Many advisors are missing opportunities to grow their businesses because they’re not talking with clients and prospects about socially responsible investing, says Eugene Ellmen, executive director of the Toronto-based Social Investment Organization.

It’s rare, Ellmen says, for an advisor to ask clients and prospects: Do you know about socially responsible investments? Have you heard about them? Are you interested in learning more?

Here are four common misconceptions that may be keeping you from incorporating socially responsible investing into your business:

1. You have to change your entire business
Including SRI in your business can be a gradual process, says Ellmen. You don’t have to jump in with both feet or discard your current investment product shelf.

You simply need to talk to each of your clients to find out what they want to do, he says. Each client is unique and will have a different level of interest in SRI.

Some clients will be more concerned about their bottom lines than corporate responsibility, says Ellmen. If so, then you may decide to have only a certain percentage of your book dedicated to SRI.

Even if you decide to completely change your clientele, you can do so gradually, referring clients to other advisors as you develop an SRI niche.

2. SRI is only for hippies
Be careful not to make assumptions about the type of client who is interested in SRI.

Don’t assume that SRI is only for aging hippies who don’t want to buy tobacco stocks, says Sucheta Rajagopal, an investment advisor and associate portfolio manager with Hampton Securities Ltd. in Toronto.

Many professionals and retirees are concerned about environmental and social issues and would reflect those concerns in their portfolios if given the chance.

“This is a huge and growing area,” Rajagopal says, “that has a place in every advisor’s practice.”

Incorporating SRI in your practice is a matter of sorting through what matters to you and your clients and deciding how you will integrate that into your business.

3. SRI means lower returns
Just because you’re making a socially conscious investment doesn’t mean you are making a smaller return.

“The biggest misconception is that you’re going to sacrifice returns,” says Richard Nickerson, an advisor with Assante Capital Management Ltd. in Halifax, “which absolutely is not true.”

The Jantzi Social Index (JSI), an index of 60 Canadian companies selected on social responsibility criteria created by Jantzi Research Inc., has slightly outperformed its conventional benchmark, the S&P/TSX 60, according to the SIO (www.socialinvestment.ca).

In March 2011, for example, the JSI reported an annual rate of return since inception (Jan. 2000) of 6.78% while the TSX 60 had a performance of 6.67% over the same period.

4. If you’ve read one report, you’ve read them all
Keep reading and researching about socially responsible investing to stay on top of the issues.

SRI is an area of financial services that is constantly changing, says Rajagopal, so it’s important to stay on top of new developments and trends.

Subscribe to SRI-focused publications, join local socially conscious groups or become a member of organizations such as the Social Investment Organization.

IE