The demand for ESG strategies among retail investors is growing at an accelerated pace – but financial advisers are being inconsistent about when they discuss the subject with clients.
Aviva commissioned consultancy firm the Lang Cat to survey 137 UK financial advisers and found 61% have an ESG process in place for onboarding all clients, and a further 23% use an existing process if the client asks for it.
But it is a different picture when considering existing portfolios, with just under half (49%) saying they never give clients an ‘ESG lookthrough’ on their existing investment holdings.
Of the remainder, only 7% do this as standard for all clients, a further 11% said they would do it for most, and 33% for some.
Research issues
The survey also found 72% of advisers said they would be extremely or slightly confident in conducting research or due diligence on an off-the-shelf asset manager or DFM range.
This falls to 46% for an adviser’s own fund or stock-picking based on screening or ESG criteria and 47% in looking for a tool or service to help pick or screen ESG investments.
Just under half of advisers (47%) regard platform functionality specifically regarding ESG factors as high priority and 20% have this built into their current processes. With regard to the ESG credentials of the provider themselves, 63% think this is high priority, and 19% have this factor built into current processes.
But only 29% of advisers said they were extremely or slightly confident in researching platform functionality, and 36% felt the same about conducting research or due diligence on the wider ESG credentials of providers.
More work for industry to do
Al Ward, Aviva’s head of platform, said: “Despite the considerable amount of coverage and industry discussion we’ve seen in recent months on all things ESG, this feedback from advisers is clearly telling us that there is still a lack of confidence about where they can resource trusted information to pass on to their clients.
“There’s still a lot for us to do as an industry. Whilst it’s obviously encouraging that so many are having conversations with new clients about their ESG objectives and beliefs, it’s a wake-up call that nearly half are not having ongoing discussions about what they can do for their clients with existing investments.
“The flip side of this is that it represents a huge opportunity to take the discussion forward – many consumers are becoming more aware that they can improve their ESG impact by changing their existing investments and will want to have the tools to do this.
“This becomes even more important when looked at alongside other findings in the research, where advisers were asked about the motivating factors of discussing ESG.
“Over a third said the most important factor to them was that discussing these issues with their clients added value to the relationship. Being able to do this with existing clients as well as new, will strengthen those relationships too.”
