Australians ‘desperate for leadership’ in sustainable investing

James O’Reilly, director of Northeast Wealth, explained that the advice firm has shifted to a sustainable investment philosophy, with more than 80 per cent of its existing members making the switch and 100 per cent of new members joining with responsible investment portfolios.

Speaking with ifa, Mr O’Reilly said the move to sustainable investing was done with a focus on balancing client outcomes with making an impact.

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“When we looked at the spectrum of responsible investments, we wanted to strike a balance between making as big an impact as possible, but also meeting the broader needs of our members and we felt that a sustainable focus did that the best,” he said.

The world of sustainable investing can be a confusing one for clients, with an array of buzzwords muddying the waters and making it difficult to understand where a strategy may fall.

Northeast Wealth operates with a baseline for members, but Mr O’Reilly said they can go as “deep green” as a client wants.

“We love meeting with those people that are really passionate about where they invest their money, and I’ve had the joy a few times of sitting down with someone and speaking with them and realising that this person might actually know more about this topic than me, which is really, really cool,” he said.

“That certainly wasn’t happening a decade ago. Having said that, I think there’s a wonderful message here that that stands out to me when you’re thinking about this, which is that over the last 12 months, having transitioned 80 per cent of our members into responsible investment portfolios, this thing that stood out to me is that people, whether existing members and new members, are just so desperate for our leadership on this in this area.”

This leadership, Mr O’Reilly explained, often materialises simply through explaining how the sustainable investment strategy can work.

“When we explain to our new members that this is our approach, this is our modus operandi, and if you are to invest with us, then we are going to be seeking to invest your money sustainably because we believe it’s going to provide better outcomes for you,” he said.

“People are happy with that, people are happy to take leadership there and I think the fact that people aren’t necessarily jumping in at that point saying, ‘Well, while I’m here, I’ve got this big, long list of ideas about how I want my money invested’, I think speaks to the environment that we’re in right now.

“Australians want leadership in this area … and they’d like to have someone explain to them what the position is to provide something more than a ‘choose your own adventure’ type thing, which can be quite overwhelming.”

While there is a baseline that all members at Northeast Wealth fall into, Mr O’Reilly added that there is flexibility on specifics based on client preferences.

“I’m not here to try to sway your values,” he said.

“We’re here to try to attract the vast majority of Australians that do feel that their adviser should have a position here. We do have a position and that’s something that attracts them into our practice.

“We deliberately constructed our investment philosophy to have some of that wiggle room. We wanted to create something that was going to be appropriate more broadly for the people that come to meet with us. We didn’t want this extremely exclusionary investment strategy that was going to create clashes everywhere.

“I think there’s probably a nice and simple message, which is that you don’t necessarily need to develop the perfect model in order to make a significant amount of progress here.”

If other advisers are interested in making a similar change to their investment philosophy, or even one that is not quite as all encompassing, Mr O’Reilly said it is important to be passionate about it.

“Despite the fact that it’s not extremely difficult to do, like everything, if you want to do something really well, you have to have a level of passion about it and be something that interests you,” he said.

“If you’re doing it in order to capture a part of the market or whatever it would be, then you’re probably going to do a poor task of it.

At times, I think your members or your clients, they’re going to be able to identify that this is not something that you’re truly passionate about it, it’s just an extra service that you offer. I think for those people who have a genuine interest, leaning into it and engaging with people that have already walked the path is the best thing that you can do.”