There are many independent financial advisers (IFAs) across the country, that give advice on ethical, sustainable and responsible investment. Among them is the Edinburgh-based Ethical Futures.
Ethical Futures was established in 2005 by financial advisers Julian Parrott and Martin Wight, to help people plan for their futures by investing their money according to their values.
Parrott spoke with Tom Revell about the state of the ethical investment market today and how Ethical Futures stays true to his punk roots.
Tell us a little about the history of Ethical Futures.
Ethical Futures is coming up to its tenth year. I formed Ethical Futures with my current partner Martin Wight, who I’d known for some time. We founded it as an ethically focused financial planning firm trying to deliver a broad range of financial advice to individuals predominantly, but also some trusts and charities as well.
Both of us were financial planners before, and we basically just got a bit fed up of working for big businesses in the mainstream sector. I had started to develop and interest in ethical investment in the 90’s, which was really quite nascent at that time. Fortunately for me, an opportunity just came along to align my values with a viable business opportunity.
On your website you say, “we’re a bit different from the average firm and I like to think, still true to my roots of the punk ethos”. How does an IFA stay true to the punk ethos?
My roots and politics derive from mid 70’s leftish politics shared responsibility and collective action. I don’t actually believe in many aspects of the western corporate capitalist society that we have today. Somehow, I found myself working in personal finance and actually, I’m quite good at it!
When it started, punk was not about Mohicans and spitting (that came much later) it was about being anti-establishment, going against the grain, doing something different and doing it for yourself. It also led to a significant growth in small non-corporate ‘indie’ labels and collective working. To that extent, I suppose we try to find ways to buck mainstream views about investing for maximum profit.
If there’s a punk ethos that underpins what we do, it’s doing things differently, challenging large corporates, supporting smaller firms, mutuals and social businesses. I would like to think that by encouraging investors to invest ethically, we can challenge the orthodoxy about profit maximisation by making small changes in how businesses are run. Businesses should consider all stakeholders and environmental and social impact – not just shareholders. Trying to establish a true shareholder democracy.
How is business at the moment?
Hectic. We’ve grown as a business and we’ve attracted more people and we’ve got a lot more money under management. We haven’t converted the whole of Scotland – that would be nice – but we’ve done well for a small business to create a decent amount of money under an ethical mandate.
And we’ve been growing our staff to reflect that. In ten years we’ve gone from 12 hours a week to 120 hours a week, in terms of support staff.
Do you think the demand for ethical and sustainable investments has increased since you founded Ethical Futures?
My measure for how it is increased is not so much my own clients – it’s difficult to know whether there are just more clients out there or whether we are being successful in attracting them – but I gauge it through my engagement with other financial services professionals, who are not solely active in the ethical sphere.
My engagement on that basis tells me there has been a great increase in interest in ethical and sustainable investments.
Are there any trends emerging at the moment that you think investors should be watching?
Yes, though probably not the ones which are governed by most of the ethically screened funds. The trends that are coming to the fore are allied to financial crash times but also to more recent revelations as well.
They are tied more to the corporate governance agenda rather than specifically the ethical investment agenda, but concerns about short-termism in corporate management, issues regarding tax avoidance, executive pay, are I suppose some of the key trends.
For these issues, there are signs that governance concerns, which used to feature mainly in the ethical market, have now become much more common place in the mainstream investment market. The outcome being governance concerns are now an important factor in investment decisions. It’s about engaging and trying to make gradual and incremental changes to corporate activity.
Have you noticed any funds that are doing particularly well that investors ought to watch out for?
Its not like there’s one particular fund that you should put all your money in, diversity is the watchword. There are however, funds that adopt a fresh and forward looking approach to investment. These funds include Alliance Trust, Ecclesiastical and WHEB. They have good considered positions in terms of where they invest. But to say put all your money in one pot or the other is a dangerous game.
What do you think the impact of the new ISA allowance will be?
That the rich will get richer. It’s a load of rubbish. Less than one in eight people used their full ISA allowance before the budget announcement. All it means is that more middle class people will be able to put more of their money away tax-free.
The only way to make more people better off is to redistribute income more effectively around society. The ISA and pension changes are a bit of George Osborne’s political expediency and Tory double-talk, basically.
And what do you think about the changes to pensions?
I think a lot of people will blow their pension money as well. The changes hadn’t been announced more than half an hour before I had the first irrational phone call, from someone who simply could not afford to do what they wanted to do.
I genuinely think that people need to be encouraged to stop and think about these things, and to look after their money. There are some good elements that have come out of the regulatory changes but by and large these changes don’t really mean much unless you have a lot of money. Or very little!
We have become a very individualised society. Whilst individualism might be appropriate in some cases – ergo the choice of becoming a punk rocker in the seventies – with that comes a considerable amount of costs borne individually. Margaret Thatcher once said there’s no such thing as society, and David Cameron and his cohorts are doing their level best to prove that. Which is why you now need a little help from an ethical financial planner.
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