completely against any animal testing in all circumstances or you might disagree with its use in the development of household products and cosmetics, but accept it for new drugs that treat serious life-threatening illnesses like cancer or HIV.
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