Advisers could lose clients over lack of ESG commitments
Advisers who are unable to demonstrate adequate commitment to environmental, social, governance (ESG) investing could start losing clients as nearly two out of three retail investors are ready to move their investments to new advisers, according to research from behavioural finance Oxford Risk.
Further to that, around one in five retail investors said they had already done so or intended to do so while another 43% said they would move if they continued to be unhappy about the ESG commitment of their current wealth adviser.
One in three clients rated their current adviser’s ESG commitment as ‘highly’ or ‘very highly’, 62% were neutral and 7% rated their current adviser’s ESG focus as either ‘poor’ or ‘very poor’.
The research also found that one in five of clients held 60% of their investments in ESG-friendly funds but only less than 5% said they had all their wealth in the ESG-friendly funds.
“Advisers who do not demonstrate a commitment to and focus on ESG investing will lose clients, and investors are ready to move money to new advisers if they are unhappy. In particular, deployment of cash into new investments will greatly favour strong ESG propositions,” Oxford Risk’s head of behavioral finance, Greg B Davies, said.
The research also found that technology played a crucial role for investment providers and advisers in order to meet the responsibilities of matching socially-minded investors to suitable ESG investments.
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