Impact investing an advice opportunity: Expert

An impact investing expert believes the principle offers financial advisers with an opportunity to engage people who might deem investing to be too complex for them.

Speaking in Sydney yesterday, WHEB Asset Management managing partner George Latham said impact investing is an avenue for financial advisers to connect with their clients on a basis other than the basic financial returns generated by their investments.

According to Latham, the financial services industry faces a serious relevancy problem, having become "increasingly financialised" in recent years.

"I think the whole financial services industry, the whole investment industry has a real problem. And that problem is that their end consumer is disengaged from the product that they're trying to sell to people," Latham said.

"So what I mean by that is that investment products have become increasingly characterised as money for money, if you like.

"They operate in spreadsheets and algorithms and jargon around beta and alpha and benchmarks and indices. Which mean very little to the average person on the street, the average investor."

Latham - whose firm manages the Pengana WHEB Sustainable Impact Fund - noted impact investing allows advisers and their clients to transcend financial jargon by demonstrating the tangible outcomes of an investment, increasing client engagement.

"What I think is really interesting about impact investing is that it enables a connection to be made from money operating in that independent cloud, to what that money is actually working towards achieving on the ground to make better outcomes for us in society, in the economy, in the environment and so on," he said.

Impact investing connects the money to what it is working to achieve and therefore what the basis of the financial return is, he added.

"And that I think creates a massive opportunity for the advisory industry and the intermediary industry to build a different kind of relationship with their clients," Latham said.

Read more: George LathamPengana WHEB Sustainable Impact FundWHEB Asset Management
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