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Advisers need to brush up on climate change

In order to take advantage of new client opportunities, financial advisers should improve their knowledge about the impact of climate change on investments, says Australian Ethical.

The ethical investment boutique’s managing director Phil Vernon told ifa that investors are becoming increasingly interested in ethical issues including climate science, presenting advisers with a new opportunity.

“Climate change is a long-term risk, so it’s imperative that advisers who provide long-term advice to their clients become educated about the issue and aware of the impact it may have on specific investments,” he said.

“Even if they are not convinced about the science, advisers need to be prepared for questions from clients who are concerned about [climate change] and the impact of legislation and regulation in response to it,” he added.

Advisers can make this area – and ethical investment more broadly – a key point of differentiation in their practice, he said.

The comments follow the release of Australian Ethical’s half-yearly financial results, which Mr Vernon said indicate the investing public’s growing awareness of ethical issues.

According to a statement to the Australian Securities Exchange, the investment manager recorded a 71 per cent increase in net profit after tax (NPAT) to reach $0.487 million in the six months to December 31, while funds under management (FUM) reached near record levels, hitting $669 million as of December 31, an increase of 12 per cent from the previous corresponding period.

While advisers are showing signs of warming to ethical investment advice, Mr Vernon said they could be playing a “bigger role” in raising the profile of this investment strategy and taking better opportunity of the growing investment appetite.