ESG – Environmental, Social, and Governance – investing has graduated to a central position in the investment strategy landscape. Two sets of factors mean wealth managers cannot ignore it.
The new generation of clients increasingly want to see ESG reflected in their portfolios. Credible industry sources indicate that some 76% of younger UK generations say it’s increasingly important to consider ESG factors when investing, compared to 37% of older respondents.
ESG focus is not just a matter of attracting younger clients. It has compliance implications too. The EU Regulation on ESG disclosures in the financial sector comes into effect from 10th March 2021.
Building ESG-related client satisfaction and business opportunities will demand more than ‘bare bones’ compliance, or generic ESG information. Successful advisers will leverage deep knowledge of clients’ and prospects’ individual preferences and passions in the ESG category. These might include climate, education or fair labour.
Advisers will curate and present specific ESG suggestions that help clients reconcile their financial goals with their ethical concerns. But this represents significant background work. How will it be feasible without big increases in bandwidth?
The answer is technology solutions. Digital tools can collect clients’ preferences, check information about companies to analyse their ethical responsibilities, and track investments to ensure they follow correct criteria. All done quickly and accurately.
So, with the right client service culture and the appropriate digital tools, good investments can be good business too.