Why advisers need to speak the language of ‘values’ with their clients

In conversation with ifa, founder and chief executive officer of Ethical Invest Group, Alexandra Brown, unveiled the array of ways that environmental, social, and governance (ESG) is understood within the context of responsible investing.

However, Ms Brown added it may not be within the client’s or adviser’s best interest to include ESG in their dialogue.

“For advisers, that means extra work on them because they need to educate the client on what ESG is,” she explained.

Instead, Ms Brown has called for “values” to be a focal point when speaking with clients, which may better articulate the products that are most appropriate for them.

“In the conversation, you split the values up into environmental values, social values, and even governance values, things like corruption, which clients may want to focus on.”

“If they talk about values, then it’s very easy having the client relate to that.”

“But I’d also say, if you do split it up into things like E, S and G, it makes it easier for advisers to then go and match products to those issues,” Ms Brown added.

“The adviser can talk about values, but if they're overlapping in the areas of environmental, social and governance, then it makes it easier for the adviser to do that matching process.”

Adam Drinkwater, senior adviser and partner at Treysta Wealth, expressed a similar sentiment.

Namely, he pointed out that with more mature Australians, language and awareness of financial jargon is another element to consider when setting up ethical or impact investment portfolios.

“This cohort of clients, they are probably not going to say to me, ‘Can I use ESG investments?’ because they won’t be familiar with it. What they will probably say is, ‘Can I use my funds to impact what we’ve talked about … in a way that will make the right kind of change or have the right kind of influence?’” Mr Drinkwater told ifa last month.

“When these conversations are actually coming up, they’re coming up more as a result of ‘values’ conversations that you’re having with them.”

“When we talk to our clients, one of the things that we do in a really detailed manner is spend time talking with them about their values and how they would like their financial decisions to align with their life, and what is important to them. This is before we’ve even gotten to the stage of, ‘How are you investing?’”