How to Find a Socially Responsible Financial Advisor

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It’s not easy to be an ESG investor these days. Financial products that focus on environmental, social and governance issues have multiplied, leaving many investors unaware of which products best suit their needs.

Some investors may consider financial advisors who can focus on ESG and offer investment ideas that closely follow their clients’ moral and financial goals.

For investors looking to take this route, here are how to get started, as well as some questions to ask potential advisors.

What tools can help me find an ESG-focused financial advisor?

There are several free, searchable online databases listing financial advisors who consider themselves an ESG focus. Just keep in mind that inclusion on a directory is not an endorsement of a consultant’s skills or assets. Due diligence on your part is still recommended.

  • In the database of the Certified Financial Planner Board of Standards Inc., investors can filter by “socially responsible investing” to find nationally certified planners who offer these services.
  • In the College for Financial Planning database, investors can search for advisors under the name “Chartered SRI Counselor or CSRIC”.
  • Green America, a non-profit alliance focused on issues such as climate and clean energy, sustainable food, and responsible investment, has a list of financial planning and investment advisory firms. The consultants listed here are certified members of Green America’s Green Business Network or members of the US SIF, a trading group for sustainable investment companies. According to a Green America spokesperson, publicly traded consultants themselves state whether they have experience creating portfolios that are fossil-free and whether they have worked with clients to pursue fossil-free investments.
  • In the US SIF membership directory, investors can do a simple search under the Financial Planners, Advisers and Brokers category or an advanced search to narrow the list by city, state or zip code.
  • XY Planning Network, a member-based organization of fee-only consultants, has a find-an-adviser portal. If you enter SRI / ESG as a keyword search, a list of several dozen consultants who identify as such with this specialty will be displayed. In order to become a member of XY Planning Network, consultants have to work with clients of Generation X / Gen Y in some form, work only on a fee basis and have a good reputation at Finra.

How do I rate the consultant’s ESG skills?

First, verify an advisor has a disciplinary history using Finra’s BrokerCheck, the U.S. Securities and Exchange Commission investment advisor public disclosure website, and the CFP Board of Directors website. Enter the consultant’s first and last name to check for customer complaints, government action, or other disciplinary action.

After you find a consultant with a clean disciplinary history, you may ask them directly about their experience with sustainable or impact investing and how long it has been part of their practice, says Josh Charlson, director of manager selection at Morningstar Research Services LLC, a Morningstar Inc.

Ask how many clients the advisor has created ESG focused portfolios for. “Ideally, you will be working with a consultant who is experienced in the field rather than someone who has just gotten on board,” says Charlson.

How do I judge if a consultant is focused on my goals?

Start by asking the advisor about their approach to ESG, socially responsible, and impact investing. If you are looking for a specific focus – such as environmental investments or a specific impact target – can the advisor take this into account or does the advisor only offer a few selected investment models that are not easily adaptable?

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“If you’re someone who is more focused on impact investing, for example, or who doesn’t want tobacco or nuclear stocks, is the advisor able to tailor the plan or portfolio to suit your preferences?” Mr Charlesson says.

Or, if you are interested in a more diversified portfolio with an emphasis on sustainability and impact investing, how would the advisor achieve that?

Regardless of whether the advisor recommends investing in funds or individual stocks, it is also important to see how his investment return compares to corresponding benchmarks.

What other ways are there to assess a consultant’s ESG expertise?

While this is not a guarantee, financial advisors with real interest and expertise in ESG and impact investing will usually highlight this on their websites and LinkedIn profiles, says Michael Young, manager of education programs at US SIF.

“If you present yourself in public, that’s a good place to start,” he says.

Mr. Young recommends asking them about their professional networks, affiliations, and titles related to sustainable investing. For example, is the consultant a member of Ceres, a non-profit organization with a focus on sustainability, Green America or US SIF? Does the advisor speak on the topic at sustainable investments or other investor conferences?

The College for Financial Planning began its Socially Responsible Investing Certification, its SRI advisor designation program, in 2018. It’s a relatively new name, but Mr. Young says it can be another signal of interest and continued commitment in the area.

Ms. Winokur Munk is a writer based in West Orange, NJ. She can be reached at [email protected]

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