How to find a socially responsible financial advisor

These days, becoming an ESG investor has never been easier. With a growing number of financial products focusing on environmental, social and governance issues, many investors are unsure which one best suits their needs.

To help with this, some investors may consider financial advisers who can focus on ESG and provide investment ideas that closely follow the moral and financial goals of their clients.

For investors who want to go this route, here’s how to get started and some questions to ask future advisors.

What tools can help you find an ESG-focused financial advisor?

There are several free, searchable online databases that list financial advisors who themselves know they are ESG-focused. Keep in mind that what is listed in the directory does not guarantee the competence or investment power of the advisor. Due diligence on your end is always recommended.

  • The Certified Financial Planner Board of Standards Inc. database allows investors to filter “Socially Responsible Investing” to find nationally certified planners who provide these services.
  • In the College for Financial Planning database, investors can search for advisers by the name “Chartered ISR Counselor or CSRIC”.
  • Green America, a non-profit organization focused on issues such as climate and clean energy, sustainable food and responsible investing, has a list of financial planning and investment advisory firms. The advisors listed here are certified members of Green America’s Green Business Network or members of USSIF, an association for the sustainable investment industry. According to a spokesperson for Green America, rating advisers themselves report whether they have experience building fossil-fuel-free portfolios and have worked with clients to seek fossil-fuel-free investments. ..
  • The US SIF Membership List allows investors to perform a basic search under the “Financial Planners, Advisors, Brokers” category or to perform an advanced search to refine the list by city, state or zip code. to augment.
  • The XY Planning Network, an organization based on paid advisor members, has a portal to find advisors. Entering SRI / ESG as a keyword search will bring up a list of dozens of advisers who have identified this area of ​​expertise. To become a member of the XY Planning Network, Advisors must work with Gen X / Gen Y clients to some extent, operate only for a fee, and have a particularly good relationship with Finra, among other standards.

How to assess the ESG skills of an advisor?

First, use Finra’s BrokerCheck, the Securities and Exchange Commission’s public investment advisers website, and the CFP Board website to see if an advisor has a history of disciplinary action. Enter the first and last name of the advisor to review customer complaints, regulatory action, or other disciplinary action.

Once you find an advisor with a clear disciplinary background, you can ask them directly about your experience with sustainability or impact investing and how long that has been part of their practice, said the director of services at Morningstar research. Said Josh Charleson, Director of Selection. LLC, a subsidiary of Morningstar..

The advisor asks how many clients have created an ESG portfolio. “Ideally, you will be working with an advisor who has some experience in the field, and not just someone who has just stepped into the field,” explains Charleson.

NOT.Do you want to assess whether your advisor is in line with my objectives?

Start by asking your advisor about your approach to ESG, social responsibility and impact investing. If you are looking for a specific goal, such as an environmental investment or a specific impact goal, can your advisor answer it, or does your advisor only offer a few selected investment models that are not easily matched? customizable?

Share your thoughts

What do you think are the most important criteria when choosing a financial advisor? Join the conversation below.

“If you are more focused on impact investing, or don’t want tobacco or nuclear stocks, can your advisor customize your plans and portfolio to suit you?” Charson said.

Or if you want a more diversified portfolio focused on sustainability and impact investing, how do advisors get there?

It is also important to see how the advisor’s return on investment compares to the appropriate benchmark, whether the advisor recommends investing in a fund or in an individual stock.

What are some other ways to assess an advisor’s ESG expertise?

There are no guarantees, but financial advisors with a genuine interest and expertise in ESG and impact investing typically highlight it on their website and LinkedIn profile, says Michael Young, head of education program at USSIF.

“It’s a good place to start if they show publicly that they are doing it,” he says.

Young encourages you to ask questions about the network, affiliation, and designation of professionals involved in sustainable investing. For example, are the advisors members of Ceres, Green America, or US SIF, a sustainability-focused nonprofit? Do advisors address this topic at sustainable investing and other investor meetings?

In 2018, the University of Financial Planning began offering accreditation for socially responsible investing, a program appointed by an SRI advisor. It’s a relatively new designation, but Young says it could be another sign of interest and continued commitment to this area.

Winokur Munk is a writer in West Orange, NJ. His contact details are [email protected]

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