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Adviser reflections - best interests and financial stewardship

“I suppose when we think about FASEA and our best interest duty, where does that code of ethics lead us? I would argue that it means we need to think of ourselves as stewards of our clients’ capital, in how we allocate that. And so, it’s no longer really appropriate to say that they haven’t asked about it. We need to position the portfolio to make sure that proactively, we’ve proactively prevented any downside risk.” Karen McLeod.

“Back in 2019, when a 25-year-old sued a major superannuation fund for the lack of climate disclosure, that drove a lot of this change in institutional level, because it woke people up to climate as a material risk. It’s a material risk to members of super funds, who have got 30-year retirement horizons. And therefore, it’s a material risk to financial advisers who are working with clients who have 30-year retirement horizons.”

Other useful adviser resources

Ratings platforms – and the variances between them – are another issue which we have touched on already.

In addition to the mainstream rating systems already mentioned, a highly valuable resource which advisers can freely benefit from is the research done by the Ethical Advisers Co-operative, who have developed a leaf rating system for comparing sustainable products46.

Advisers should also consider standalone, bespoke ESG research platforms such as ETHOS from the US, or Perth-based Sustainable Platform.

A variety of useful resources, including fact sheets, research reports, and an Adviser Guide, can be found on the website of the RIAA.

Their Financial Adviser Guide to Responsible Investment seeks to demystify responsible and ethical investing by breaking down the key components of responsible investing to help advisers better understand the demand in the market and how they can consider their clients’ values, along with details of 4 practical steps to getting started.

The guide also includes a host of other resources to help grow an adviser’s knowledge of responsible investment and help them meet their obligations when considering clients’ broader, long-term interests.

Adviser reflections - RIAA

“RIAA are a great organisation. You should check out their website if this is a space you want to start learning about. They do annual reports on the market itself, and what’s happening there. They’ve got a screening tool, they engage with funds to improve, and they hold conferences and educational sessions. They also manage the certification of ethical advisers. So, if you want to push into this space, consider joining them. The bigger their member base, the more value they can create.” Nathan Fradley.

sponsored by PIMCO

Find out how to invest your client's wealth ethically

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Ethical Fund Ratings, ethicaladviserscoop.org

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