As a consequence of increased awareness, the looming intergenerational wealth transfer, and the ageing of Millennials, advisers will encounter more demand for ESG options.
ESG investing is no longer a niche category, with funds flow into sustainable funds outstripping flows into traditional investments in recent years.
The ubiquity of ESG investing reflects not only increasingly powerful social and regulatory factors, but also the superior investment returns achieved by funds managed sustainably.
Rather than being a homogenous, one size fits all framework, Responsible Investing is an umbrella under which sits a spectrum of different methodologies reflecting the different objectives and preferences of investors.
Advisers should identify whether there are any gaps between increasing demand for Responsible offerings by their clients, and their ability to make them available for client consideration.
Regulatory guidance around Responsible Investing advice is likely to evolve, as it has in other corporate sectors, and advisers should keep abreast of any changes.
In summary, an increasing desire to make a positive impact on the planet is being seen across governments, businesses, and individuals. This is being reflected in both the increasing incorporation of ESG principles into day-to-day business management, and in the growing popularity of ESG investment options. As this momentum continues to grow, financial advisers have an ideal opportunity to engage with both new and existing clients, to facilitate outcomes which can meet both ethical and financial objectives and adding a new dimension to the value of their advice.
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