Taking Action Preparing for a meeting with your financial adviser

This section is designed to help you navigate the intricacies of investing for your retirement, your children’s education or your future projects, while remaining consistent with your social and environmental values.

The investment market is configured to help you retain your savings and make money. The advice below will help you ensure that proper account is being made of your individual values and that you are being taken seriously. If we are expounding at length on financial advisers, it is because the vast majority of new investors use an adviser when investing. Advisers must balance your tolerance for risk against your expectations of returns, bear in the mind the amount that you have to invest and proceed in accordance with the rules and regulations governing their professional licence(s).

However, their training does not necessarily make allowance for ethical considerations. It is therefore crucial to either choose an adviser with a substantial knowledge of responsible investment (RI) or be prepared to educate the individual with whom you already do business as to your needs. Given that precious few advisers are knowledgeable on matters of responsible investment, we recommend that your first step be to use Ethiquette to help your investment adviser to help you. To do so, you’ll need to find a suitable adviser.

Step 1: Find a suitable financial adviser

Identify your needs before you seek out a financial adviser: Are you looking for an intermediary to purchase a responsible investment product (RI) you have already chosen on your own? Do you want your adviser to do the research for you and recommend the securities or mutual funds that you should purchase? Or do you require someone who can help you with your overall finances in the years ahead?

You are interested in the prospect of responsible investment but already have a financial adviser? Proceed directly to Step 2!

Based on the answers to these types of questions, you will either be looking for an investment representative, mutual fund dealer, insurance professional, financial planner or combination of any of
the aforementioned. You will find the definitions, roles and responsibilities of each type of intermediary in the Investment Specialists section of the Ethiquette website.

Once you have identified your needs, you have several options:

Option 1

 

Contact your credit union or bank branch and ask to meet with a financial adviser. Most financial advisers employed by financial institutions do not offer the full scope of responsible investment products available on the market. In addition, they tend to prioritize the offering of the financial institutions with which they are employed. The good news is that the large majority of banks and credit unions now offer customers at least one responsible investment fund. You can see what the different financial institutions offer here.

Option 2

Consult the Directory of Responsible investment association (RIA) adviser members for your province. These professionals have enough of an interest in RI to pay an annual membership fee to the RIA, and will have differing knowledge about responsible investment.  For some of the listed advisers, levels of experience with RI are indicated as are professional licences and authorizations. Some are certified Responsible Investment Advisers (RIAC) while others may be certified Responsible Investment Professionals (RIPC) Both are designations of the Responsible Investment Association (RIA) . Some may even have completed the Sustainable Investment Professional Certification program (SIPC) offered by the John Molson School of Business at Concordia University.

You have found a financial adviser? Evaluate their capacity to help you now!

Step 2: Evaluate how much your adviser knows about responsible investment

Prior meeting – First and foremost, a prior meeting with the selected adviser is highly recommended. This will enable you to learn about the fees charged, the financial products offered, how at ease you are with him or her, how qualified he or she appears to be and whether he or she is worthy of your trust.

Your financial adviser must be aware of your social, environmental or ethical concerns if they are to take them into account when recommending investments. At the outset of your meeting with the adviser, be clear that you seek to incorporate an ethical, social and environmental components into investing activities and that you would like to discuss RI products.

If your adviser appears comfortable with the concept of RI and is willing to discuss the different types of products available, you can proceed to Step 3: Determine your investment profile below! If not, proceed to the section entitled My financial adviser does not recommend the RI route …

Step 3: Determine your investor profile and values

Your investor profile – Typical first meetings with advisers involve the creation of an investment profile. Be prepared to answer some questions respecting your tolerance for risk, your knowledge of the investment process and your goals when it comes to money. All advisers, whether independents or professionals with a financial institution, will ask you questions pertaining to your investment profile. Investors are generally considered conservative, moderate or aggressive.

Convey your values – This first meeting is the time to tell your financial adviser about the values you cherish and the importance they play in your investments. For example, you might be concerned about social issues, such as food, human rights, labour conditions, pollution, aging populations or even the autonomy of the local community. You might also be concerned about accountability issues if you think, for example, transparency, the fight against corruption, business ethics or limiting executive remuneration is important. Or, you may resonate strongly with environmental issues, such as access to natural resources, action to reduce climate change, energy use and the sustainable management of air and water quality.

Discuss strategies – Tell your advisor that you wish at least a portion of your investments to have a positive, measurable impact (impact investment), or that you wish to leverage your power as a shareholder to influence corporate behaviour positively (engagement), or that you are not interested in investing in specific sectors (screening/exclusion).
There is a socially responsible investment solution for you, whatever your investor profile and your values.

If your adviser has been able to help you define your investor profile and your values, it is now time to seek out the appropriate RI products – Proceed to Step 4 – Determine the responsible investment products best suited to your investor profile.

If your adviser has been unable to help you, proceed to the section entitled My financial adviser does not recommend the RI route.

Step 4: Determine the responsible investment products best suited to your investor profile

Based on your risk profile and values, your financial adviser will suggest different products and solutions. You will be better poised to accept or reject these investment solutions if you have a good understanding of the different strategies and types of responsible investment products offered on the capital markets. For a detailed description of the latter, including a table of currently available RI products and RI investment strategies, consult the Ethiquette website.

Relevance of products on offer – Here are some important questions to should ask your RI adviser when assessing whether RI recommendations are appropriate:

  • How do these financial products fit my investor profile and my investment time horizon? How liquid are these investments?
  • How do these investments reflect my values and concerns?
  • What are the minimum initial and monthly investments?
  • Are these investments guaranteed or accompanied by a capital guarantee?
  • How do past returns on the proposed fund compare with reference indices such as S&P/TSX total return?
  • What is the management expense ratio (MER)? Are there back-end charges or exit fees (deferred charges)?

If the recommended solution includes an RI product:

  • Are the fund managers committed to engaging with the companies in which they invest to improve environmental and social practices?
  • What is the fundʼs policy on voting at general meetings? How were these rights exercised the year previous? (Funds have an obligation to provide their proxy voting record).
  • Is the recommended fund transparent about engagement with companies in the portfolio?
  • Does the recommended fund invest in local communities or have an impact investment component?
  • How often does the manager report on the state of the fund? What are the channels of communication used?
  • How will I be updated on the social and environmental impact and financial performance of my investments?

Ask to consult Fund Facts which provides core information about the fund, the fees you will pay, dealer remuneration and your rights (Check out an example on the AMF website . For more detailed information, you may consult the fundʼs prospectus (or simplified prospectus if it is a mutual fund) which will provide the specifics about the issuer and the securities on offer. By reviewing the fund facts or simplified prospectus, you will be better able to decide whether or not the investment is suitable for you and whether potential returns are consistent with your investment needs and objectives. You will also find information about the responsible investment strategy employed by the fund manager. More often than not, however, you will find more details on RI strategy on a fundʼs website than in their prospectus.