More than half of investors want ESG in their portfolios, reports Quilter
Data from Quilter’s new client profiler tool shows attitudes to responsible investing - Quilter’s Andy Miller details the findings to Harriet O’Brien
Quilter reports that 56 per cent of clients want ESG to play a role in their investments, with 12 per cent choosing portfolios dedicated to responsible investing and 44 per cent wanting to take ESG factors into account in their investment selection. Meanwhile 44 per cent of the company’s clients are merely aware of ESG.
The findings come from a new client profiler tool, launched to support Quilter’s WealthSelect Managed Portfolio Service that helps advisers to understand and match their clients’ requirements. The tool was developed in collaboration with software company Dynamic Planner, and it assesses client needs across four areas: risk, investment goal, investment management style and ESG preference.
The wealth management company, which oversees GBP107.2 billion in customer investments, found that data from the new tool partly correlates with a survey it conducted in March 2021, where 11 per cent of investors indicated they wanted investments dedicated to ESG.
Andy Miller, investment specialist at Quilter, comments that the data from the tool “so far shows a slight rise in the number of clients who are ESG dedicated, between research carried out in March 2021 and actual clients put through the profiling tool March-June 2022 - a rise from 11 to 12 per cent. This would suggest that there has not been a significant rise in the number of investors who are interested in investing responsibly over this period. However, in the majority of cases - 56 per cent - investors wish for sustainability factors to play some role in how their investment portfolios are selected or managed. That is a higher percentage than many might think. The role of the adviser is to educate and explain responsible investing appropriately and that is exactly what the tool is designed to help with.”
Quilter offers five tips for discussing responsible investment with clients: broach the topic once a relationship of trust has been established with the client; be positive, don’t project guilt on to the client; don’t get bogged down in detail initially; empathise with the client’s stance; and be wary of projections over investment returns - while some clients believe responsible investing means foregoing investment returns, others think investing responsibly makes higher returns more likely, although in time either could be the case.
When it comes to notions that ESG appeals more to a younger generation, Andy Miller is mildly sceptical. “The ‘generation gap’ which is typically suggested between the responsible investing preferences of millennials, generation X and baby boomers is not as strong as often proposed,” he comments. He cites research from Morningstar’s report The True Faces of Sustainable Investing, 2019, which, he says “found that while there was a slightly stronger preference for sustainable investing when comparing baby boomers to millennials, this statistical significance didn’t exist after including other factors. In fact, they found that the majority of investors across all age groups were interested in discussing this area, which has been our experience too.”