Is your financial advisor guilty of ‘halalwashing’? Ask these 5 questions to find out.

Halalwashing is when a company makes false or misleading claims about their investment’s Shariah compliance. Far too often, we see advisors claiming to invest halal for their clients while being intentionally ambiguous.  Advisors who promise to manage a portfolio in accordance with Islamic investment guidelines, but then lack written policies or procedures designed to ensure that they do what they say they’ll do, are engaging in halalwashing. Unlike ESG investing which has no set regulations or definitions for what makes something “sustainable”, the Islamic financial industry has a renowned institution called the Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI).  AAOIFI is regarded as the de facto gold standard for Shariah compliance in Islamic finance globally. They outline the general guidelines necessary to label an investment halal. It’s up to the advisory firm to incorporate these into their compliance program. In fact, regulators like the Securities and Exchange Commission (SEC) will audit firms to hold them accountable for any claims they make about halal investing.   How can you identify an advisor or investment firm engaged in halalwashing? The best way is to ask questions. Here are 5 questions that I recommend you ask an advisor offering “halal” products: Do