Challenge responsible investing assumptions

Advisers need to challenge some of their own assumptions about responsible investing before it will become mainstream, an advocate says.

Tuesday, November 5th 2013, 5:58PM

by Susan Edmunds

Rodger Spiller, of Money Max, has been promoting responsible investment for many years. He said there were now enough responsibly-invested and managed funds that clients who wanted to adopt the approach would not find it difficult.

But galvanising people to care was another matter. “We need passionate advisers who care about it and want to see it happen.”

He is speaking at this week’s Annual Responsible Investment Briefing in Auckland.

There was increasing interest in responsible investing, but changing investor behaviour was another matter, he said.

“One of the reasons they don’t is that they have big assumptions.”

Those assumptions were things such as that they would not be able to make a difference as an individual, that they would not be able to make money and make a difference, that their investments were already responsibly managed and that responsible investment strategies were none of their business.

“Advisers need to look at their own assumptions and then help clients deal with their assumptions.”

Asking clients about their investment values should be part of the initial exploratory process in which advisers ask clients about their attitudes to money, he said. “In Australia, it’s required as part of best practice. My sense is that most advisers don’t. We need people to explore the question of values.”

Spiller said studies had proved that responsible investments need not perform poorly compared to traditional options.

The RIAA Benchmarking Report found that that five-year returns had been stronger in all core Australian responsible fund categories compared with the benchmark and average mainstream funds and that those funds delivered better returns than the benchmark and the average of all mainstream funds in all but one category across one-year, three-year, five-year and 10-year time periods.

“That demonstrates that you can do well and do good. It’s something that’s a growing force.”

He said the United Nations’ principles for responsible investment showed it could be expected to reduce risk and increase return.

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