With the increasing awareness of social and environmental issues, more and more people are interested in investing their money in companies that align with their values. But how do you know if your financial adviser is considering your ethical concerns?

Here are a few things to look for when choosing an adviser.

Compensation And Fees

One way to gauge whether an adviser is acting in your best interest is to ask about how they’re compensated.

The other thing to look at is whether they’re trying to get you to invest in something that has a high commission. For example, if they’re trying to sell you insurance, they may get a commission of 10% or more. That’s a huge incentive for them to sell you something that you may not even need. So, be sure to ask about their compensation and fees before making any decisions.

You can find out about SJB Global’s fee structure here.

Investment Philosophy

It’s important to find out about an adviser’s investment philosophy. Ask whether the firm has a policy on ESG. Does the policy reflect your personal values and standards?

Furthermore, is your adviser recommending active funds over passive funds? CNBC reported that 79% of active fund managers underperformed the S&P 500 in 2021. Morningstar says that it is clear that active funds are more expensive than passive funds with ongoing costs to the fund (OCF) per annum of between 0.5% to 1.5%. 7.6% of funds have an OCF of 2% per annum or higher. Vanguard, Fidelity, and Blackrock, three of the top four largest fund managers in the world, provide multi-asset passive funds, of funds for less than 0.25% OCF which provides global exposure to all asset classes that is rebalanced on a regular basis. Investment strategies between advisers differ greatly which is why it´s important to do some research and digging before committing your hard-earned money to an adviser.

Paying more for a poorer performance based on long-term statistical analysis is counterintuitive. You may find that your adviser has a financial incentive to recommend this active fund which begs the question. Who is your adviser looking out for? You or himself?

Final thoughts

Making sure your financial adviser takes your ethical concerns into account is vital if you want to ensure your investments are making a positive impact on the world and to make sure your money is in good hands. By asking the right questions and doing your research, you can be confident that you’re making the best choices for both your money and your values.

Find out more about our values on our about page.