Understanding the environmental and social concerns of your clients can go a long way toward strengthening your relationships with them.
“Look at [socially responsible investing (SRI)] as an opportunity to deepen the relationship with the client,” says Patti Dolan, a financial advisor with Raymond James Ltd. in Calgary. “I do have that better understanding of what their values are and I try to align their investments accordingly.”
Socially responsible investing is “the inclusion of social, environmental and governance considerations into the management and selection of investments,” according to the Social Investment Organization (SIO) in Toronto.
Follow these tips when clients start asking how they can bring their investments in line with their values:
> Do your homework
A little research can help you prepare for questions on SRI.
Mutual fund companies that offer socially responsible funds provide information on their websites, says Sucheta Rajagopal, an investment advisor and portfolio manager with Hampton Securities Ltd. in Toronto. To find out which mutual fund companies offer SRI, visit the SIO’s website (www.socialinvestment.ca) for links.
To improve your knowledge further, Dolan says, Toronto-based CSI Global Education Inc. (www.csi.ca) offers an online mini-course on SRI.
“It’s a really simple way of getting familiar with the subject matter,” Dolan says, “and you can also earn credits while doing it.”
> Start off slowly
Socially responsible investing is not an “all or nothing” strategy, Rajagopal says. Acting as though it were might drive some clients away.
Instead, if your client is interested in SRI, get him or her started with an investment in a single SRI fund. Or, Dolan says, you might dedicate a certain percentage of the portfolio, such as 10% or even 50%, to SRI.
> Keep an open mind
When talking about SRI, be careful that you and the client are not dismissive of every company or entire industries.
There’s a misconception that SRI investments are chosen purely by elimination or “negative screens.” For example, Dolan says, an SRI fund might not reject every company associated with the oil sands.
Suncor Energy Inc. in Calgary, for example, may be criticized for being in the oil business. But as oil companies go, it has a good environmental record. “[Suncor] has for decades had great practices in looking at investing in alternative energy,” Dolan says, “and it has great governance in the organization.”
> Spend (a little) more time
Talking about SRI is a more focused conversation, Dolan says, but doesn’t mean a whole lot of extra work. However, you will have to dig a little deeper to find the right investments.
“I read articles,” Dolan says, “and maybe do a bit more research than just choosing on a technical basis or from the recommended lists from the brokerage firm.”
For example, when selecting an investment for a client, Dolan will also look at the company’s sustainability report.
> Don’t wait for clients to make the first move
To start the conversation on SRI yourself, ask clients about recent headlines in the news.
Bringing up specific topics such as the Northern Gateway pipeline, says Rajagopal, gives you an opportunity for an engaging discussion with clients in which you can find out more about their values.