Financial Advisors And Sustainable Investing – Forbes Advisor


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Ethical investing has always been around, but in recent years it’s become more defined and refined into ESG investing. Environmental, social and governance investors hope to improve the world around them while improving their own finances in the process.

While you can choose and purchase highly rated ESG funds on your own, working with a financial advisor can help you do it within an overall financial management strategy that works best for your goals.

5 Ways To Find a Financial Advisor Who Shares Your Values

Professional and credentialing organizations for financial professionals and sustainability initiatives often have online search tools you can use to find an advisor. We checked out the search functions from 12 of the top organizations to see which ones make it easiest to locate and learn more about financial advisors with sustainable investing expertise.

1. National Association of Personal Financial Advisors (NAPFA)

NAPFA offers a relatively efficient search tool for finding a sustainable investing advisor. You can search by location and filter your results by specialty. There is no filter for ESG investing specifically, but you can choose the specialty “socially responsible investments” as a proxy.

A limitation of using the NAPFA site is that it doesn’t include any explanations of what each advisor defines as socially responsible investing. It also only lists NAPFA members.

Being a NAPFA member is a good thing. Its advisors are fee-only fiduciaries, which means they’re required to put your interests above their own. But there are plenty of fee-only fiduciaries who aren’t NAPFA members, too.

2. XY Planning Network

XY Planning Network lets you search for advisors by location and apply numerous filters, one of which is SRI/ESG. If you end up with more SRI/ESG advisors than you know what to do with, try adding a second filter, such as women’s finance or holistic financial planning. If you end up with too few results, try searching in a different location, as many advisors will work with you remotely.

The advisor profiles at XYPN are engaging and give you a true sense of the advisor’s interests and personality. Advisors spell out who their ideal clients are and what fee options they offer, and the site provides direct links to each advisor’s regulatory profile.

Advisors listed in the directory have paid a fee to join XYPN, which offers technology, education and support to members in addition to the directory listing. All XYPN members are fee-only advisors, which means they don’t earn commissions for recommending specific investments.

3. CFP Board

You’ll find more than 3,000 financial advisors nationwide who say they offer socially responsible investing when you use the CFP search tool on the website for the Certified Financial Planner Board of Standards.

You can narrow these results by location and by choosing additional filters related to your characteristics, such as investable assets, and needs, such as comprehensive financial planning. You can also choose a client focus if you want someone who has a special interest in working with LGBTQ+ couples or young professionals, for example.

Some advisors seem to specialize in everything; be skeptical. These may be newer advisors hungry for clients, or they may be experienced advisors who really do have deep knowledge in many areas.

In the results list, you can click on “view details” to get the planner’s website address and contact information, see how long they’ve been a CFP, and see whether the CFP board has disciplined them. You’ll also learn what other professional designations they hold and, if you scroll far enough, you’ll find links to their background check pages with FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure databases.

4. Certified B Corp

A company must meet standards for governance, treatment of workers, environmental impact, customer stewardship and community engagement and impact to earn B Corp certification. In addition, the company must also apply for evaluation and pay an annual certification fee. Like many certifications, B Corp status is not without criticism, so you’ll want to make sure the firms that interest you meet your own standards.

If you’re interested in using a B Corp to help you meet your goals, use the Find a B Corp tool on bcorporation.net to search for “financial advisor,” “sustainable investing” or “sustainable investing financial advisor,” and you should find a few dozen firms there that might appeal to you. The search results provide a business overview, the firm’s web address and a breakdown of their B Corp score and how it compares to an ordinary, non-B-Corp business.

5. US|SIF (Sustainable Investment Forum)

The US|SIF’s website has a searchable directory where you can find a few dozen financial planners, advisors and brokers who have joined this professional organization.

The requirements for being listed in SIF’s directory appear to be self-attested sustainable and responsible investing activity and the payment of a membership fee that starts at $595 for solo advisors and goes as high as $27,500 for large firms with more than 8,000 advisors.

Many listings provide nothing more than the advisor’s contact information, with no details about their sustainable investing experience. And with so few listings, finding someone local may be a challenge.

Evaluating the Advisor’s Approach

The best way to evaluate how a prospective financial advisor approaches sustainable investing is to have a conversation with them.

I know, I know—some of us will do anything to avoid a phone call or video meeting. But your advisor is someone you’re going to need to be comfortable talking to, so interviewing them is a necessary step in the process. Here are some questions you may want to ask them.

1. What made you decide to offer sustainable investing services to your clients?

The advisor’s answer to this question should give you an idea of whether it’s a passion for them or just a way to reach more clients.

It doesn’t have to be a dealbreaker if they aren’t passionate about sustainable investing, as long as they know how to do it right—you don’t care if your plumber is passionate about unclogging drains, do you? Conversely, an advisor won’t necessarily be good at sustainable investing just because they’re excited about it.

Still, you should get some insights about what makes the advisor tick by asking this question. Other questions in a similar vein include:

  • How have you incorporated sustainable practices into your own business?
  • Which sustainability principles are most important to you and why?
  • How do you invest your own money?

2. Tell me how you would help me create and manage a portfolio of sustainable investments.

“Sustainable investing” doesn’t seem to have a consistent definition. Some people use it as a synonym for ESG investing or socially responsible investing, while others insist it’s a higher standard.

When you’re choosing an advisor, all that matters is that you’re on the same page about what you’re looking for in a sustainable investment portfolio. You might ask them whether they prefer negative or positive screens and why, as well as whether they use an active or passive approach.

3. Have you earned any credentials or completed any continuing education related to sustainable investing?

An advisor doesn’t need to have a specific credential to be good at sustainable investing. If you’re looking for signals of their interest and commitment, however, the Chartered SRI Counselor or CSRIC designation is one to be aware of. In this instance, SRI stands for “socially responsible investing.” However, note that CSRIC professionals are not required to be fiduciaries.

Credential holders have studied “the history, definitions, trends, portfolio construction principles, fiduciary responsibilities, and best practices for sustainable investing,” according to the College for Financial Planning, which awards the designation.

Don’t Forget the Basics

Before choosing your advisor, make sure they meet the criteria you would expect from any financial advisor. You don’t need to compromise on the advisor’s fundamental qualifications and track record to work with someone who can help you invest in line with your values.

Here’s a quick overview of the other qualities you’ll want to consider:

  • History. Use FINRA’s BrokerCheck and the SEC’s Investment Advisor Public Disclosure databases to see where your advisor has worked, whether they’ve been disciplined and what licenses and credentials they hold. Use the same sites to look up the firm they work for.
  • Qualifications. In addition to the advisor’s sustainable investing qualifications, you’ll want to know how long they’ve worked as an advisor and whether they’ve earned any widely known and respected credentials such as the certified financial planner designation.
  • Asset minimum. Many advisors require a certain net worth or amount of investable assets to accept someone as a client.
  • Fee structure. If you’re looking for ongoing advice, you can expect to pay a flat dollar amount or around 1% percent of your assets under management as the advisor’s annual fee. Some advisors will create a one-time plan or meet with you once or twice for a flat fee or hourly rate.
  • Fiduciary duty. Advisors who charge a fee for their services and don’t earn commissions for recommending specific investment or insurance products are called fiduciaries. They’re required to put your interests first.
  • Services. If you want services other than portfolio design and investment management, make sure the advisor offers these. For example, you might want help with budgeting, tax planning or a major life transition, like combining or disentangling your finances after a marriage or divorce.
  • Personality fit. Your advisor should be someone you feel comfortable being honest with and who listens well—not someone you feel intimidated or judged by.

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