Roadmap to ESG - Part 6

In this sixth part of our ‘Roadmap to ESG’ series, developed in collaboration with research firm NextWealth, we look at how ESG evolves within a firm.

As part of the research for this series, we spoke to a variety of financial planners, some who were very advanced in their ESG offerings and some who were still in the strategy planning phase.

“By no means do I think we have completed that journey. I think we are still in the process of educating our clients, educating our financial planners and understanding the tools available to support the delivery of a good responsible panel. I also feel there is more to be done from a regulatory and industry point of view to get a consistent measure and a consistent way of reporting, understanding, and comparing different responsible ESG funds.”

Roy Coulson, Attivo Group.

They were all asked to rate their progress on a scale of one to 10, with one meaning they were at the very early stages and 10 meaning they are completely satisfied they have done all they could. Interestingly, all of them scored themselves somewhere between a 4 and a 6.

At first glance, this seems odd, considering they are all at very different stages. However, this is an evolving subject and firms are recognising that there is more to learn and more to be done to review and refine the proposition.

“Is it perfect? No. Will it change? Yes, because we review it annually. As we learn more and look at it more, and as clients become more engaged, the level of detail and the filters, the requirements, and what we use as a firm will probably change.”

David Nelson, Intelligent Capital

Learning more about ESG and having deeper client conversations

A number of advisers we spoke to expressed the importance of educating clients and being able to communicate the impact of their investments.

“I definitely see it as my role to help educate clients on ESG. Many get their investment ideas from media such as the Daily Mail and they are often surprised that the facts don’t always align to what they’ve read.”

Dave Watson, Throgmorton Financial Services

“What’s interesting is that clients who decide to really get behind responsible investing don’t mind that tailoring a portfolio might cost a bit more – they appreciate the value it’s adding. These clients prioritise value over cost.”

Roy Coulson, Attivo Group

“If returns, diversification, concentration, and all those kinds of things rank higher, you would still like to tell people what good it is doing. Whether it's Worthstone (or another) in their reports to clients they show how much good they're doing in terms of carbon emissions, and all those kinds of things. There's some really clever and good stuff out there that you can portray to clients, that actually shows them making a difference.”

Alex Reynolds, Advies Private Clients

Clearly, ESG is a topic that requires time and focus from financial advice firms, to ensure they are getting it right.

However, some planners expressed frustration that they are still waiting for clear guidance from the regulator. In our next article, we’ll look at what we know about the FCA plans and what this might mean for firms. Follow us on LinkedIn for the next article in our Roadmap to ESG where we focus on ESG regulation and what to expect.

Roadmap to ESG part 7: ESG regulation: What to expect

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