Insights
Ethical exploration

Your clients are changing and so are their expectations. It’s no longer enough to just hit the right return targets or manage risk well. Many clients now want their investments to reflect their personal values.

By integrating ethical considerations into your fact-finding process, you can strengthen trust, differentiate your advice, and improve client retention. This isn’t just about doing good, it’s about making your advice even more relevant and personal.

You already ask clients what they want to achieve and when. But the why is where the deeper connection happens. Retirement might be about more family time, a home purchase might be about security, and a legacy might be about making the world better.

When you uncover those motivations, you position yourself as a trusted partner with a holistic understanding of your clients' needs.

You know the importance of understanding a client’s comfort with market risk, their reactions to volatility, liquidity needs, and investment timeframes/goals.

Adding an ethical dimension doesn’t replace that work; it complements it. Just as you wouldn’t recommend a high-risk portfolio to someone with a low risk tolerance, you don’t want to put a climate-conscious client heavily into fossil fuels - the ethical shock they experience on learning where their money is invested can be detrimental to your ongoing relationship.

How a client feels about the industries and companies they’re invested in is a way of understanding their ethics. Some may want to avoid certain sectors altogether; others may want to actively support positive change.

Getting this right can:

- Increase client satisfaction and loyalty

- Generate referrals from like-minded clients

- Help you stand out in a crowded market

Every client has values, whether you've discussed them or not. Finding them out before providing your recommendation can save you from future awkwardness, like the moment a client realises they’ve been invested for years in something they’d never knowingly support. As an article written by the FMA puts it (March, 2023):

"We’re familiar with harm from unexpectedly poor returns… [but] we can’t… fathom the harm to investors from finding out their investments have compromised their values for 10, 15, 20 or more years.”

You can structure your ethical fact-finding around three pillars: People, Planet, Animals.

Here’s a starting point for your conversations:

People (Social Justice, Labour Rights, Human Rights)

- How important is it that companies treat workers fairly, including in supply chains?

- Would you prefer to invest in companies that have a process for avoiding human rights abuses like modern slavery?

Planet (Environmental Impact, Climate, Biodiversity)

- Would you like to exclude fossil fuels, heavy polluters, or deforestation-linked industries?

- Are you interested in supporting renewable energy or biodiversity?

Animals (Welfare, Testing, Agriculture)

- Is animal welfare a consideration in your investment decisions?

- Do you wish to avoid companies involved in animal testing for non-medical purposes?

To integrate ethical considerations without slowing down your process:

- Use scaled responses (e.g., 1–5) to measure strength of preference

- Summarise key ethical priorities in your fact-find

- Ask open-ended questions to uncover unspoken values

- Revisit both Risk and Ethical Profiles at review meetings

Find out if your clients want their money to reflect their values by bringing ethical considerations into your advice process. You're not just responding to demand, you’re providing a more holistic offering that looks beyond your clients' financial needs. That’s good for your clients, and it’s good for your business.

Demanding to make a difference: Kiwi savers are calling for more ethical options » Sorted

Sustainable? Ethical? The substance must back up the claims

How to Incorporate ESG Investing into Your Practice | Financial Planning Association

Sustainable Investment – The scientific foundation behind the trend - Weltethos Institut Tübingen

Biodiversity as decision criteria when investing in listed equity - Insights of Nordic pension investors and ESG specialists

Grazing for dollars: responsible investing for healthy and sustainable animal agriculture in Australia

Survey: demand growing for adviser expertise on ethical investing