Advisors and wealth managers report increased focus on ESG credentials by clients but is the industry well placed to deliver?
Wealth managers, financial advisors, portfolio managers, and financial planners are almost unanimous in reporting an increase in clients including ESG credentials in their investment portfolios.
A new survey from risk management solutions provider Ortec Finance reveals that 96% of respondents say clients are increasing this focus, including 74% who have seen a slight uptick and 22% who report a dramatic rise.
Poll participants collectively manage around $370 billion of assets and most believe that ESG will become an even more important part of portfolio management in the next 24 months, including 8% who expect this to be dramatic.
Climate change is a major driver of the trend with 34% reporting a dramatic increase in client focus, 62% seeing a slight increase, and just 4% seeing no change.
Industry challenges
While clients are clear on their demands, what is less certain is how well placed the wealth management industry is to deliver.
Nine in ten wealth professionals surveyed said that the industry needs to invest heavily in new technology to help them understand the risks.
Ronald Janssen, managing director of Goals-Based Planning at Ortec Finance, said that private investment is critical to ensuring the world can meet climate-related goals on carbon net zero by 2050, but the wealth management industry needs to be in a strong position to help investors play their part.
“It is encouraging that so many investors are increasing their focus on ESG issues and actively avoiding companies that contribute to climate change,” he said. “But Canadian advisors need the right technology and systems if they are to fully support their clients in investing for good.”
