More than a third of advisers are confused by ESG regulations and four in 10 say they need more ESG training, new research shows.
A CoreData Research study of 266 UK financial advisers found nearly half (46%) are worried about greenwashing. However, more than a third (35%) admit they are confused by the growing array of ESG regulations intended to combat greenwashing. Levels of confusion are higher among advisers focused on mass market clients (43% vs. 30% mass affluent and 36% HNW).
Adviser confusion over ESG regulations in part reflects low levels of knowledge. Nearly three in 10 (29%) advisers agree their knowledge of the Sustainability Disclosure Requirements (SDR) is poor. This increases to more than a third of mass market advisers (35% vs. 29% mass affluent and 27% HNW). Furthermore, just 17% of advisers overall disagree they have poor knowledge of SDR – indicating less than one in five have a solid understanding of the incoming regulation.
The CoreData study, conducted in August, highlights an ESG knowledge gap, underlining the importance of advisers receiving the necessary training and education to improve their understanding. This is something advisers themselves acknowledge — nearly four in 10 (39%) agree they need more ESG training. Mass market advisers (43%) are more likely to say they need additional ESG training.
But while advisers recognize the need to enhance their ESG knowledge base, they are struggling to get the necessary support. Only a third (34%) say their firm provides ESG training, with this dropping to 23% of mass affluent advisers. Furthermore, just one in five (20%) advisers say their firm has, or plans to have, at least one member of staff in a dedicated ESG role. This plunges to less than one in 10 (8%) mass market advisers. HNW advisers, however, are far more likely to work for firms with specialist ESG personnel (25%).
“Financial advisers are battling against a hazardous set of headwinds including inflation, interest rate rises and a cost of living crisis which has sent UK investors running for cover,” said Andrew Inwood, founder and principal of CoreData. “But as advisers swim against these currents, they also need to contend with a wave of ESG regulations. So it is little wonder that some are feeling confused and calling for additional training. This situation provides an opportunity for asset managers and providers to bridge the ESG knowledge gap through the provision of educational and training materials for advisers.”