Karen McLeod is a financial adviser at Ethical Investment Advisers in Queensland. She speaks to Audacious Investing about her journey to becoming an ethical investment advisor. This Q&A has been edited and condensed for clarity.
Rachel Alembakis: Can you describe your practice?
Karen McLeod: Our practice looks after every day Australians that want to invest their funds in line with their values, and make a good return. Most of our clients find us online, because we are a boutique practice, and we have the pleasure of looking after a lot of individuals that are very concerned about environmental, social and governance issues, and are interested in engaging in the investments that they own.
There are probably two different profiles – pre-retirees or retirees who have saved or inherited a sum of money that they’d like to invest ethically, and would like an advisor to be on the journey with them into retirement. Then there are those that are younger, single or part of a couple that hasn’t started a family, want their money to work harder for them while they’re working or travelling or volunteering or studying.
For us to provide advice, the minimum is about $1100, for most clients that they have a sum of ideally more than, say, $50,000 to invest, but many start lower than that with maybe $10,000 that they contribute to on a regular basis. The majority of pre-retirees would come to us with $300,00 to invest, some come with more.
Rachel: How did you come to being an ethical fund advisor?
Karen: I think it was about 12 years ago when I saw the first Al Gore film. I was in financial planning, and it was my lightbulb moment. I got online and discovered clean-tech, renewables, and then I took myself along to the first RIAA conference, met lots of like-minded asset managers, advisers, and have just become integrated within our industry from that point, to now, where I’m volunteering a lot of my time to giving the opportunities to all Australians to invest in line with their ethics.
Rachel: What are the top concerns/challenges/opportunities to clients when they come to you?
Most clients are concerned at the moment with divestment, not only from fossil fuels, but now also in divesting from the financing of fossil fuels. Clients are interested in supporting positive investment choices to make a better environment and society. They’re looking at healthcare, they’re looking at technologies, whether it’s renewable energy generation, energy efficiency, battery technology, smarter materials, telecommunications, robotics in medicine, and also things like property, aged care sector, basically all of the industries that are promoting caring, health and well-being.
Rachel: Are clients investing domestically or internationally?
Karen: We’ve had a wonderful number of international funds arrive in the country in the last two and a half years that are very deep green and very suitable for our clients. Now more than ever before, Australians have a wonderful opportunity to invest in deeply ethical funds on the international stage. There have also been more interesting opportunities in international funds in recent times in terms of green bonds, or infrastructure, or equities.
Rachel: Is it possible to get a diversified portfolio and invest ethically?
Karen: Because we’re their advisor, we advise them to be diverse across asset classes. We don’t have to compromise – there are literally ethical choices across all asset classes. It’s wonderful. There has been a massive transformation, especially in the bond sector, the property sector, the infrastructure sector. So much is happening and it’s fabulous for investor. We’re excited about it.
Rachel: How has the understanding of ethical/responsible investment evolved in recent years?
Karen: I think you still have that question from people that don’t know much about it; they feel concerned that they have to give up performance to invest ethically, but fortunately, a lot of people that do contact us have already done that research, so they know that’s a myth because of the great work of the industry and also by a lot of academics and people in the divestment movement.
More people are seeing in their day to day lives the benefits of doing things in a smarter, more sustainable, greener fashion. For example, Queensland has banned plastic bags, and we soon will have a container return scheme in Queensland. More things are changing peoples’ ideas as well. It’s all starting to turn people’s heads a little bit. It’s not even ethical investing, it’s just a smarter way to invest, really.
Rachel: What would you like people to understand when it comes to investing their money in line with their values?
Karen: It’s extremely rewarding. It’s not a charity, but it’s almost as rewarding as giving, because you almost have a much closer connection with the investment that you hold because you actually hold values aligned to it.