Investors report lack of adviser interest in ESG
Financial advisers have a role to educate consumers on how their views on environmental, social and governance investing can be translated in their portfolios.
Research by New Zealand fintech, Capital Preferences, of over 300 advised investors found 59% said they placed high importance on ESG factors in their investments, with the highest proportion among those with $350k-$1.4 million in assets.
However, less than 40% felt their adviser was committed to helping them invest sustainably and only 20% said their adviser explained ESG concepts and terms to them.
While there was a desire to invest with ESG goals in mind, there was a lack of understanding around how it could be translated in their portfolios.
The majority said they were unaware of concepts such as negative screening or impact investing and only one in seven said they were confident that their portfolio was fully aligned to their values.
Only 34% of those who rated ESG as ‘somewhat important, important or very important’ could identify how much they wanted invested in ESG and 27% knew how they wanted ESG represented in their portfolios.
“Tight alignment between an investor’s ESG preferences and portfolio is central to a high-calibre experience,” the firm said.
“It underscores the need for wealth managers and superannuation funds to educate and help investors and members discover their own ESG portfolios.”
This could be done by using educational tools, client discovery tools, sustainability metrics, reports on the sustainability of their investments and alerting clients if a company they had shares in had an ESG-related controversy.
AUTHOR
Laura Dew
Recommended for you
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Australian licensees are expected to make greater use of custom model portfolios for their clients, according to State Street Investment Management, following in the footsteps of US peers.
Adviser Ratings has argued that it’s time for more advisers to utilise digital engagement tools available to them as a disconnect grows between consumers seeking advice from finfluencers and from professionals.
