Getting started with your responsible investment advice journey
There’s so much noise around responsible investment, but how do you prepare for engaging your clients in this area?
The direction of travel
The surge in momentum behind responsible investing continues to accelerate whilst the finishing touches are being made to a number of regulatory proposals that are likely to have a fundamental impact on the financial advice process.
Ultimately, asking your clients and responding to their sustainability preferences is going to become a mandated and core component of financial planning at some point.
Preparation and education are vital
There’s so much noise around responsible investment, but how do you prepare and start to engage with your clients in this area?
Responsible investment is an area littered with buzz words and acronyms and understanding all this alphabet spaghetti should be the beginning of your journey. A sensible starting point is familiarising yourself with the Investment Association’s (IA) framework. It outlines and defines the opposite responsible investment approaches.
Familiarising yourself with these terms and what they actually mean will allow you to clearly communicate with your clients in an honest and more consistent manner. Solving this terminology puzzle is an essential pre-requisite to any client conversation in this area.
Terminology at a glance
| Responsible investment |
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| Responsible investment is an umbrella term used to identify a spectrum of approaches which, not only aim to deliver a financial return, but are also intentionally seeking to effect positive change. Examples of some of the approaches are outlined below. |
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| Ethical exclusions funds avoid industries and company practices that cause harm to people or the planet. | Responsible practices funds consider the operational practices of the companies they invest in and encourage them to improve their environmental and social performance. | Impact investing funds aim to make a wider measurable positive social and environmental impact, as well as meeting financial objectives. | Sustainable solution funds actively seek to invest in companies that are providing solutions to social and environmental challenges. |
Find out more
Visit our glossary to familiarise yourself with more terminology – so you can confidently get started on your responsible investment advice journey.