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Ethical choice and treating customers fairly

How interesting to read Chris Salih’s recent article entitled, Green piece, in Money Marketing.

The content was primarily negative, talking about how an ethically screened universe of shares, removing many of the large caps, must lead to long-term underperformance.

I think informed opinion now recognises there is little or no difference in long-term performance but can I say that really this piece misses the point entirely.

It is for the customer to decide whether they want an ethically screened investment.

It is for the adviser to give the customer a satisfactory level of comprehension (financial capability) where the customer is able to decide whether they are prepared to accept any perceived potential investment underperformance (or outperformance going by 2006) or not.

Do financial advisers do this? Or do they shy away from this whole area and instead tell the customer they don’t sell ethically screened investments, because they are not on their panel, etc, etc.

How does that stack up with treating customers fairly?

So let us go back to the results from the F&C survey. Out of 2,193 people interviewed, 87 per cent said companies should be taking social, ethical and environmental issues seriously.

Let us assume that is a hugely inflated figure and really of those interviewed, only half will put their money where their mouth is. That is still a massive 43 per cent.

How many financial advisers routinely ask their clients if they want social, ethical and environmental issues taken into account, and then arrange ethical investments in all cases where a positive response is received?

My guess would be 1 per cent or less.

So I say again, how does that stack up with treating customers fairly? Not to mention you are missing an awesome new business opportunity dealing with all of that “unmet demand”.

Dr RW Keyte
Director and chartered financial planner
Towers of Taunton (Financial Services),
Taunton, Somerset


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