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
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
