If a client donates to an organization that plants trees or serves on the board of a food bank, that could give financial advisers an opportunity to discuss how those interests can be reflected in her portfolio and provide an entry into values-based investing.
“You can get a read on what they’re passionate about,” Alli Hillgren Warner, chief marketing officer at Beacon Pointe Advisors, said Thursday during the InvestmentNews ESG Summit. “You can use that as a segue to the impact or ESG conversation.”
Anthony Eames, vice president and director of responsible investment strategy at Calvert Research and Management, said delving into a client’s charitable giving or volunteer activities can shed light on whether they want to engage in ESG investing.
“That is a clear opening for advisers to say, ‘This is clearly a passion of yours … Have you thought about how these issues are potentially expressed in your portfolio?’” Eames said. “This is about deepening the relationship, deepening the connection that an adviser has with a client, and the portfolio is a tool for doing that.”
So-called impact or socially responsible investing that incorporates environmental, social and governance factors in making decisions about stocks and fund purchases is one of the fast-growing investment sectors.
More advisers should be part of the movement, which is “very much an investor-driven phenomenon,” Eames said.
“We would definitely advocate that advisers be more proactive in terms of getting to a particular client’s or prospect’s interest in the approach,” he said. “It’s a tremendous opportunity for advisers to engage not only more meaningfully with their current clients but it’s a tremendous business-building opportunity as well.”
Values-based investing does more than allow a client to express his or her social priorities in a portfolio. It also boosts returns.
“We’re seeing real separation from companies that have strong management of their human capital, their use of natural resources, their corporate governance,” Eames said. “These are issues that are material, and they can … drive stock prices.”
In fact, it’s a good idea to take emotion out of the ESG discussion with clients and focus on how their own bottom line will benefit, Warner said.
“It’s important that at the end of the day, we are fulfilling the clients' aspirations and goals and passions, but so that they don’t run out of money when they turn 80,” she said.
Women are especially inclined toward ESG investing, Warner said.
“When there are women at the investing table, it’s brought up on a more organic basis,” she said.
Promoting ESG also should be a firmwide effort. Beacon Pointe, for instance, participated in a holiday food drive that provide 57,000 meals.
“Firm culture plays a critical role,” Warner said.
Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.
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