UK savers ploughed almost £1 billion a month into ESG funds in 2020, but there remains a number of hurdles for both advisers and investors to overcome, says Aegon.
In its latest Adviser attitudes report, Aegon said ESG investment had risen 66% year-on-year, with 41% of advisers experiencing an increase in queries about ESG.
Despite this, the overwhelming majority (84%) of advisers surveyed cited barriers to integrating ESG into their propositions.
Confusion around ESG research was cited as the leading barrier (38%), followed by a lack of ESG asset classes to build rounded portfolios (26%). A further 22% felt that the current range of investment products is too equity focused and doesn’t offer clients products that match their values and investment goals.
A further quarter (24%) of advisers said a lack of information on ESG was the key issue when selecting ESG investments.
This lack of knowledge extended to both advisers and clients, with only 2% of advisers believing their clients understood ESG well, with the remaining 98% citing a need for further education and improved awareness of the options available.
Just over one in ten (12%) of advisers said their clients are overwhelmed by the choices available, while 28% said their clients didn’t realise there were different types of approaches to ESG.
Aegon said this lack of awareness highlighted the need for industry standardisation of ESG fund categories so advisers and their clients can more easily compare strategies.
“ESG is no longer an optional extra. There is a real opportunity to help advisers cut through the marketing messages so their clients can connect their savings with the ability to make an environmental or social impact.” – Tim Orton, Aegon
Tim Orton, managing director of investment solutions at Aegon, said: “ESG is no longer an optional extra. There is a real opportunity to help advisers cut through the marketing messages so their clients can connect their savings with the ability to make an environmental or social impact.
“Our research shows that the industry is not moving fast enough in terms of clarity and consistency ─ which is a source of frustration for advisers and their clients.
“The government’s green finance agenda puts UK financial services at the forefront of this opportunity and as an industry we need to increase transparency so clients and their advisers can make informed decisions about their investments.”
