SRI In Your Practice. Kim Buitenhuis, SVP Product & Marketing NEI Investments June 2013

Transcription

1 SRI In Your Practice Kim Buitenhuis, SVP Product & Marketing NEI Investments June

2 5 Steps to Getting Started 1. Decide how SRI you want your practice to be 2. Create your SRI product shelf 3. Introduce to clients and prospects 4. Implement portfolio modifications over time 5. Communicate! 2

3 1. How SRI will my practice be Total Assets No SRI at all Proportion of SRI assets based on: Min/max target level per portfolio Particular asset classes Particular client segments 100% SRI 3

4 Investor Goals Ideal Portfolio What proportion of your portfolio should be made up of socially responsible investments? None 10% Less than 10% 16% 10% - 24% 25% - 49% 50% - 74% 5% 14% 22% 26% 75% - 99% 7% 100% Ethical Funds SRI Investor Research,

5 2. Create your SRI product shelf Sample checklist Do the mutual funds have: A comprehensive and transparent evaluation process? An in-house ESG Team? A corporate engagement program? Is there a publicly available list of companies engaged? Published ESG proxy voting guidelines? Public disclosure of voting results? Public disclosure of ESG Program results? Does the company: Make public policy submissions? Conduct in-depth industry and sector research? Produce a CSR Report for the firm? Disclose its code of ethics for SRI? 5

6 2. Create your SRI product shelf Sample worksheet Existing funds in my book that I am looking to replace with SRI alternatives: Fund Name Canadian Equity XXX Fund YYY Fund Small Cap XXX Fund YYY Fund Global/EM Equity XXX Fund YYY Fund Current Assets $ $ $ $ $ $ SRI Replacement NEI Ethical Canadian Dividend Fund NEI Ethical Special Equity NEI Ethical Global Dividend Fund Portfolios/Funds of Funds XXX Portfolios $ NEI Ethical Select Portfolios 6

7 3. Introduce SRI to clients/prospects Identify potential clients for transition: 1. Clients for whom portfolio changes are warranted For regular rebalancing To correct performance issues Due to a change in risk profile, time horizon or other KYC issues 2. Clients who have expressed interest in SRI 3. New clients 7

8 Don t just focus on women! Likely to consider SRI if recommended by advisor Men 75% Men and women equally as likely to consider SRI Women 77% 0% 20% 40% 60% 80% 100% Ethical Funds SRI Investor Research,

9 Those likely to invest in SRI Assets $ K Children <18 Under 40 BC All 80% 81% 84% 84% 76% 60% 70% 80% 90% 100% Ethical Funds SRI Investor Research,

10 3. Introduce SRI to Clients/Prospects A. Articulate your value proposition B. Develop a communications plan Existing Clients Mail or announcements One-on-one conversations at annual portfolio review Clients & Prospects Lunch and learn sessions Newsletters Web sites Brochures Events 10

11 3. Sample Value Propositions Mission-based Education Personal Biography Our mission is to build a successful, unique, and values-based financial planning practice, where we help our clients build wealth and make a positive difference in their financial lives and their community. As citizens of the local community and the world, we believe in ethical investing that supports and promotes sound environmental, labour, and social practices. Sound long-term financial planning should be about giving back to our local and global communities, as well as growing our personal wealth. Socially Responsible Investment (SRI) involves the inclusion of ESG considerations into the management and selection of portfolio investments. SRI strategies could involve positive and negative screening promotion of community investment, socially responsible lending along with many other factors. The X Team tries to integrate SRI objectives into client financial and investment plans on a case by case basis, in a manner which is consistent with each client s goals and values while also assisting them to identify opportunities that are profitable and sustainable in the long term. I have an enthusiastic interest in helping clients achieve their financial and social goals through an investment strategy focused on socially responsible investments. I have found a growing interest among my clients for investments that protect the environment, promote human rights, respect the dignity and value of all people, are community minded, and that have responsible management practices. XXX started her practice in 19xx and focuses on both retirement assets and responsible strategies with a particular emphasis on Environmental, Social and Corporate Governance (ESG) investing. XXX manages portfolios for high net worth individuals and foundations using a financial planning and asset allocation approach to focus on the needs of the client or organization. XXX is committed to increasing exposure for ESG as a risk management tool and for identifying performance advantages. Samples from advisor public websites 11

12 3. Introduce SRI to Clients Watch your language! Some investment companies evaluate a potential investment by specifically considering the environmental and social impact of their business and how they are managed and run in addition to just looking at the usual financial data. As far as you know this kind of investing is called: Ethical Investing Socially Responsible Investing Environmental, Social and Governance (ESG) Investing Responsible Investing 20% 19% 19% 13% Implications for Advisors: Be sure your clients and prospects know what you re talking about! Define your terms Don't know 29% Ethical Funds SRI Investor Research,

13 4. Implement portfolio changes over time 13

14 5. Ongoing Communication Include some reference to SRI issues or updates in regular communication to clients: newsletters, web updates Consider lunch and learn or client appreciation events that focus on SRI issues Clients want to know how their money is making an impact Focus on outcomes/stories NOT on process 14

15 5. Ongoing Communication - Examples Quarterly Electronic Newsletter Success Stories - handouts 15

16 5. Ongoing Communication Sample - web An investor website to support SRI discussions with clients and prospects 16

17 5. Ongoing Communication Social Media 17

18 Resources for Your Practice Social Investment Organization (SIO) Responsible Investor Principles for Responsible Investing (PRI) Ethical Funds Investor Site NEI Investments (advisor site) 18

19 Ethical Funds 19

20 Ethical Funds Balanced Funds NEI Ethical Balanced Fund Equity Funds NEI Ethical Canadian Equity Fund (formerly NEI Ethical Canadian Dividend Fund) NEI Ethical Special Equity Fund NEI Ethical American Multi Strategy Fund NEI Ethical Global Dividend Fund NEI Ethical Global Equity Fund NEI Ethical International Equity Fund Select Portfolios NEI Ethical Select Income Portfolio NEI Ethical Select Conservative Portfolio NEI Ethical Select Balanced Portfolio (formerly NEI Ethical Select Canadian Balanced Portfolio) NEI Ethical Select Growth Portfolio (formerly NEI Ethical Select Canadian Growth Portfolio) 20

21 Ethical Funds NEI Ethical Canadian Dividend Fund Morningstar Category Quartile Rating 1 Yr 3 Yr 5 Yr 10 Yr * * * * * NEI Ethical Special Equity Fund Morningstar Category Quartile Rating 1 Yr 3 Yr 5 Yr 10 Yr * * * * NEI Ethical Global Dividend Fund Morningstar Category Quartile Rating 1 Yr 3 Yr 5 Yr 10 Yr * * * * n/a Source: Morningstar Series A, as at May 31,

22 For more information about Ethical Funds and other investment solutions available from NEI, contact your NEI Investments sales representative at The information and opinions in this report were prepared by NEI Investments for internal and professional Advisor use only. NEI Investments endeavors to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, NEI Investments makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein. Mutual funds are sold by prospectus only through registered dealers. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Northwest Funds, Ethical Funds and NEI Investments are registered marks and trademarks owned by Northwest & Ethical Investments L.P. 22