Over 200 financial advisers told us their view on the state of their industry, sustainable investment and the economy in the fifth annual Voice of the Adviser survey. Today we look at the sustainable, responsible and ethical investment market. Again we see a strong rise in the number of financial advisers being asked about this investment approach.
The number of financial advisers who are asked about sustainable, responsible, ethical investment has risen to 87% in 2014 from 73% in 2012. 22% expect their clients to require more advice about ethical investments this year than last. After a slip dip in 2013, the percentage of a financial adviser’s clients asking for sustainable investment has also grown from one in seven (15%) to just under one in five (19%).
Simon Howard, CEO of industry body UKSID, told Blue & Green Tomorrow, “I’m not surprised to see the number of advisers being asked about ethical advice growing sharply. The change in [shareholder] voting intentions which we seem to be seeing probably reflects a broader willingness to change behaviours in the public at large and it’s encouraging that it is reaching into retail investment. Let’s hope it continues and is noticed because so far I’m disappointed that sustainability issues aren’t looming larger in the election campaign. Some of the more detailed data is relevant there too, with renewable energy the most popular sector for retail investors. If people are willing to fund renewables where is that being reflected in planning and energy pricing policies?
“It looks as if beginning to offer advice in the sustainable/ethical area would be a sensible move for advisers. Certainly the feedback from members of the Ethical Investment Association, an UKSIF ‘chapter’ is positive, and advisers are looking for more information and innovation. The message for UKSIF and the producing elements of the sector from that and the Blue & Green Tomorrow data is that there is unmet retail demand out there. Go for it!”
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Financial advisers are divided into equal thirds on whether, “Using socially responsible, ethical or sustainable investment strategies means compromising performance.” A third of financial advisers agree that, “The only purpose of investment is maximising a client’s financial return through income or growth.” 42% disagree with this sentiment (13% strongly).
76% of clients who ask for these type of funds primarily want, “To avoid profiting from activities they find unacceptable.” 12% want to, “use their investments to promote change,” or, “position their investments to benefit from sustainability themes.” 31% of financial advisers have had their clients talk to them about divesting (stop investing in) from certain sectors.
The companies that retail investors are most keen to avoid investing in are involved in weapons/aerospace manufacture and sales (78%), tobacco (61%), human rights abuses (50%), poor environmental record (46%), the exploitation of animals for cosmetics (39%) and the production of pornography, adult or violent material (38%).
The companies that retail investors are most keen to invest in are renewable energy (74%), clean technology (54%), fair trade (53%), recycling (43%), sustainable agriculture and fishing (38%) and sustainable forestry (31%).
If you’re looking for sustainable investment options why not refer to our 2014 Guide [If you’re looking for financial advice why not refer to our 2013 Guide to Sustainable Investment and our 2013 directory of sustainable funds].
Photo: 401(K) 2012 via Flickr