Advisers have 'obligation' to discuss ethics

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Financial advisers who do not discuss attitudes to responsible investing with their clients may not be living up to the requirements of the Code of Conduct, a conference in Auckland was told his week.

Thursday, November 27th 2014, 6:00AM 1 Comment

by Susan Edmunds

Matthew Mimms, director of The Investment Store, opened the 2014 New Zealand Responsible Investment Briefing, the fifth time the event has been held.

Mimms told Good Returns he thought the Code of Professional Conduct for AFAs provisions relating to advisers’ knowledge of their clients and the appropriateness of their advice called for a direct discussion with clients about their view on investment approaches.

“If you know your client properly you will know about their preferences in terms of responsible investing. At the first conference four years ago [FMA principal adviser, licensing] Mel Hewitson said that and I still think it’s relevant.”

Mimms said it was something that had to be raised with clients because most would not inquire about it unprompted. “If you ask them what they’re looking for, they’ll talk about things like returns but if you ask their views about the ethical perspective, it opens up a different sort of debate.”

RIAA’s latest report shows the amount of assets managed responsibly in New Zealand has increased from $17 billion to $27 billion, about 40% of which is due to the NZ Super Fund. A small number of KiwiSaver funds also have responsible mandates.

Mimms said: “KiwiSaver is the main point of growth for managed funds in New Zealand but the number of specific KiwiSaver funds managed responsible is very small.”

If that increased, the resulting awareness might prompt clients to inquire about responsible investment in their other investing, he said.

Mimms said interest in responsible investment was not high among advisers but it could serve as a useful point of difference. “Very few people are focusing on responsible investing, there is an opportunity there.”

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