How to select an adviser
Working with an investment adviser can help you to develop and implement a Responsible Investment policy. They can help you to identify and select a fund manager. In order to find an appropriate adviser it is important that you are clear about the services you require and know where to go for advice.
In this section:
Clarifying your needs
Issues to consider when selecting an adviser
Finding an adviser
The selection process
Further information
Clarifying your needs
When selecting an adviser it is important to find a service that fits with your charity’s needs.
You may first want to consider:
- the Responsible Investment issues and strategies that your charity wishes to incorporate into your investments
- the financial objectives required from investments (such as income levels and capital growth)
- the level of risk you are prepared to accept
- the timeframe over which you wish to invest
- the type of service required and level of involvement you want in the investment process (e.g. execution only, discretionary management, or advisory services)
This information will help you to identify a suitable adviser.
The stage at which you choose to use the services of an adviser may vary. This may depend upon the expertise within your charity, the sophistication of your investments and your understanding of Responsible Investment. It may be useful to see the Developing a policy section and assess the point at which you would need advice.
Issues to consider when selecting an adviser
- there are many financial advisers and it is useful to check their experience of advising the charity sector.
- many advisers will not have expertise in Responsible Investment. Large established organisations may have access to specialist knowledge and further help, and there are some small companies or individual consultants that specialise in ethical investment advice.
- some advisers only advise on the products of their employer, or fund managers with whom they have financial links. This may not provide you with the best solution and you should ask if an adviser is independent.
- some advisers specialise in particular financial products e.g. pensions. You should check that any specialisms fit with your needs.
- the Financial Services Authority (FSA) regulates the financial services industry and you can check if advisers are authorised on the FSA website.
Finding an adviser
- the Database of advisers provides details of a range of advisers with experience of advising on Responsible Investment issues.
- CAF may be able to recommend lists of reputable investment advisers, though these will not necessarily have knowledge of Responsible Investment.
- the EIRIS website contains a list of Independent Financial Advisers (IFAs) which have experience of advising on ethical investment issues (though not necessarily to the charity sector.)
- the Ethical Investment Association is a nationwide body of IFAs which aims to set standards in the ethical investment industry. They have a directory of members on their website.
- the UKSIF member directory includes the details of a number of IFAs.
- personal recommendations
The selection process
You can make a shortlist of advisers and ask them to submit a proposal based on your detailed requirements.
You may then wish to request your preferred advisers to present their services and strategy in more detail.
You may wish to ask:
- what experience they have of advising on the development and implementation of Responsible Investment policies?
- what experience they have of advising charities?
- do they have a specialist Responsible Investment team/representative?
- are they independent of fund managers?
- what resources do they use to research funds?
You may wish to look for an adviser that:
- demonstrates a clear understanding of your charity and its needs.
- outlines a strategy that is clear and free from unnecessary financial jargon.
- provides clear and transparent details of all fees which may be charged.
- demonstrates an understanding of your Responsible Investment objectives
Do not be afraid to question or challenge anything that you don’t understand.
After selecting an adviser it is important to regularly review the performance of your investments and your adviser.
Further information
The Financial Services Authority (FSA) is an independent body that regulates the financial services industry in the UK. The FSA regulates most financial services markets, exchanges and firms. It sets the standards that they must meet and can take action against firms if they fail to meet the required standards. Its website includes a register of authorised firms and individuals.
