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Features Ethical Financial Advisers Near $1 BillionAustralia's ethical financial advisers now manage $910 million for clients and are closing in on the $1 billion mark with their ethically screened funds under management growing by 18 per cent last year. The Ethical Advisers' Co-operative comprises 17 advisers from 11 firms across every state. The Co-op's advisers help their clients to make financial decisions and match their ethical values with financial investments. Specialist ethical investment advisers are a trusted source of advice for investors as the range and complexity of ethical investment products and investments continue to broaden in a maturing investment sector, says Louise Edkins, a director of EAC and an adviser with Brisbane based Ethical Investment Advisers. "There are many choices for investors – impact investing, sustainability funds, ESG screened funds, best of sector, negative and positive screened as well as fossil fuel excluded investments," she said. "An ethical investment adviser specialist can assist investors in reflecting their personal values and financial needs with the best ethical investment choice for them." With global responsible investment rising to $21 trillion last year, and investors increasingly aligning their values with their investment decisions, Eco Investor interviewed Ms Edkins on the ethical investment advice sector in Australia. Eco Investor: When was the EAC formed, and what percentage of ethical financial advisers does its membership account for? Is there room for growth or has it got all/ most of the ethical advisers in Australia? Louise Edkins: The EAC was formed in 2011. I am only aware of one individual adviser who is not an EA Co-operative member that also specializes in ethical financial advice. That is, most of their advice business, or transitioning most of their new business to ethical investment advice. The Financial Planning industry at large are the least convinced and many misunderstand the benefits of incorporating clients' ethical values into financial advice. Some actively discourage investors who then mistakenly believe that there are performance concerns in ethical investment. Increasingly, clients are demanding ethical investment and EAC members are sought because a client's needs have not been meet by their existing planner. There were three reasons why EAC was formed. One of them was to mentor financial planners into ethical investment advice and assist advisers in growing this sector of financial planning. We would all like to see ethical investment being incorporated into all financial planning advice - at least checking with the client if this is a consideration for them. The second reason was engaging with the community to dispel myths and create awareness of the benefits of ethical investment. We have Ethical Investment Week in October, and this will be our second one. The third reason was to engage with ethical investment product providers and standard investment product providers to provide the range of products that clients are demanding. Eco Investor: What sort of people are drawn to ethical advisers? Have you noticed any changes over time in the type of people, wealth of people, ethics of people drawn to ethical advisers? Louise Edkins: People seek an ethical investment specialist because they wish to invest in line with their values and are unsure of which products and investments are best suited for them. In addition, as with all those who seek financial planning advice, usually these are people who have increasingly more complex financial situations or have built up assets that they then feel need more specialist advice. Our clients vary across the range of Australian investors, from those who wish to invest their superannuation more ethically up to philanthropic trust creation and self managed superannuation funds for retirement. Ethical investors are across the whole spectrum of Australian investors. The myth that ethical investment means lower investment performance is being debunked by numerous papers and reports over decades and this is filtering into the public awareness. In addition, investors are becoming aware of the real financial risks of carbon intensive sectors and stranded assets as global energy markets increasingly incorporate renewable technology and energy efficiency. Eco Investor: What are the main issues clients are interested in? Louise Edkins: Climate change is increasingly a concern and fossil fuel divestment. Ethics and values are individual and will include faith based concerns, social issues such as human rights or gambling and environment focused concerns. Investors increasingly wish to be part of the solution rather than just avoid certain areas and they are seeking cleantech, energy efficiency technology, impact investments that have social outcomes and renewable energy. Eco Investor: What are the main ways EAC's members differ from normal financial advisers? Louise Edkins: As with all licensed financial planners, EAC members provide advice that is suitable for a client's risk profile, goals and financial objectives. In addition they tailor an individual investor's investments to their ethics with a values questionnaire. Eco Investor: Do EAC's members work only for a fee for service, or are the fees of some or all of the advisers also based on percentage of assets, commissions, trailing fees? Louise Edkins: In most cases, EAC members work for a fee for service for most of their advice. Where possible most EAC members rebate commissions. Some fund products do not always allow advisers to do this. EAC members ensure that advice is in writing with transparent and detailed information on fees and charges for advice that is agreed to before advice is provided. Eco Investor: What other financial areas do the advisers have expertise in apart from investments? Do they advise across all aspects of a client's financial affairs (insurance, superannuation, estate planning, etc) or mainly just investments? Louise Edkins: EAC member financial planners provide comprehensive advice across tax effective investment structuring, insurance, estate planning, retirement planning, Centrelink advice, superannuation and investment. Eco Investor: What are the levels of service for different clients? Louise Edkins: When a client requires limited advice, this is agreed to with the client along with fee structure within an engagement agreement. Eco Investor: Are the advisers free to recommend any financial product they think suitable or do they have a pre-determined list? Louise Edkins: The license under which a financial planner can provide advice requires that the licensor assess, monitor and review the investments that can be recommended by that group. For EAC members with their own licence, they can decide on the investments they wish to recommend and which are suitable for their clients. There are some EAC members who are licensed through groups where they may have less choice on investment products. Some advisers have differing scope of advice specialization as well, ie direct shares. Eco Investor: How important are environmentally positive investments and environmentally positive equities in their portfolio advice? Louise Edkins: For EAC members, very important. It is incorporated within the advice they provide. Whether that is through an ethical investment share product or directly in stock selection. Eco Investor: Thank you. The EAC says its members are all Financial Planners who aim to provide
financial planning advice at the highest level plus an overlay that can
give clients peace of mind about their ethical decisions. The members
are all specialists in ethical investment and are all Certified with RIAA
(Responsible Investment Association of Australasia). Members: * Participate in the exchange of ideas with other likeminded advisers * Work with associations such as RIAA to promote Responsible Investment * Provide feedback to Investment Managers on products and underlying investments. EAC Members The ethical advisers and member organizations of the Ethical Advisers' Co-op are: New South Wales: Queensland: South Australia: Tasmania: Victoria: Western Australia:
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