An Interview with Cleona Lira: How I became an Ethical Adviser

For Adviser use only. Not for use with customers.

An Interview with Cleona Lira: How I became an Ethical Adviser

Financial adviser Cleona Lira frequently appears in the financial press, both as an influencer and writer specialising in ethical investments. She is a Chartered IFA based in London with Conscious Money, and an appointed representative of 2planwealth management Ltd.

We were keen to put her under the spotlight as interest in Environmental, Social and Governance (ESG) investing has surged recently. An Aviva survey conducted in September showed that 81% of advisers are now considering ESG, 38% of whom are now thinking about ESG ‘much more’ than before. 1

92% of advisers also believe ESG will make up a larger proportion of the business in 2 year’s time. 1

Aviva: How did you get into ESG Cleona? Was it a conscious career path?

Cleona: Not really. I worked in a bank, and one of my clients requested ethical investing back in 2009. It piqued my interest even though we could only offer basic screening. My client worked for Google and had a large chunk of shares. He said 'I just want to do something good with this money.'

So when I set out as an IFA around 2013, I asked every client if they wanted to invest ethically or not. Over time, it became my niche, and I learned about this topic as much as possible. It also suits my values and is meaningful work. 

Eventually, your niche becomes a self-reinforcing bias. Through referrals, blogs, and my monthly newsletter, I began to attract more clients interested in investing sustainably.

It's a process. Life happened, and life took me to sustainable investing. I am now studying for the CFA UK Certificate in ESG Investing. I find the syllabus exciting, and I've never said that about an exam in financial services before!

I want to point out here that ESG is a process for screening all companies and what I offer as an ethical specialist or sustainable investing specialist is a lot more in-depth than ESG investing. 

Aviva: Do your customers fit a particular profile? They say younger investors are very keen on ESG.

Cleona: I enjoy working with young people, but I don't have too many young clients. Young clients do find me and its often because they've inherited money. I imagine it's harder to save when you have other priorities and rent is a large outgoing. 

My clients are mostly working professionals, aged between 40 and 65, with slightly more women clients than men.

Aviva: How do you broach ESG with clients - without making them feel guilty if they're not interested?

Cleona: By asking, then listening carefully and offering guidance or information where needed. 

I always ask 'Do you prefer to invest in line with ethical values?' or something of that nature, and let them know all the options available in a clean way, including active, passive and ethical funds. I think it is vital to guide and educate the client in a non-judgemental, matter of fact way. That's what I mean by clean - no manipulation or guilt. I use examples and show different fund factsheets, so it is visual; I try to use story-telling and share examples of businesses, rather than just facts.

Clients can sense when the adviser has an agenda very quickly; so, I believe in laying out the options, clarifying and answering any questions as needed—helping the client choose what is appropriate for them based on their values, goals and objectives. 

The client relies on us to make decisions that feel right to them. And adopting a non-judgemental approach is important to me. 

Aviva: Many people say ESG is confusing. Would you agree?

Cleona: Yes. The terminology can be somewhat confusing. The lack of standardisation with definitions and processes doesn't help. There are various methodologies to integrate qualitative and quantitative data; this can be challenging even for experienced Investment Analysts.

Even Shell, BP and Exxon Mobil report on ESG criteria. There could be a small company that's very environmentally friendly in their approach, which produces solar panels, that doesn't report on ESG and is therefore not included in an ESG focused fund.

So, it's about nuances. I ask the client to fill in an ethical questionnaire that gives a structure for research purposes and compliance. However, then you also have to have the conversation to gather 'soft facts' so you have an idea of clear boundaries, preferences and value priorities.

When the client needs more information, I usually ask "What would you like to know?" Then, I focus on the gaps in knowledge and where the client's interest lies. Most clients want the big picture, so it's useful to sense how detail is needed.

There's the traditional way of ethical investing, which is how it started, which was very much 'I don't want to invest in things that are harmful'. I usually offer an example like Boohoo, which was in the headlines a few months ago, where there have been allegations of human rights violations.

Then there are impact funds that focus on creating the world we want, related to UN Sustainable Development Goals, and a 'towards', rather than an 'away from' focus. Also, positively-screened themed funds and many similar terms, so clients need help to de-mystify the labels.

I made a video about it, explaining all the terminology. Clarity is useful.

If you're a financial adviser, you have to understand these nuances at an advanced level so you can distil it down clearly for clients.

Aviva: Do you think Covid has had an effect on ESG? 

Cleona: Yes. Definitely.

With screening factors, what I see, is that environmental factors are usually the highest criteria, because of climate change. Human rights violations follow this. In this lockdown period, we have seen how air quality has improved. There was less traffic, less stress, more cycle lanes. It's made people more aware of how businesses operate, how we live and the environment. 

Diversity and inclusion are also a big focus. Board diversity with various perspectives and experience is highly beneficial to businesses avoiding groupthink and bad decision making. 

We see how businesses are treating staff during Covid. Some have been pretty brutal in a lack of care for employees, while other companies like Patagonia have demonstrated a strong commitment to employee welfare.

The pandemic has shown society's inequalities. Essential workers' are well, so essential, yet they are paid poorly. Remote meetings have become normal; that would mean less business travel.

The views in this article are that of Cleona Lira, Financial Adviser. They do not necessarily reflect the views and opinions of Aviva.


1 ESG Landscape Research conducted by The Big Window Survey September 20 for Aviva