Making ethical specialisation work: A planner’s journey to live their values June 2021

Karen+mcleod

Karen McLeod decided to specialise in ethical investment advice after seeing Al Gore’s An Inconvenient Truth, and has watched as the sector has grown and become more widely accepted since then. She is a big advocate for the role that ethical and sustainable investing can play in transforming the planet.

What has been the biggest change you’ve seen in the industry during your time?

It’s so refreshing that there is now a greater understanding by the financial services sector around responsible and ethical investing. Previously when I started specialising in this area it was seen as a niche, but these days it’s a common topic of conversation amongst fund managers, advisers and clients. Which is great. Clients are finally able to invest their money in a more responsible way, without having to sacrifice their values or returns.

What changes do you expect to see in the future?

I see that responsible and ethical investing will continue to grow and move towards impact investing (providing returns and additionality). By that I mean clients will receive a financial return on their money, and they’ll know how much energy they have generated from renewable sources, how much wastewater has been treated, micro loans given and so on. Greater transparency of holdings will continue and I’m sure that within the next two years, every managed fund / unit trust in Australia will have to provide full disclosure of their holdings – just as they do in the US and the UK. I also know that shareholder activism, by Mum and Dad investors, superannuation funds, fund managers and institutional investors will increase. This means better stewardship of your client’s money. Think about the recent event with Blackrock voting to support tiny hedge fund Engine No 1’s candidates onto the Exxon board.

What are you doing to prepare and adapt?

We are constantly engaging with our clients to ask them about the issues or themes they would like to support or invest in, for example affordable / social housing, gender equality, proactive health care technologies (rather than reactive), renewables infrastructure, alternative finance, the list goes on! By better understanding our clients’ needs, we can seek out managers and investment solutions that best suit their needs. But, more importantly, we can get investments that we are seeking to be created. To meet Paris Targets we know that financial product innovation really needs to explode and we need to reimagine how we will finance the infrastructure and technologies that will get us to net zero emissions by 2050. A great example of innovation has been the strong rise of green bonds and social bonds.

Finding investments that meet their values and financial goals is really empowering for our clients. They know they are providing capital to get us closer to a fairer, healthier and more sustainable world for all. I would also add the UN Nations has 17 Sustainable Development Goals. I believe they will continue to be an increasing focus for investment managers globally and the reporting on these 17 goals will deepen so that clients and advisers will really understand exactly how their investments are contributing positively to a) access to clean and affordable energy or b) responsible consumption or production.

How do you build your business and grow your client base?

I am a specialist in my field of expertise, so that provides a competitive advantage. I also volunteer a lot of time to speak at various event that are aligned with my client’s interests and to raise awareness of ethical investing in the wider community (retirees, students, advisers, academics, activists, shareholders, and families). Over the years, that has involved me speaking at Australian Shareholders’ Association Meetings, FPA, Kaplan, Responsible Investment Association Australasia, Sustainable House Day, 350.org, UQ Global Change Institute, Green Heart Fairs, Australian Conservation Foundation meetings and more.

What has been particularly effective?

I’ve found that speaking events (either in person or virtual) have been quite effective as people connect with you as a person. We also have a lot of enquiries that come directly to us from our website or from existing clients. As well as new enquiries from the websites of the Responsible Investment Association Australasia and the Ethical Advisers’ Cooperative. We are founding members of both.

What is your point of difference in the market?

We look after socially-conscious investors that want to invest their money ethically without sacrificing returns. We are active in the industry. For 10 years I was a board member of the Responsible Investment Association Australasia and I also looked at all the new and renewing investments as part of the Certification Committee. I also chaired the Ethical Advisers’ Cooperative in 2015, which represents advisers that specialise in ethical investing. We all contribute as part of this cooperative to get better outcomes for our clients – ethical investors.

What demographics do you cater to?

All demographics are ethical investors. But particularly those that are well educated, have travelled widely to developing nations, love nature and those that read widely. Because they understand that our footprint on the planet must lighten and they want to ensure that their money is doing more good than harm.

Why is financial advice important to you?

Our clients are often specialists in their own area of expertise, so for them we provide vital advice and a connection to the financial investments and financial strategies that optimise their situation without compromising their values.

When and why did you become a financial adviser?

I originally did work experience in a Stockbroking firm in my hometown as an undergraduate and I really loved it. I loved getting close to the companies, and their activities. I really liked giving clients that sense of ownership via direct equities. I think that clients who own direct equities feel more connected to their holdings and that means they care a lot more about how responsible these companies are being with their money and with stakeholders (customers, employees, the wider community).

After my work experience, I started studying the Diploma of Financial Planning and went on to become a Certified Financial Planner. After watching the Al Gore film, An Inconvenient Truth, I then decided that I would change my career and specialise in clean tech and ethical investments. I try to live a healthy and sustainable life and I didn’t want to have my clients invested in old economy stocks like oil, tobacco or soft drinks. I’ve not looked back! It has been a wonderfully engaging and enriching journey to know that you are actively seeking positive investments for your clients’ portfolios.

What do you look for in a license provider/partner?

Innovation, flexibility and ethics.

What interests do you have outside of the office? What are your hobbies?

I’m an active person. My passions are Pilates, yoga, swimming, triathlon and running. I’ve just completed my first ultra-marathon – the UTA50 in the Blue Mountains! On the day, the feels like temperature was -7C! It was a wonderful experience doing the race. But I think I loved the training the most. Each trail I run takes me to some beautiful places and I meet so many different people from all walks of life who just love to get into nature. Running in the dark when it’s freezing cold and you only have a head torch and your running shoes is a humbling experience. My next race is the 42km Rainbow Beach event on sand. That will be interesting!

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