Many people choose to use a financial planner for choosing and managing their financial portfolio, especially where investments are concerned. This is even more true for ethical investments given the additional effort and knowledge needed to thoroughly research companies during the screening process to assess their suitability and make sure that they match your ethical criteria. Going down the DIY route can be daunting, particularly if you are not experienced with investments.
Finding a Financial Planner
Firstly, you need to make sure that you will be working with a qualified financial planner. This may sound obvious but it is not always necessary for financial planners to have prior credentials before establishing themselves so you could find yourself dealing with an unqualified financial planner if you do not do your homework. Look for the CFP mark to verify that they are a Certified Financial Planner (CFP).
Some financial planners earn commission by selling particular financial products to you. This can mean that they are somewhat biased in terms of the advice that they offer. Many financial planners just earn a flat fee for their services, which may come in the form of an annual fee from the products that they manage for you. However, this is not without potential problems either as their advice can be influenced by the fee from your portfolio.
Finding an Ethical Financial Planner
Not all financial planners have sufficient knowledge about ethical financial products so as well as finding one that is certified, you will also want to choose one that specializes in ethical finance. Here are some things to think about when you are looking for an ethical financial planner.
1) Where to find them. Knowing where to find financial planners who specialize in ethical finance can be challenging if you are not sure where to look. There are a couple of options that you can try. Firstly, you can take the route of finding financial planners in your area and using the steps in the next section to assess their ethical credentials. If you are not sure whether a particular financial planner is certified, you can search for CFPs on the CFP website. Alternatively, you can search directly for ethical financial planners.
In the US: You can search for socially responsible financial advisors through the Forum of Sustainable and Responsible Investment (formerly the Social Investment Forum) and the Financial Planning Association. Social Funds allows you to search for socially responsible financial planners in your state.
In Canada: The Social Investment Organization allows you to search for socially responsible financial advisors by province.
2) Check their ‘green’ credentials. Once you have drawn up a list of potential candidates, be sure to assess their suitability in more depth. Any financial planner can claim ‘green’ or ethical finance knowledge without necessarily being an expert in the field or specializing in it. With this in mind, you will want to check exactly how extensively they know the topic. Some questions to ask include:
- How much of your business involves ethical investment? Is it a significant part of your work or just an add-on?
- Do you have any relevant qualifications to position you as an expert in ethical finance?
Summing Things Up
If you feel that you need some guidance in choosing the right ethical financial products, a financial planner can help you to select ethical funds that match your criteria and manage them for you. As far as ethical products are concerned though, not all financial planners are equal. Many financial planners are marketing themselves as having ‘green’ credentials but this does not automatically mean that they have enough knowledge of ethical finance to provide the guidance that you are looking for so don’t just take their word for it – go ahead and delve a bit deeper to see how much expertise they actually have.
So, are you an ethical investor? If so, have you used a financial planner? Were they helpful?