Religion. Sexuality. Morals. Scruples. These things and more are all topics that can come up when talking with clients about what they would, or would not, like to invest in. This is according to financial planner Gretchen Betts, managing director of Bridgend-based Magenta Financial Planning.
‘I find it fascinating what can raise a red flag for clients when you delve deeper into conversations,’ she says.
This is particularly true when it comes to sustainable investing, which Betts outsources in part to specialist discretionary fund manager (DFM) Rathbone Greenbank.
‘I’ve used Rathbone Greenbank for many years,’ she says. Its business model is ‘very much a traditional DFM’, meaning paperwork and wet signatures, ‘which can be frustrating’.
‘But its skill, knowledge and due diligence around ethical and positive impact investing, and its ability to design bespoke portfolios for clients, means we can be confident we will find a solution for our ethically minded clients, no matter how complex and intricate their needs may be.’
One way in which Rathbone Greenbank differs from a traditional DFM is advisers’ clients must complete ‘a very comprehensive ethical questionnaire’ on top of the risk profile questionnaire the planners put them through, says Rathbone Greenbank head of investments John David.
David says investment areas of interest for the DFM at the moment are renewable energy infrastructure and electric vehicle technology.
‘We have found infrastructure funds investing in operational wind and solar assets to be really defensive in periods of growth and volatility. They generate a fairly high and sustained income that is linked to inflation,’ he says.
‘In electric vehicle technology, we are more interested in manufacturers of component parts rather than individual car manufacturers.’
David also notes interest in ethical investing has increased among advisers and their clients across the age spectrum. ‘There is a lot written about interest from millennials, which I think is very true, but some of my clients who have been doing this for more than a decade are well into their 80s.’
Another adviser who has used the DFM is Ed Gibson (pictured above), head of financial services at Oxford-based Shaw Gibbs.
‘It was in a beauty parade for one client who felt it managed to get the balance right between having processes and structures to its investment approach, and being able to properly understand and meet his quite specific ethical requirements,’ Gibson says.
‘It actually sat very nicely in between the two others, one of whom was very corporate but didn’t convince on the ethical side. The other was very focused on the ethical but seemed far too dependent on the individual manager with little show of process and structure.’