CISI Paraplanner Conference 2018
Book now to take advantage of the early bird discountDon't you just love a good survey full of numbers? I certainly do. The CISI recently commissioned some
independent research from YouGov on how the population views pensions and investments. But for me, what’s more interesting is the thinking behind the statements of different demographics. There are real indicators of a changing population.
For example, just under 50% of 18–25-yr-olds said the three groups of people they’d go to for advice would be a financial adviser, a friend and their bank, with 37% saying they would trust their bank to give them financial advice. This is a stark difference to the older groups. I was surprised and intrigued. Could it be that the under 25s have no memory of the banking crisis and misselling scandals? That seems like the most plausible answer.
What does it say about the rest of us? We have longer memories and the problems have had a lasting effect on us. But, for me it also indicates that 18–25-yr-olds are also forging their own way in life, happy not to be coloured by their elders.
Leading on from this, and also connected I believe, is the large number of all groups who appear to have ethical investing requirements. Some 69% of those workers surveyed say they are unhappy investing in armaments or countries with alleged dubious human rights.
This amazes me. Why aren’t we as paraplanners picking this up? Is it that lip service is paid to this area by planners who talk to clients? Is it that there is a sizeable discussion of the potential change in investment returns by negative filtering and possible increasing risk as a result? Are we really a nation of ethical investors? It seems a bit at odds with my experience in my years giving advice.
Some 69% say they are unhappy investing in armaments or countries with alleged dubious human rightsI had a client who described himself as a ‘lapsed Muslim’. He had two daughters and lived a relatively luxurious life. He called me one day saying he needed to see me urgently. I feared a serious illness in the family. When he arrived he explained that he had won £50,000 on the lottery. He knew that because of his religion he shouldn’t have been doing the lottery but instead of handing the money over to his mosque, he wanted to invest it for his daughters’ private education. For me this was an interesting dilemma that I needed to support him with. If he didn’t invest this money he would not be able to send both his children to private school, perhaps only one. So on we went with the knock-on problem – he didn’t want to invest in anything directly or indirectly involved with armaments, gambling or alcohol. This was one of his beliefs of being a Muslim.
So off I went researching. Do you know how many companies have indirect links to these things? Well, not far off every collective investment and huge numbers of single listed shares! I enlisted the help of a specialist stockbroker. List after list they came up with, once vetted, was thrown out. Eventually we found a small selection of ‘suitable’ investments. It took a while and opened my eyes to just how interconnected the investment world really is.
So, what’s changed since? Yes, there have been some positive changes to ethical investing, making things clearer and more accessible to investors. So why don’t more people actually invest ethically? Good question. And something that certainly seems at odds with our YouGov survey findings.
Perhaps there is a case for more surveys such as this and more in-depth discussions with clients to help them understand how the economic and investment world works. It is possible to invest ethically and maybe we should be talking more about the different layers of investment concerns.
This article first appeared in Professional Paraplanner. Republished with permission.