Clients expect deep RI understanding: Kiwi Wealth

Investment advisers may need to have fewer, but deeper, relationships with product providers to better understand their responsible investment stance, Kiwi Wealth’s head of retail wealth says.

Monday, December 9th 2019, 6:00AM

A survey by the fund manager found that 89% of people expect their KiwiSaver funds to be invested responsibly.

Almost 80% would consider changing provider if the scheme they were in was not investing in a way that was consistent with their values.

Kiwi Wealth head of retail wealth Joe Bishop said advisers had an important role in the development of responsible investment in New Zealand.

He said a crucial part of their job was to understand how fund managers invested.

“If as an adviser you never want to be in a situation where an investor says why is my money invested in this terrible company or this area I don’t believe in … advisers need to understand their clients, their concerns and their wants and needs and that includes responsible investments.”

He said there was quite a bit of work involved for advisers in understanding what fund managers’ responsibility claims meant – and they couldn't rely on a fund's marketing.

“When it comes to responsible investment you can’t always go by the labels, you’ve got to dig a bit deeper. If you are an adviser who is putting clients into a fund that’s labelled responsible or ethical, is that enough or do you need to understand what the rules are within that fund?”

He said advisers would need to partner with fund managers and providers they knew were looking at products deeply, even at the stock level, so that they knew a responsible investment policy was being properly implemented, with proper governance.

They would sometimes be better to have fewer, deeper relationships to achieve that, he said.

“Do they know that the provider is looking at every security in that portfolio? That’s what any client would expect an adviser to do.”

Tags: ESG ethics kiwi wealth responsible investing