Why IFAs are the gatekeepers to impact investing

Written by Rebecca O'Connor on 24th Jan 2018

What if you just want to do your bit, without making a financial sacrifice?

To answer this question for clients, George Critchley, senior partner at Pennine Wealth, the discretionary fund manager, set up Positive Pennine just over a year ago with the help of 3D Investing, which authored the latest Good Investment Review.

“We weren’t trying to be purer than pure or the darkest green you can get”, he says “we were just trying to come from a practical point of view, where if you have a continuum of 0 per cent to 100 per cent for making an impact with investment, we wanted to get to something like 75 per cent, where people would feel comfortable.”

The world will only really change when the average investor says ‘OK, put 20 to 40 per cent of my money in this area- I’ll give it a try’

For financial advisers trying to bring impact into the equation for clients – that’s the desire to generate a return for people and planet as well as a profit – the challenge is meeting the need for risk control, through asset allocation. There is a perception that this can be difficult if you then also bring into the equation concerns about the impact of the companies your funds invest in.

But George thinks its an essential part of meeting client demand. In a recent survey by Pennine Wealth, 70 per cent of the public are interested in sustainable investing. IFAs think this figure is less than 10 per cent.

“IFAs are out of touch with public opinion, they are well behind the curve. There are so many things going on in the world – plastics in the sea, corporate governance issues, internet companies not paying tax….

“The world will only really change when the average investor says ‘OK, put 20 to 40 per cent of my money in this area- I’ll give it a try’. And we have to get the average investor to say this, not those who are already converted. We want the non-converts.”

“With IFAs, we need to get the majority and say ‘look, you are missing a trick. This is an opportunity. If nothing else, do it for business reasons.”

“One of the reasons this hasn’t happened yet is the regulatory process and due diligence. To understand this area properly, a lot of study is required, it isn’t something you can pick up just like that. But that information and training is becoming more available.”

“At the moment, IFAs are the blockage – they are the problem, not the solution. But the IFAs that have done it – their heads have been turned. We want to help people take one step at a time.”

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