More than half (56%) of advised clients want their portfolio to have an ESG focus, although just 12% are ESG ‘dedicated’, according to new research from Quilter.
While 12% of clients are ‘dedicated’, meaning they want ESG factors to be a major influence on how their portfolio is managed, a much larger 44% are ESG ‘focused’ meaning they will take ESG factors into account when selecting a portfolio.
Quilter said 44% of clients are ESG ‘aware’, which means they are aware of the ESG rating of their portfolio.
The group said the findings correlate with research carried out in March 2021 which indicated that 11% of people are ESG ‘dedicated’. In response, Quilter launched a new tool to support its WealthSelect Managed Portfolio Service which added responsible and sustainable portfolios to the range.
David Tiller, commercial and propositions director at Quilter, said: “Suitability is already an area that attracts significant regulatory scrutiny and it is absolutely crucial that advisers are able to articulate and invest client assets according to their preferences for integrating ESG factors.
“The data from the tool shows that responsible investing is not a one size fits all. While the demand for and awareness of investments that actively consider ESG factors have grown over recent years, there are varying degrees of preferences when assessing clients psychometrically. It’s especially important to acknowledge the middle ground of clients who may not be ready for an ESG dedicated portfolio but who would still like to select their portfolio partly on the basis of its ESG rating.”
Quilter says advisers should raise the topic of ESG at the right time and in the right way, when trust has been built in the relationship and clients have the context of their financial circumstances.
Quilter also recommends not projecting guilt on clients or basing the decision on perceived negative or positive returns. Finally, Quilter says advisers shouldn’t get too bogged down with detail and make sure they empathise with the client’s stance.
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