Advisors key to SRI sales strategy

Quebec investors don’t know a lot about responsible investing, but a significant majority are interested in the concept — so interested, in fact, that 59% of those surveyed by Desjardins said they would consider investing in socially responsible investing (SRI) products. Furthermore, 64% believe that financial institutions have a duty to offer SRI products to their clients, and 92% said that offering SRI products positively affected their perception of Desjardins as a company.

Those are the main findings of a study on Quebecers’ attitudes toward SRI, which was released by Desjardins earlier this week at the Canadian Responsible Investment Conference in Toronto.

Desjardins is one of the largest financial institutions in Canada, offering banking and investment services to nearly six million clients through its caisse network in Quebec and Ontario. The company is also a pioneer in SRI. The Desjardins Environment Fund, one of the first of its kind, was launched in 1990. In January 2009, Desjardins introduced the SocieTerra portfolios, in partnership with Ethical Funds.

Desjardins has also profiled its SocieTerra fund holders, and some of the results were surprising. For instance, advisors play a key role in the SocieTerra portfolio purchase process. Nearly half of the fund holders surveyed said their advisor was their primary source of SocieTerra fund information. And 56% said they decided to purchase the product after meeting with their advisor, even those who had never heard of SocieTerra before. Only 10% of SocieTerra fund holders were classified as “do it yourself” investors, making the purchase without the assistance of an advisor.

“We did a lot of work with our advisors when we launched these funds,” says Benjamin Commerie, marketing research senior advisor at Desjardins. “The advisor plays an important role by being the first source of information. Their role is crucial.”

Advisors have traditionally been viewed as the main reason for the lack of significant growth in the SRI retail sector in Canada. Many simply don’t bring up the SRI option with their clients, either because they’re not comfortable discussing the topic or because they don’t understand the sometimes-complex concepts behind responsible investing. Desjardins appears to have overcome this problem: their advisors know the SocieTerra product line very well and can explain it thoroughly to clients.

“When we launched the portfolio, we did a road show and we did some training,” says Rosalie Vendette, responsible investment advisor with Desjardins. In addition, a question on responsible investing has been added to the company’s “know your client” form. “Each advisor does ask the question, so that helps a little,” says Vendette.

Desjardins’ historical role as a credit union makes SRI somewhat easier to promote at the caisses, Vendette believes. “When you look at the mission of the credit union, it’s the well-being of people, so we already have that social component. And now we are viewed as being social and environmental.” It’s an important differentiator for Desjardins compared to other financial institutions, she adds.

Still, there are major obstacles to overcome. Desjardins has thousands of advisors, and it’s going to take a significant time and resource commitment to promote the SRI message.

“It’s still a challenge to get advisors on board — they’re not used to talking about these things,” Commerie admits. “They want to look good in front of clients, so the more information we can get to them, the better.”

“Advisors need to be comfortable speaking about these issues,” Vendette notes. “We’re expecting questions on things like the oil sands, so we have to be prepared.”

It’s early days for SocieTerra, but the focus on the advisor channel appears to be working. The four SocieTerra portfolio funds (with total assets of $185 million, according to Morningstar) have seen healthy sales since they were launched and continue to meet sales targets.

Desjardins held a focus group with investors across Quebec and followed up with an online survey of 1,000 Quebecers, aged 18 and over.

Doug Watt is an Ottawa-based writer and editor and co-founder of SRI Monitor, a blog on socially responsible investing.

(06/17/10)

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Doug Watt