Sustainable financial advice: IFA Julian Parrott on ‘fighting for the ethics’

Julian Parrott, a partner at Edinburgh-based financial advisory firm Ethical Futures, gives advice to clients on sustainable, responsible and ethical investment.

He talks to Blue & Green Tomorrow about his career in financial services, Joe Strummer (who, did you know, was an ethical investor) and why he is fighting to keep ethics a part of the debate.

How did you get into sustainable, responsible and ethical financial advice as opposed to financial advice more generally?

I had spent 12 years in financial services, eight of which was as an adviser with national IFA firms. I was getting a bit fed up with the way the business was run and was looking to either start on my own or find a small firm. Whilst with Towry law in the mid, in the 90s I started to advise some clients with ethical interests (a rarity in those days) and I found that it chimed with my personal values, too.

As chance would have it, late in 1999 I saw an ad for an adviser post with a small firm specialising in ethical investment in Edinburgh. The dawn of the new millennium saw me embarking on a new stage in my career in a field that I at last believed in.

Tell us about your firm, its history, team numbers and what you see as its expertise.

I formed Ethical Futures with Martin Wight in 2005. Martin and I had worked together at Towry Law in the mid-90s. We went in different directions but I met him again when he worked at NPI and was active in promoting their Global Care ethical funds. When the broker consultant life lost its attraction for him, we joined forces and I rolled my previous business into Ethical Futures.

We started with one part-timer on 12 hours a week; we now have three full-time and one part-time support staff – a 10-fold increase to 127 hours a week. This reflects the growth of our business over the years.

We are general financial planners but with a strong investment emphasis. Under retail distribution review (RDR) rules, we are independent advisers but with an ethical and socially responsible specialism. We don’t do mainstream investment funds at all; if someone wants that, we’ll refer them on.

I think the thing that we are experts in, is actually just understanding why clients want to invest ethically. We are on the same side as our clients so we don’t see it as a hassle or constraint.

Why do you think people should consider investing sustainably, responsibly and ethically?

How long have you got? People should invest with their own convictions. I think that there are good long-term returns to be had, but don’t invest just for a new investment angle; invest because you want to make a difference.

Appropriately channelled and focused your money:

– Can start to influence the ways big business behaves
– Can help develop local community businesses
– Can support social and community projects
– Can invest in development of alternative forms of energy, recycling, waste management and water treatment
– Can help develop new initiatives in health and education
– Can fund micro–finance in developing countries
– Can make a difference

Is there a compromise to be made between getting a return on investment and ‘doing the right thing’?

I don’t think so, but I don’t care. Are you going to tell the clothing worker in Bangladesh that you really needed that extra marginal gain, so sorry, you have to continue working in a sweatshop? Or to the farmer in a developing nation: sorry, you have to keep on buying the seed for your grain because we have a nice fat GM patent and they can’t be allowed to propagate their own? Or to the tribe in Africa: sorry, you can’t farm on your land because it is needed for oil exploration and the company has given the government ministers a big bung to secure access?

We just have to take a wider world view and re-structure our economies and expectations.

Are there any sustainable, responsible and ethical funds that people should be looking into and talking to you about?

It really depends what you are looking for, there are a range of funds with different objectives that I like but they won’t suit everyone. I like the management style of the Ecclesiastical Amity and Alliance Trust Sustainable Future funds. Kames funds and Jupiter Ecology are tried and tested and pretty dark green; WHEB and Quilter Cheviot are newer firms with really interesting approaches to the sustainability sector. Not a fund, but I also really like what Abundance Generation are doing in the renewable space and real ethical banking from Triodos Bank.

What, if anything, is stopping sustainable, responsible and ethical investment from taking off in the UK?

There is still resistance out there amongst many financial advisers and investment houses don’t put enough support into promoting the sector or developing new funds. They still prefer to develop ‘flavours of the day’ type funds. There is also still the muesli muncher, hippy notion about ethical investment out there, too.

What trends have you noticed in sustainable, responsible and ethical investment in the past year?

Social impact is the thing for me. It’s in tune with the Big Society agenda (which I can buy into even though I think it’s a Tory plot to slash the welfare state) and offers a combination of financial and social dividend with a bit of localism thrown in, too.

If people do not invest sustainably, responsibly and ethically what is the biggest consequence for them?

Err, is another 2008 financial crisis enough? Try the headlong rush for shale gas or tar sands or Arctic oil, Bangladeshi sweatshops working for major fashion brands, millions of UK workers working for below a living wage – it’s happening now and we need to change the agenda!

A curved ball question, but if you were stuck on a desert island, which famous person would you like to be stuck with and why?

Can I bring Joe Strummer back to life? I saw him in concert loads of times but never got to meet him. We’d have some great debates which he loved having around a campfire and he might teach me to play guitar! Joe was an ethical investor; he was an early investor in a carbon offset business called future forests. There’s a wood dedicated to him on the Isle of Skye.

What’s your prediction for the next 10 years of sustainable, responsible and ethical investment?

It’s growing, but we have yet to reach the tipping point. I’m not sure what the catalyst will be. In terms of funds, there will probably be more emphasis on the sustainable and responsible – which is okay – but I’m going to keep on fighting for the ethics, too.

Julian Parrott is a partner at Ethical Futures.

Further reading:

2013 sustainable financial adviser of the year: Julian Parrott, Ethical Futures

Ethical investment: money with a voice

Green Dragon: Julian Parrott

The Guide to Ethical & Sustainable Financial Advice 2013