A report launched today by Big Society Capital, lawyers Bates Wells & Braithwaite and social investment experts Worthstone sets out a set of principles to help investment advisers decide on the ‘suitability’ of social investments for clients. Download report here.
Key findings are:
Investment objectives and social goals – investment advisers need to develop a new set of tools to explore the suitability of investments in light of the social goals of a clients.
Client discovery – Investment advisers should ask each client whether or not the investment objectives of the client involve the pursuit of positive social impact, as well as financial returns.
A portfolio approach – Once full provision has been made for a client’s financial needs as well as any legacy, investment advisers should be able to allocate assets either for philanthropy and/or social investment, where this is in fulfillment of a client’s objectives and the client provides informed consent.
Professional standards and best practice – Further work needs to be done by FSA accredited bodies, in dialogue with the FSA/FCA, and others to encourage the development of best practice standards with respect to social investment, including through the conduct of research, provision of training, raising of awareness, promotion of best practice standards and convening of debate and discussion.
Regulation and policy – The FSA/FCA should in due course consider taking further action if, as expected, the market develops and grows. The developing nature of social investment should be considered and appropriately acknowledged as part of the current MiFID review process.