Tap into RI growth with a professional designation

James Leung

Portfolio Manager, CIBC Wood Gundy

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As responsible investing (RI) quickly becomes best practice for the investment industry at large, James Leung, Portfolio Manager, CIBC Wood Gundy, shares his insights on the many benefits of attaining a certified designation in the space – including differentiating your practice and attracting new business.

Getting up the curve

I recently took the opportunity to complete the Responsible Investment Association’s (RIA) RI designation after learning about some new environmental, social, and governance-focused (ESG) products on the market, and I’m so glad I did.

Not only does it allow me to contribute to wider societal goals, but it’s a first step in understanding what RI represents today – from strategies to the various approaches – and becoming a subject matter expert, so I can have an effective conversation with my clients.

The RI movement has grown exponentially in the last five years and may be due, in part, to the estimated $1 trillion intergenerational wealth transfer to individuals in Canada between the ages of 25 and 40.1 Ageing investors are reflecting on what they’re passing down to the next generation, while millennials – a large and increasingly important demographic for Advisors – are making more conscious decisions not just about their health and the foods they eat, but also on how they want to allocate their capital. Given the rising demand, it made sense to proactively embrace RI practices, and professionalize them into my approach to get ahead of the game.

Adding value – and growing my business

Becoming a certified RI specialist and maintaining an up-to-date toolkit in this respect allows me to tap into the needs and wants of the prospective millennial client base, and expand my business. In fact, it’s a great ice-breaker. Younger professionals increasingly want to align their investments with their values, and many are piqued by the RI designation when they see it on my business card. It’s not a common credential among Advisors yet, and fairly new to the world of financial services, so it often sparks meaningful discussion.

At the same time, I’m able to continuously add value for my existing clients (which consist mostly of pre-retirees) and differentiate my offering: I now have the confidence to proactively broach the conversation and let my clients know their options when it comes to constructing a socially responsible portfolio across asset classes. Many have already expressed an interest in RI, and agree that this is an important focus for the future of their children – and grandchildren.

What you need to know about the RIA designation

Starting down the path of RI education for me was both simple and straightforward. After hearing about it from my BMO Global Asset Management wholesaler, Sanjay Singla, I quickly found the details of the course, which is offered by the Responsible Investment Association. With no prerequisites required, the certification is catered to every type of Advisor, including IIROC and MFDA-licensed professionals, with separate courses/designations offered for each. Both are completed online, including instruction and examination, which has definitely come in handy during the current pandemic.

My training covered everything from the basic tenets needed to discuss ESG factors with Canadian clients, to complex compliance issues and the tools to offer advice about the diversity of RI retail products.

My top 5 benefits

  • Differentiate your practice
  • Tap into RI’s exponential growth
  • Grow and expand the scope of your business
  • Earn professional credentials and continuing education credits
  • Demonstrate your RI knowledge and commitment

Part of a holistic approach

On the back of growing support for the RI movement, my plan is to hold educational seminars on the topic in the near future, and my new designation fosters credibility of my knowledge and conviction in the space. Part of the education will include the message that RI works hand-in-hand with my fiduciary duties as an Advisor, as numerous studies have found evidence to support that taking ESG considerations into account can help protect against downside risk over the long-term. Data from the RIA shows that nearly 75% of responsibly managed funds domiciled in Canada outperformed their category averages over a one-year period, with similarly high (over 50 per cent) proportions over longer three- and five-year periods.2 This is especially relevant now in the current environment, as many clients are looking for investments that offer lower volatility, stability and comfort in an otherwise uncertain world.

Providing that peace of mind is central to my holistic, planning-based approach. We’re not solely concerned with portfolio performance; we assess the big picture, including how investments impact lifestyle, family dynamics, estate issues – and how they align with personal values. We adapt our client portfolios based on their individual goals and vision for their future. The trust that forms between me and my clients is the basis for a long-term relationship.

With the current limitations on in-person meetings, I touch base with all my clients weekly to keep them engaged, and ensure we’re on the same page when it comes to their plans. Importantly, it’s this enduring bond that sparks referrals, brings in the next generation, and allows me to consolidate assets and grow my practice. To me, it’s not the short-term, month-to-month performance that’s significant; it’s whether we’ve achieved their objectives at different life stages. I think RI works to address this concept, nurturing success longer-term through the careful – and consistent – consideration of material ESG factors throughout the investment process.

Don’t wait – differentiate yourself now

Especially in these volatile markets, there is more focus than ever before on RI for investors worldwide. The current pandemic has shone a spotlight on the sustainability challenges of today, and everyone is paying attention: many companies are now being forced to rethink inherent risks in their business (related to employee health and safety, for example) that had not been prioritized previously. Every detail is being scrutinized, and for Advisors, this means holding investment managers accountable, and knowing the right questions to ask.

In terms of advice to my peers, I’d suggest that Advisors capitalize on the remote working efficiencies right now, and grow their ESG knowledge base as part of ongoing professional development. Based on my experience, the faster you start on the path to attain your RI designation, the better you can drive meaningful change for your client portfolios – and the world.

James Leung on BMO Global Asset Management

Integrating BMO ESG Corporate Bond Index ETF (Ticker: ESGB) makes sense to me because in addition to being invested in a diversified portfolio of corporate bonds, my clients are able to align their socially responsible values through this vehicle. Professionally managed – and designed for investors seeking consistent income – the securities held in this ETF have a higher MSCI ESG rating than their peers, of BBB or above.

To help your clients set their responsible investing goals – and understand which ESG investments are right for them – visit BMO Global Asset Management’s new interactive tool, MyESG.

Disclosures

1 Toronto-based research firm Strategic Insight projects that approximately $1 trillion in personal wealth will be transferred from one generation to the next in Canada between 2016 and 2026, with roughly 70% of that in the form of financial assets. A 2019 RIA Investor Opinion Survey recorded a 34% growth in RI mutual funds over the past two years.

2 RIA Canada Q2 Funds Highlights, July 2019.

 

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