RBC GAM moves SRI funds to Vision Funds

As responsible investing (RI) goes mainstream, you may feel persuaded to integrate RI practices into your financial advisory business. But unless you do your due diligence and make an honest commitment, you’ll fail to win over conscientious clients.

Your interest in (RI) must be genuine. And the only way to distinguish your practice is to build a track record.

“You can’t just say it’s a cool flavour of the month,” says Fred Pinto, senior vice-president, head of wealth management at Qtrade Financial Group in Toronto.

If you are new to RI, you’ll need to learn as much as you can before adopting an RI approach. You should eventually develop a process of research to filter and identify companies that adhere to ethical standards.

The following tips can help you break into the RI field in a credible way:

> Avoid “greenwashing”
Today’s consumers are wary of “greenwashing” — the practice of labelling products as “eco friendly” or “fair trade” when those claims are at best questionable. Therefore, simply declaring your practice as RI-friendly is not going to cut it unless you can back up that claim.

Try taking incremental steps to gain credibility, without explicitly calling yourself an RI advisor.

“We’re not really big believers in advertising [it],” says Laurie Stephenson, principal at Starboard Wealth Planners in Halifax, which offers RI services to its clients. “But we get this good press because we have this excellent research [process].”

For example, Tyler Field, an advisor with Starboard, simply mentions his interest in RI as part of his online bio.

> Join industry associations
Participate in events hosted by industry organizations related to RI, and consider becoming a member. Opportunities abound for networking and swapping best practices at these events, Pinto says.

For example, many advisors — including Field, Pinto and Stephenson — have become involved in the Responsible Investment Association (RIA). Through the RIA, you can take courses on how to factor the principles of RI into your investment services.

“It’s about building your affiliations with like-minded individuals,” says Field. “I found it to be a useful foundation to become more knowledgeable and understand different perspectives.”

> Narrow your focus
Reflect on the issues that appeal to your own interests and focus on just a few.

“The whole field [of RI] is broad-ranging,” Pinto says. “It’s unlikely everyone is going to have a mastery of all the issues.”

Start by following a handful of issues, so that you can learn to screen companies effectively, based on environmental, social and governance (ESG) criteria. The ESG principles serve as a guide to help investors analyze how a company is managed, whether its employees are treated fairly and whether environmental standards are maintained.

“If you’re passionate about one to three issues, that’s great,” Pinto says.

> Stay abreast of the topic
Educate yourself on the relevant issues of the day. Field, for example, follows news about “green” investing and subscribes to various e-news outlets to get a balanced perspective.

Your goal should be to think critically and be conversant about what’s happening in the world of RI.

This is the first part in a two-part series on responsible investing (RI). Next: Appealing to millennials through RI.

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