Survey: ESG preferences probed in majority of adviser fact-finds

Intermediaries are now explicitly asking about a client's environmental, social and governance preferences when conducting fact-finds.

Around 60% of UK investment advisers are now factoring in ESG-related questions when they speak to clients to conduct initial fact-finds, a new study shows.

The research entitled The Future of Advice – Beneath and Beyond was conducted by analysts at AKG and sponsored by wealth managers Charles Stanley.

It found that of the remaining advisers not currently including ESG questions in their fact-finds, 22% expect to do so within the next year.

As part of the research, AKG surveyed 100 advisers between March and April 2020, 1,041 consumers between 15 and 16 April 2020 and followed this with 20 qualitative interviews with intermediaries between April and May 2020.

“While awareness and appetite for socially responsible investing are increasing, we still need to complete the shift from niche investing to the mainstream,” said John Porteous, group head of distribution at Charles Stanley (pictured).

“One of the main misconceptions is that it doesn’t generate such attractive yields, but our analysis shows that investors have been significantly more likely to generate outperformance from ethical or sustainable funds than from standard funds.”

The research confirmed the widely-held belief that interest in sustainable investment approaches is now increasing among consumers.

Nearly a quarter (24%) of those polled, with investable assets of more than £100,000, said they have independently reviewed their investments to ensure they are sustainable and socially responsible. Around a fifth have done so with the support of a qualified adviser.

“We need to provide the confidence that this type of investing is delivering for people’s financial future as well as for the global good,” Porteous added.

Reviewing the report findings, Charles Stanley concluded that the ESG market still needs to mature further in the retail advice sector.

The wealth management group said it is becoming increasingly important in the coming years for advisers to be able to evaluate fund manager approaches and assess credentials to get a better understanding of key differentiators and performance drivers.

The full report is available here.