Knowledge gap a challenge for advice sector

Much of the financial advice world still lacks the specialist knowledge required to meet investors’ expectations for advising them on ethical and responsible investment choices, according to the latest survey by Mindful Money and the Responsible Investment Association Australasia.

The report, Voices of Aotearoa: Demand for Ethical Investment in New Zealand 2025, released Monday, shows how financial advisers are playing an increasingly important role in values-based investing, with a 3% year on year increase in investors choosing funds based on their financial adviser’s advice.

In total, 54% have sought advice from their adviser while 10% have had help from their financial planner, but only 12% are seeking advice regularly.

“The reasons for seeking financial advice were cited as needing specialist advice from a professional, taking up a mortgage, putting money aside for children or grandchildren, in response to a life-changing event and for ethical/sustainable options,” says the report.

“There was an increase in the number of people doing so on the recommendation of friends or family.”

Topping the list of investors’ expectations of financial advisers is maximising returns, but the survey finds they are also expected to be knowledgeable about ethical and responsible investment options.

“The emphasis on returns may reflect financial pressures from cost of living increase and greater uncertainty over the future,” says the report.

“There are still relatively few New Zealand financial advisers with expertise in ethical and responsible investment, so there are challenges for the sector as a whole to ensure that advice processes include questions on ethical and responsible investing and analysis of the options available.”

The survey captured data from 1,000 New Zealanders in February this year and shows a majority of investors, 75%, expect KiwiSaver and other managed fund providers to invest their funds ethically and responsibly. The pipeline for ethical investment indicates continued interest from investors with close to half of survey respondents considering changing to ethical funds within the next five years.

“New Zealanders continue to want their investments to avoid harm and contribute to addressing real-world challenges such as climate change, biodiversity loss and harm to people,” says Barry Coates, co-chief executive of Mindful Money.

“They not only want to avoid harm, but they are also seeking investments that deliver positive outcomes for society and the environment.”

The survey suggests younger investors and women are more likely to consider switching funds if a company’s activities are out of sync with their values, while baby boomers are more reluctant to make a change.

“Kiwis want confidence that their money is creating a positive impact, with over half more likely to choose ethical or responsible funds that have independent certification,” says RIAA co-chief executive Dean Hegarty.

“This presents a significant opportunity for investment providers who can authentically demonstrate how they're contributing to positive social and environmental outcomes."

The number of people choosing a KiwiSaver scheme based on who they bank with has steadily declined since 2018, with fewer KiwiSaver members entering into default funds or employee schemes and growing numbers making a choice based on sustainability and ethics, according to the report.

Comments from our readers

On 8 April 2025 at 12:06 pm Murray D Weatherston said:

Question
Is it investors' unprompted expectations or MM's and RIAA's view of what investors' expectations should be?
Based on my career experiences with clients, I expect there is a big difference between the two.

On 9 April 2025 at 9:25 am John Milner said:

Quoting Charlie Munger “Show me the incentive, and I'll show you the outcome” comes to mind with this report. I suspect no matter what questions were asked of the public, all answers would somehow lead to ethical investing.

The statement that really brought it home for me was “The emphasis on returns may reflect financial pressures from cost of living increase and greater uncertainty over the future,” says the report. Either the writer of the report is divorced from reality or was bathing in self-indulgence at the time. I'll leave you to decide.

It reminds me of my frustration with Morningstar's reports on their Direct platform. For me to get to meaningful research on funds, I first have to wade through how ethical the fund is. I can tell you now, as an adviser of 37 years working with investors, it's not the first thing that is top of mind. In fact, it's not there at all for anyone I work with. But it is the headline of the reports.

For the advisers I come across who specialise in this area, it's their passion, and I genuinely admire that. But it concerns me that some go out of their way to avoid the inevitable question of returns. I know this because they have told me so. Although it is only one thing of many to discuss with clients, returns are the very thing that will make the difference between achieving their goals or living on tofu.

On 11 April 2025 at 4:20 pm w k said:

Murray, I've yet to meet one client or prospect who ask / talk about "ethical" investment.

The three categories of people I meet:
1. Unsure what funds to invest in.
2. The risks.
3. Want to know the returns.

It's not difficult to explain how the returns on their investment will affect their retirement plan. Even the least investment savvy client could understand in 10 min.

Knowledge gap a challenge for advice sector

Much of the financial advice world still lacks the specialist knowledge required to meet investors’ expectations for advising them on ethical and responsible investment choices, according to the latest survey by Mindful Money and the Responsible Investment Association Australasia.

Tuesday, April 8th 2025, 7:56AM 3 Comments

Comments from our readers

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