The Role of the Financial Adviser

Financial Advisers are an integral link in the investment chain and an imperative inclusion in the impact investment space. When discussing impact investing with clients, advisers discuss their investment purpose & understand their preferences towards impact investing. Advisers can then provide clients with different options in areas where their investments can make a difference; such as healthcare.

As more clients seek advice to align their super and investments with their values and support the issues that matter most to them, advisers proactively ask their clients about their responsible investment preferences. As more impact investments enter mainstream finance, advisers must embrace the provision of investment advice in this space, or risk being left behind.

Barriers to Recommending Impact Investing

Impact investing is not a new concept, yet it remains so for many advisers. There is a general lack of understanding and awareness about introducing the idea into client conversations and investment portfolio construction.

“For many advisers that have been in the industry for a long-time and may be set in their ways on how they do things and what products they recommend, impact investing can represent something new, and something unknown. I think the barrier for some advisers can be that perhaps they aren’t personally interested in impact investing themselves.”

– Kevin McDonald, CFP, Principal Adviser & Director of Future Focus Financial Planning.

Impact investing is often accompanied by questions about how to assess impact, as well as concerns about potentially unrealistic expectations that social impact and market-rate returns can be simultaneously achieved.

In our research, we note five common barriers to recommending impact investments.
1. Awareness and Understanding
2. Knowledge of Products and Methodology
3. Regulation of Products
4. Transparent Outcomes, Impact Measurement and Reporting
5. Understanding Client Preferences

Advisers who demystify and adopt impact investing in their advice offering are best placed to respond to the rising client requests on this investment approach and can appropriately service their clients to deliver quality financial advice that is in line with their values.

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