Sustainable Investments | Six Steps for IFA’s to Succeed written By George Critchley Senior Partner

Having been through this process, I am aware of the hurdles that IFA’s face when launching themselves into the sustainable investments market. Here is a step by step guide to meeting your clients ever changing needs.

Step 1 – CONQUER THE JARGON

As the sustainable market has evolved, there is an amazing number of headings created to describe such investments. For example, green, environmental, sustainable, ethical, ESG, and impact. What is the circular economy and what is “greenwashing” all about.?

The new IFA needs to do some background reading to get their heads around all of this. It’s not that difficult once you put your mind to it.

Step 2 – READ THE RESEARCH COMPARING PERFORMANCE

It’s quite common for IFA’s to intuitively believe that sustainable investment performance must be worse than the equivalent traditional. It’s certainly true that the investment universe is smaller. However, many studies in varying markets and over many years show this is not the case. There is no proof that sustainable investments outperform, or that traditional investments outperform. Research by the Royal Bank of Canada would be a good place to start.

As many sustainable investments are based on new technologies, good corporate governance, and solving modern problems, there is an argument that in the future they may outperform.

STEP 3 – UTILISE THE PENNINE WEALTH SOLUTIONS CLIENT SURVEY

We developed a survey IFA’s can use with their own clients. Results have been startling. This survey can be downloaded here It’s FREE OF CHARGE.

In 2017 we invited 3 experienced IFA’s to utilise this survey. This is a brief review of the survey and results: –

  • 167 clients surveyed with 72 responding (43.1%)
  • age range 33-81 with the average being 60.8 years.
  • 40 males and 32 females make up the 72 responders.
  • the survey has just 9 questions.
  • a survey sent by letter is much the best way.

Conclusions from the survey

  • the survey works, more IFA’s should use it.
  • the IFA’s were surprised at the results.
  • the IFA’s booked many client meetings on the back of the survey.
  • the response rate is high at 43.1%. The subject is emotive to investors.
  • investors really are concerned about ESG issues.
  • 54 of the 72 responders wanted to invest positively in future, and many NOW.
  • if only 3% of onwards invested monies are in ESG investments, there is a blockage somewhere.
  • majority of IFA’s are behind the curve,
  • IFA’s are a part of the blockage!

Step 4 – RESEARCH TO SUPPORT YOUR RECOMMENDATION

We use the 3D ratings and research to put portfolios together. John Fleetwood is the chap behind 3D. John has made it his life’s work to dig behind the scenes. We soon learnt that many retail investment funds were trying to claim their funds were much better than they actually were. I remember 1 fund with the word ethical in its name that had only 6% of underlying ethical investments!

3D have a 1 to 5 star rating system. This rating comes after all that funds underlying investments have been analysed.

ESG focuses on a funds environmental, social and good corporate governance attributes. IMPACT looks at whether an investments main objective is to satisfy one of the 17 United Nations Sustainable Development Goals.

The Positive Pennine Portfolios are rated for both the above factors and the data is part of the monthly fact sheets. An investor can quantify both financial performance and ESG and Impact performance.

Step 5 – UNDERSTAND IMPACT v ESG

True Impact Investments are where the major objective of the firm/investment is to achieve 1 of the UN Sustainable Development Goals. For example, one of these is Good Health and Well-Being. So, a research firm that is developing new bio technologies could be said to have an impact.

Firms/Investments with strong ESG may trade in non-impact industries. Their major purpose, for example, could be to sell cosmetics or fashion. However, they do this always with an eye on their footprint.

Step 6 – ALTER YOUR FACT FIND

The IFA should add several additional questions to their regular fact find. You can decide what these are for yourself, but make them second nature.

Opening questions such as

  • “Would you like your money to help make the world a better place for future generations?”
  • “Did you know you could do this whilst still meeting your current and future financial needs?”
  • “Would you like to understand how your money is invested?”
  • “Would you like to know the positive and negative impacts of your investments?”

Here are some examples of questions that you might find an Investor asking their IFA.

  • “Is it a realistic to expect an investment to achieve my financial goals, and at the same time make a sustainable contribution to our society?”
  • “Is it possible for my investment to make a difference to future generations to ensure they can enjoy a healthy environment?”
  • “How do I know my money is being invested in line with my values?”

IFA’s my message is that YOU really can make a difference to our world, and make your business stronger at the same time. It’s easier than you think.

If you are a Financial Adviser and would like more information about Positive Pennine, please contact Sean Fisher on 07583 241668 or e-mail


These investments are only accessed via accredited Financial Advisers.

Investors should remember that the value of investments, and the income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee of future results. Any mention of specific security should not be interpreted as a solicitation to buy or sell specific security.