In a recent study released by the non-profit Forum for Sustainable and Responsible Investment, they identified $3.07 trillion in total assets under management using one or more of the three core sustainable and responsible investing strategies – screening, shareholder advocacy, and community investing. From 2007 to 2010, social investing enjoyed a growth rate of more than 13 percent, increasing from $2.71 trillion in 2007. Nearly one out of every eight dollars under professional management in the United States today – 12.2% of the $25.2 trillion in total assets under management tracked by Thomson Reuters Nelson – is involved in socially responsible investing (SRI). Most of the assets are in separate accounts, mutual funds, and portfolios managed for institutional and individual clients.
Although cynics may point out that there may be greater opportunity in investing in “sinful” companies, or funds that don’t screen on social issues, there are investors who have a deep conviction in adhering to a socially responsible financial plan. On the other hand, there are potential clients who don’t know this option exists. If a prospect demonstrates a particular social concern during the initial meeting, you might cement the relationship with your ability to offer socially responsible products. The standard argument for socially screened investing is simple: It allows people to avoid investing their money in companies whose products or behavior they find objectionable.
Increasingly, sound social policies are not just intrinsically good, in the opinion of SRI advocates, they are good for business. Good employee and community relations, a diverse workforce, and protecting the environment are all things that can add to a company’s strength by giving it more productive workers, community support, a good corporate image, and less exposure to lawsuits.
Additionally, socially screened investments can be very much for profit as well. They do not hold securities solely on the basis of social criteria. Fund holdings must also be financially viable. In fact, SRI fund managers go about the business of security selection the same way other fund managers do – by following their particular stock-picking styles. In most cases, managers select securities first, and then submit them for social screening, which is done by a separate team of screening analysts.
Summit Brokerage Services offers its advisors a full spectrum of socially responsible investments.
For more information on Summit Brokerage Services, visit www.joinsummit.com or contact us at (800) 354-5528.