Until the asset management industry can agree on some standard definitions and practices regarding sustainable investing, the onus will be on financial advisers to look behind the scenes and under the hood of any strategy marketed as incorporating ESG factors.The following are due diligence best practices and tips for avoiding “greenwashed” products.
• Request a meeting with the asset manager’s ESG team to understand their process and where they sit within the company.
• Find out if the firm has a formal commitment or mission statement regarding ESG investing.
• Find out if the firm has dedicated ESG-investment professionals, including portfolio managers and analysts.
• Ask about the firm’s ability to leverage ESG data and analytics in security analysis from a risk perspective.
• Ask about the firm’s policy and track record when it comes to shareholder proxy voting and engaging directly with company management and directors.
Additional practices regarding the data.
• Know the asset manager’s source of ESG data.
• Single-source third-party data is limited and can be stale.
• The next step would be an in-house team developing proprietary ESG assessments.
• The ideal scenario would be for the firm to have active engagement, collaborating dialogue with individual companies.
Examples of resources for screening funds.
• Morningstar.com: Using data from Sustainalytics, Morningstar’s globe rating system provides a historical sustainability score that includes metrics for carbon risk and fossil-fuel involvement. The globe ratings are updated monthly based on the latest portfolio reporting, and consider the trailing 12 months, while weighting recent portfolios more heavily.
• MSCI.com/ESG-ratings: MSCI is expanding its universe of funds that are screened and graded with ESG scores. The grading is on a seven-point scale and provides context as to specific ESG areas where the fund is strong, average and weak.
• FossilFreeFunds.org: Part of AsYouSow.org, this screening tool provides detailed analysis of a fund’s underlying holdings. In addition to a breakdown of fossil-fuel holdings, the site grades funds on factors including deforestation, gender equality, civilian firearms, military weapons and tobacco.
Firms in New York and Arizona are the latest additions to the mega-RIA
The agent, Todd Bernstein, 67, has been charged with four counts of insurance fraud linked to allegedly switching clients from one set of annuities to another.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State,” Justice Peter Moulton wrote, while Trump will face limits in his ability to do business in New York.
Sieg, 58, was head of Merrill Wealth Management, left in 2023 and returned that September to Citigroup, where he worked before being hired by Merrill Lynch in 2009.
Technology can do a lot of things, but advisors still have undeniable value
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
