Socially Responsible Investment doesn’t have to be an afterthought when your financial planner has suggested an investment portfolio is suitable for your current situation. Andy Pearce, Investment Manager at Punter Southall Wealth, explains how the Socially Responsible Investment (SRI) service fits within a wider financial plan, and is a continuation of their investment philosophy.
The situation:
Mr F approached Punter Southall Wealth following the death of a parent and subsequent large inheritance. In his forties, Mr F felt that his finances were in good order; he was earning a good salary, owned his own home along with another property which generated rental income, and he was making regular pension contributions.
Initially, Mr F wanted Punter Southall Wealth to advise him on investment options for the cash and shares he had inherited. He felt that there was limited need for any changes to be made to his existing finances. His main wish was for some detail on how he could invest the inherited sum with a socially responsible bias. Mr F, like many others, felt that using an inheritance to invest for the benefit of future generations was vital. More and more investors are becoming concerned about the impact that their money is having on the world around them.
Mr F, like many others, felt that using an inheritance to invest for the benefit of future generations was vital. More and more investors are becoming concerned about the impact that their money is having on the world around them
Punter Southall Wealth, being an advice-led wealth management firm, felt that Mr F would benefit from a full financial review. In arranging for a financial planner to be present at the first meeting with Mr F, as well as an investment manager, it was possible for Mr F to appreciate how the two specialities work hand in hand and therefore why a full review would be helpful at this stage.
The solution:
By including a financial planner in the proceedings, it quickly became apparent that some valuable changes could be made to Mr F’s existing situation for his long-term benefit. By undertaking a full review, it was possible to create a bespoke financial plan, taking into consideration short-term, medium-term and long-term goals.
By undertaking a full review, it was possible to create a bespoke financial plan, taking into consideration short-term, medium-term and long-term goals
The inherited share portfolio and part of the cash sum were earmarked for investment as part of Mr F’s financial plan. As part of the process, Mr F’s attitude to risk was determined, and it became apparent that a balanced investment portfolio was most suitable for Mr F. This raised concern for Mr F, who now felt it would be difficult to achieve his goal of investing with a socially responsible bias. Mr F believed that to do so involved only investing in shares, screening out companies that failed to meet set screening criteria (also known as negative screening).
Top Tip
Lee Goggin
Co-Founder
The Punter Southall Wealth SRI service is specifically designed to address this issue. A dual approach is taken: looking to achieve a client’s financial objectives (within a particular risk framework) whilst also creating a positive social impact. This provides our clients with a no-compromise solution, and Punter Southall Wealth can offer SRI portfolios across the entire risk spectrum. Different asset classes, such as bonds and alternatives, are used within a multi-manager approach in order to cater for each client’s needs whilst always keeping a focus on being socially responsible.
Different asset classes, such as bonds and alternatives, are used within a multi-manager approach in order to cater for each client’s needs whilst always keeping a focus on being socially responsible
The results:
Comfortable that this bespoke financial plan suited his needs, Mr F was able to fully engage with the SRI portfolio that was a key concern following his inheritance.
Punter Southall Wealth focuses on positive inclusion, rather than negative exclusion, meaning that they can choose the investments they want to own, rather than following a process based exclusively around screening. Punter Southall Wealth’s SRI framework is linked to the United Nations’ 17 Sustainable Development Goals.
As it is an extension of Punter Southall Wealth’s existing investment philosophy, investing in an SRI portfolio enabled Mr F to access all the benefits of using a discretionary investment manager. In this case, it meant a prudent reduction of the inherited shares and reinvestment into the SRI portfolio, whilst being mindful of market timing and tax considerations.
Mr F achieved his aim of investing his inheritance with a socially responsible bias, but with the added bonus of this being part of a well-constructed and bespoke financial plan created for him by Punter Southall Wealth.
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