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Advice firms predict ESG will grow post Covid

21 December 2020

A growing number of advisers believe sustainable investing will grow in popularity in the wake of the Covid-19 pandemic, new research from Standard Life has revealed. 

Standard Life’s bi-annual survey of 250 advisers found that 69% of advisers think environmental, social and corporate governance (ESG) investing is more likely to happen in the future, up from 54% who said the same in June. None of the advisers surveyed thought ESG investing is less likely following Covid-19, suggesting the investment trend has escaped the effects of the pandemic, Standard Life said. 

The findings follow recent research from Boring Money and Standard Life that found that more than four fifths (83%) of advised investors say they would value a conversation about investing sustainably but only 45% of advisers are having that conversation with clients. 

More than half (51%) of advisers said more affordable options would make them more inclined to use new investment approaches, while 40% cited higher returns and a third (32%) said they would like more information on how sustainable investing works. 

Jenny Davidson, head of platform investment proposition, Standard Life, said: “The continued shift towards ESG must be accompanied by a debunking of the misconception that ESG hampers a fund’s performance.”

Meanwhile, Standard Life’s survey found that nearly a fifth (17%) of advisers also expect investment management outsourcing to become more likely in the future, while 14% said the uptake of risk-rated fund ranges is more likely to happen at their firm following Covid-19. Almost a fifth (17%) believe active over passive investing will be more popular. However, less than one in 10 (7%) thought high risk over low risk investing would be more likely. 

Davidson added: “The uptake of high-risk investing was the only investment area in our poll deemed to be less likely by advisers. It’s perhaps not surprising that the popularity of these approaches is waning following market fluctuation caused by the pandemic.

“Platform technology has a crucial role to play in facilitating the investments and information that are made available to advisers and can enable truly personalised solutions that reflect an individual’s ethical convictions, beliefs and environmental considerations. We’re certain that despite ebbs and flows in investment approaches, the industry will move forwards to adapt alongside clients’ expectations and priorities.”

Professional Paraplanner