IFA firm creates sustainable investing matrix to match clients with portfolios

PWM today launched its sustainable investment strategy, whereby advisers will gauge clients' attitudes on negative screening, environmental, social and governance (ESG), socially and responsible investing (SRI) and impact investing.

By ascertaining how important a client considers each area to be, the firm creates a ‘matrix' that can be used to match individuals with different investment managers.

PWM managing partner James Roberts said the strategy - which was 18 months in the making - aimed to build a clearer picture on varied approaches to sustainable investment for advisers, clients and fund managers.

"When we started to construct sustainable investment strategies, we suddenly realised that this wasn't an area you could just go into lightly. You really needed to have knowledge to have authority to deliver proper solutions for clients," he said.

"We developed a methodology whereby we break down the overall universe of sustainable into four distinct camps for clients, and there's a different risk spectrum [depending] on the way you stand in those four buckets."

PWM, which has almost £2bn funds under management, uses this risk profile to identify the most suitable fund manager for a clients' needs.

The firm's head of investment research and sustainable investing Richard Atherton said the approach of each investment manager to sustainable investing was varied and there was no consensus on terms.

"Some focus on ESG whereas others will weigh their portfolios to social responsibility and impact investing. These are terms that many investors do not fully comprehend and all fall under the umbrella term of sustainable investing," he said.

A recent government report revealed 56% of the British public are committed to positive investing but only 13% said they currently hold a sustainable investment.

"The market is rapidly expanding and evolving. It is only by being truly independent that we can maintain the necessary oversight and objectivity to find the best solutions for clients," Atherton added.

Roberts said the sustainable model currently matches clients with eight discretionary fund managers or multi-asset managers but has scope to expand that as the product evolves.

"I think when it comes to sustainable investing, independent advisers have an enormous advantage. Because there are a range of managers who all do different things, to be tied or restricted to any one solution really doesn't work when you're trying to advise clients in a sustainable place. We have a universe of managers, and we're currently working with eight on the sustainable side."

Roberts said while the strategy was well-timed for the FCA's requirements for advisers to speak to their clients about sustainable investing from January, the firm wanted to be to the front foot in this burgeoning area.

PWM made national headlines earlier this year when it "decarbonised" former parliamentary adviser and environmentalist Katie Critchlow's investment portfolio.

 

 

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