Existing client portfolios miss out on ESG reviews

by | Jun 27, 2022

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Research results released by Aviva today show that ESG factors are discussed by a majority of advisers when they are taking on new clients in the fact-finding process, but almost half don’t offer existing clients an ESG look-through on their current investments.

Additionally, although a good number think that it’s important to take the ESG credentials of the provider themselves into account, adviser confidence that they have sufficient resources to do this is very low.

The research, which was carried out in May by lang cat on behalf of Aviva, spoke to 137 advisers who regularly take part in their research panel.

It showed that ESG conversations are becoming much more the norm during new business conversations – 61% of advisers said that they have an existing ESG process in place for onboarding all clients, and a further 23% use an existing process if the client asks for it. 

However, it is a different picture when considering existing portfolios, with just under half (49%) saying they never give clients an ESG look-through  on their existing investment holdings. Of the remainder, only 7% do this as standard for all clients, a further 11% said they would do it for most, and 33% for some.

Confidence in conducting individual or bespoke research seems to play a role in this. Whilst a healthy 72% of advisers said they would be extremely or slightly confident in conducting research or due diligence on an off-the-shelf asset manager or DFM range, this falls to 46% for an adviser’s own fund or stock-picking based on screening or ESG criteria, and 47% in looking for a tool or service to help pick or screen ESG investments.

The ESG credentials of providers themselves, and the platform functionality they offer to provide adviser support in these conversations, are both considered high priority, but there is again a lack of confidence amongst advisers in having the tools to properly assess these. Just under half of advisers (47%) regard platform functionality specifically regarding ESG factors as high priority and 20% have this built into their current processes. With regard to the ESG credentials of the provider themselves, 63% think this is high priority, and 19% have this factor built into current processes.

However,  only 29% of advisers said they were extremely or slightly confident in researching platform functionality, and 36% felt the same about conducting research or due diligence on the wider ESG credentials of providers.

Al Ward, Aviva’s Head of Platform, commented : “Despite the considerable amount of coverage and industry discussion we’ve seen in recent months on all things ESG, this feedback from advisers is clearly telling us that there is still a lack of confidence about where they can resource trusted information to pass on to their clients. There’s still a lot for us to do as an industry.

“Aviva’s ESG Profiling tool on the Adviser platform is one example of where advisers can source independent ESG data on a range of factors and we continue to develop this in line with adviser feedback – but we are conscious there is still a lack of clarity for advisers about where resources like this can be accessed.

“Whilst it’s obviously encouraging that so many are having conversations with new clients about their ESG objectives and beliefs, it’s a wake-up call that nearly half are not having ongoing discussions about what they can do for their clients with existing investments. The flip side of this is that it represents a huge opportunity to take the discussion forward – many consumers are becoming more aware that they can improve their ESG impact by changing their existing investments, and will want to have the tools to do this.

 “This becomes even more important when looked at alongside other findings in the research, where advisers were asked about the motivating factors of discussing ESG. Over a third said the most important factor to them was that discussing these issues with their clients added value to the relationship. Being able to do this with existing clients as well as new, will strengthen those relationships too.”

 

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