Wednesday, June 8, 2011

Wholesalers not interested in SRI

I recently came across a news item that said HSBC will wind up the HSBC Global Climate Change Fund. The decision to close the fund was based on the small fund size and relatively small number of unitholders.

This surprised me for two reasons. First, that in the current environment there was no interest in a Climate Change fund (?!%?), and second that I, presumably a member of one of the target markets for this fund, had never heard of it.

I asked other professional members of the SIO about the fund. Across the board, no one had heard of it, been contacted by HSBC or received any marketing material. Little surprise then that it failed to attract assets.

Mainstream fund companies recognize that investors want SRI funds. They launch the funds, often with fanfare. And then they languish. Primarily, I believe, because wholesalers don’t offer them to advisors. Please note that the following comments apply to fund companies that have a few SRI products in their line up, not to companies like Meritas that specialize in SRI.

Fran Goldberg, an established financial planner in BC and long time member of the SIO, has this to say “My practice is to not see wholesalers unless I request a meeting. Every time a new one is assigned to me, they call and try to offer me the newest, best practice that will make me a better planner. They have no historical information as to who I am, tenure in the industry, etc. All they see are assets under admin. Never once have any of these newbies even mentioned SRI offerings. In fact, they never talk about SRI at all. I’m certain my experience is not unique.”

Numerous advisors chimed in to agree that they never hear about SRI unless they ask. And sometimes don’t get much information even when they do. “Recently I asked a Franklin/Templeton rep if the tradition of excluding tobacco companies at Templeton was extended to all the funds. The answer I got was something like ‘Why would you care?’....” comments Sara Gooderham, a Quebec based planner

Where does that leave the many advisors who are interested in SRI but not yet committed, who want to offer it to at least a portion of their client base, and are open to wholesalers raising the topic? Nowhere.

Margot Willmot at Family Wealth Advisors in Ottawa sums it up nicely ‘As for the mainstream companies, although they are very supportive of my non-SRI business, they are not helpful whatsoever in supporting me with the few SRI investments that they provide. I think that it is mainly due to their discomfort and lack of knowledge in SRI products. It is discouraging but I think with time, as more and more clients demand SRI products, the mainstream companies will wake up!’

Meanwhile, fund companies remain asleep at the wheel, SRI funds continue to stumble along and we keep getting told the palpable untruth that no one wants SRI.

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