How to Find a Socially Responsible Financial Advisor Near You

·6 min read
SmartAsset: How to find a socially responsible financial advisor
SmartAsset: How to find a socially responsible financial advisor

Making social change is an admirable goal. And you can do so even if you can’t make a million-dollar donation to your favorite charity. If you’re looking for investment advice while you save for retirement, a socially responsible financial advisor can strengthen your portfolio by directing you toward companies with sustainable business practices. Here’s the definition of socially responsible investing and how to choose a suitable advisor.

To find the right investment strategy for your situation, consider talking to a financial advisor.

What Is a Socially Responsible Financial Advisor?

A socially responsible financial advisor specializes in investing in companies with ethical, environmentally friendly practices. Typically, these advisors prioritize socially responsible investing (SRI) and focus on businesses with high environmental, social and governance (ESG) ratings.

These scores indicate a company dedicated to minimizing pollution and facilitating positive social change. So, if you’re concerned about investing according to your values, a socially responsible financial advisor can help.

What Is a Socially Responsible Investment?

SmartAsset: How to find a socially responsible financial advisor
SmartAsset: How to find a socially responsible financial advisor

Socially responsible investment involves purchasing stock in companies with a pro-environment, pro-human rights outlook. For example, socially responsible companies prioritize the following:

  • Championing social justice

  • Advocating for human rights

  • Developing green technology

  • Producing fewer carbon emissions than industry competitors

  • Earning high ESG scores

Therefore, researching which companies match these values will help you invest in a socially responsible manner.

Credentials to Look For in a Socially Responsible Financial Advisor

While a socially responsible advisor should be conscientious, it’s also wise to look for an advisor with one of the following credentials: CFP, CFA or CPA.

Certified Financial Planner

A certified financial planner (CFP) earns their title through rigorous study, years of work in the field and passing required examinations. CFPs are experts in numerous financial topics, such as investing, financial planning and taxes. In addition, CFPs are known for following the “four E’s” in their work: education, experience, exam and ethics. Together, these four values help financial advisors conduct themselves with professional excellence and social responsibility.

Chartered Financial Analysts

Similarly, chartered financial analysts (CFA) work and study for years to earn their credentials. On average, a financial professional studies for 1,000 hours and works for four years to earn their CFA. This field focuses on investing, financial analysis and economic trends. As a result, they are sharp investors with insight into the market.

Certified Public Accountants

Finally, certified public accountants (CPAs) are tax and accounting experts. If you’re concerned about how your investment income affects your tax situation, look no further than a CPA. They can file taxes on your behalf and help you optimize your return.

How to Find a Socially Responsible Financial Advisor

Finding the right financial advisor to work with can be challenging. Use these strategies to help you find the one that will serve you best:

Identify What You Need

Before you start speaking with an advisor, identifying your needed services is crucial. Obviously, you’re looking for a professional to help with socially responsible investing. But you might also need help budgeting, managing debt or filing taxes. These considerations will guide you as you move forward.

Decide How You Want to Pay

Financial advisors have various ways of charging for their services. For instance, an advisor can charge per hour when you speak to them or a percentage of the assets they manage for you.

On the other hand, you might pay a monthly or quarterly subscription fee. In any case, it’s vital to ask each advisor you speak with about how they will charge you. Don’t be afraid to keep asking questions until this is crystal clear – after all, it’s your money they’re managing.

Speak with Multiple Advisors

When searching for a financial advisor, it’s best to shop around. Interview several advisors so you get a sense of different investment styles.

Feel free to ask as questions as you like, such as their credentials, frequency of communication, measurement of results and investment strategy. You’ll be able to understand what you resonate with and which advisor matches your preferences.

Verify the Credentials

Claiming to be a CFA isn’t the same as holding the title. Fortunately, you can use the Investment Adviser Public Disclosure (IAPD) website for free to confirm the professional you’re speaking with has the credentials they claim.

In addition, you can view customer complaints and disciplinary actions against the advisor (if there are any). Ideally, you’ll find an advisor with bona fide credentials and a clean record.

Other Factors to Consider When Looking for a Socially Responsible Financial Advisor

SmartAsset: How to find a socially responsible financial advisor
SmartAsset: How to find a socially responsible financial advisor

It’s recommended to be thorough in your search for a socially responsible financial advisor. Rushing in because a financial advisor makes big promises can be a one-way ticket to losing money. Therefore, consider the following during your search:

An Advisor Should Demonstrate Their Fiduciary Status

‘Fiduciary’ means the advisor is legally bound to act in your best interest. However, any advisor can bear the moniker without acting accordingly. As a result, you will need to do some digging to verify the advisor’s fiduciary status.

For example, asking the advisor about their continuing education on new tax regulations can help you see if they stay updated in their field. Advisors who disregard ongoing education are less likely to serve your needs.

Shy Away from Commission-Based Compensation

Likewise, an advisor who earns a living through commissions might not invest according to your best interests. For example, they might put your money into a fund that pays them the most instead of providing you with the highest return.

So, an advisor who charges fees can be a safer way to go. This way, you pay for the services you receive and can break off the relationship if you aren’t satisfied.

Find Someone You Connect With

A financial advisor needs to produce results but should also demonstrate empathy and approachability. You’ll feel like you can talk about any financial topic and share your concerns about your money with an excellent advisor. In short, you should feel heard by your advisor.

Bottom Line

Finding a socially responsible financial advisor means finding an advisor who prioritizes ESG scores and SRI. In addition, the typical considerations that come into play when finding an advisor – such as relevant credentials and a fair fee structure – are crucial in your search. Investing according to your social values is possible with the right financial advisor. That said, keep your eyes and ears open while interviewing advisors to ensure you find one who is committed to acting in your best interest.

Tips for Finding a Socially Responsible Advisor

  • If you’re looking for an advisor with the same social sensibilities, finding one can be difficult. Fortunately, SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area. And you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Socially responsible investing doesn’t mean giving up excellent returns. Putting your money into impact investing can facilitate the change you want to see in the world while helping you save for retirement or other major financial goals.

Photo credit: ©iStock.com/sarayut, ©iStock.com/gesrey, ©iStock.com/Koh Sze Kiat

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