Louise Edkins, Director at Ethical Investment Advisers

Ethical Investment Advisers (EIA) is a financial advisory firm that pioneered ethical investment in Australia. Operating for over 10 years, it continues to innovate and create ethical investment solutions. RIAA spoke to director Louise Edkins about the firm’s rich history and where she sees the future of ethical financial advice heading.

With 17 years behind you, Ethical Investment Advisers continues to be one of the pioneering firms behind ethical investment advice. What are some of the major changes that have occurred in the ethical advice space since 2004, and what are the trends in 2021?

Some advisers in our group have been providing ethical investment advice since 1993. We have seen lots of changes. The power of the investor consumer in influencing financial planners to provide ethical investment advice is the great news story in recent times. Over the years our clients have become more emboldened by the great performance and increasing investment choice. Investors have increasingly become more focused on positive planet solutions and social impact rather than ESG or only negatively screened choices.

EIA has seen significant growth in its adviser network over the years. How has this helped build the company’s expertise?

We are regularly consulted by fund managers to provide feedback when they are creating and issuing investment products. This has included tightening screens and influencing providers to divest or engage with companies. It is rewarding that fund managers change their screening and investments based on our advice. This type of engagement with fund managers is having a beneficial impact on the product choices investors have. Our advisers and clients feel that we are making a difference. Our advisers mentor other financial planners, promote Ethical Investment Week in the community, speak at professional events to educate financial planners and the community. We continue to build on our credentials as a group of collaborative advisers, most with over 10 years as ethical advisers specialists across Australia.

Ethical Investment Advisers’ funds management arm has a fund certified under RIAA’s Responsible Investment Certification Program. Tell us about some of the unique features of this fund.

We run four ethically screened separately managed accounts (SMAs) under our funds management brand Ethical Advisers Funds Management. The Ethical Investment Mid Cap is certified by RIAA and was the first purely fossil fuel free Australian share fund, which we created because clients did not want to invest in major banks that lent to fossil fuel exploration and generation. This fund has returned 8.77%pa since inception (May 2015), beating the All Ordinaries Accumulation index 7.92%pa over the same time fame.

We are increasingly seeing financial planners confused by the jargon and spin on responsible investment product and created the Ethical Investment Growth SMA and Ethical Investment Income SMA as Lonsec rated Fund of Funds product offering that will suit any client risk profile. As pioneer advisers with expertise in ethical investment in Australia, we are uniquely placed to understand what the ethical investor wants. We have curated the ‘best ideas’ in ethical investment funds so that a financial planner can be confident they have the best screened and blended thematic investments that will reflect their clients’ ethics.

FASEA’s Code of Ethics has been a major advancement for the advice industry. What are your views on how the Code is changing advice in Australia? Are you seeing a tangible effect?

Knowing your client and best interest duty is about incorporating client’s personal values. Digging deeper within the client relationship provides holistic advice and real connection with clients. Talking abut values is a personal deeper level of engagement. The adviser-client relationship can only benefit from this process. Investors want to reflect their personal values as investors, not just as consumers. Investors see their financial actions as impactful and feel a responsibility as part of the community. Financial planners should consider this holistic viewpoint in their client discussions as well as on a personal level. We are gratified to see more of this occurring and more advisers making the shift.

What topics and issues do you think clients will be asking their advisers more and more about in the coming years?

Increasingly clients are demanding more and more accountability and transparency in the stocks they hold and the super funds they invest in. Shareholder activism will continue, especially as it becomes clearer that the financial risks and implications of climate change adversely affect investments. ESG will be standard funds management and positively screened impact investment will be what the investor demands. Closed loop environmental business practice and positive social outcomes will be what the investor aims to see in the investments they make.