ESG profiling tool launched to help assess client preferences

9 September 2021

Pacific Asset Management has developed a new ESG profiling tool to guide advisers in assessing their client’s ESG preferences.

EnlightenESG, which was designed in conjunction with Gordian Advice’s Nick Spencer and financial planning firm Fidelius Group, will use a series of questions to map a personalised sustainable investment profile to each client.

Clients will be asked about their lifestyle and how they incorporate sustainability in their day to day choices, as well as their views on big picture sustainability issues and how they feel about taking a sustainable investment versus a conventional investment.

The tool will enable advisers to gain a better understanding of how clients express their sustainable goals, whether they are interested in a particular area of sustainability and their tolerance to different risks attached to their decision making, the asset manager said.

Following the profiling process, advisers will receive two separate reports – one for use with clients and one to use within their business.

Advisers will also be able to access educational views on sustainability, guest-curated by independent editors, to help them stay abreast of changes in the ESG landscape.

Matthew Lamb, CEO of Pacific Asset Management, said: “EnlightenESG is our open commitment to ensuring that sustainability meets suitability. As asset managers we are very good at championing the benefits of our own products, often through a fog of financial jargon but we mustn’t forget the implications of that to the ultimate consumer of our product.

“EnlightenESG’s aim is to protect and inform advisers and clients by helping them to make better choices, through intelligent profiling of appetites and attitudes towards sustainability. In the process, it also supports the continued adoption, and in our view, the overall sustainability and longevity of positive investing.”

Lamb said new regulation and a lack of standardised nomenclature has made the sector increasingly confusing for investors and advisers.

Lamb added: “With EnlightenESG, we wanted to build a framework around this which advisers can use to help navigate this complex area. ESG should not be dictated by providers. It is not about delivering a pre-defined outcome and we believe an educational approach is better than a proscriptive one.”

Nick Spencer of Gordion Advice commented: “There is a growing awareness across society of the importance of overseeing the environment and social factors within our economy. Investors want to see these factors reflected in the investment choices that they make.  However, like the different lifestyle choices that people make, investors differ in the degree and focus with which they want these factors included in their investment portfolios.

“However, advisers and clients face a blizzard of industry jargon that fails to address these factors in relatable terms. The ESG profiler uses everyday examples to understand an investor’s views and their lifestyle choices on environmental, social and governance factors along with their willingness to engage in trade-offs.  By comparing their responses against peers, the profiler creates a sustainability profile that the adviser can review with their client.

“But more importantly, it enables advisers to discuss, in everyday terms, what matters to their clients.  And using that discussion in the context of their client’s broader financial goals, enables the adviser to integrate their client’s sustainability preferences into their suitability needs.”

Professional Paraplanner