According to a recent Vontobel global study, a higher percentage of financial advisers (62%) are including ESG offerings and business into their client interactions, up from 53% in 2021.
The outcome demonstrates that, in spite of the challenges and political pushback that sustainable investment has faced over the past two years, sustainable services are nevertheless becoming more and more significant in the advice market.
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The Vontobel Advisor ESG Study 2024 evaluates the perspectives of 300 financial advisers and wealth managers from 15 countries across Europe, the Americas, and Asia Pacific to better comprehend their perspectives on the many aspects and problems of ESG investing.
When asked how much of their overall book of business is invested in ESG, 54% of advisers worldwide answered less than 10% is now invested this manner.
European advisers were prone to have a larger book of business in the field, with 24% spending at least a quarter of their overall book in ESG, as opposed to 16% in APAC and 11% in North America.
Growing ESG business
With ESG continuing to gain traction in every location surveyed, this number is anticipated to increase in the upcoming years.
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By GlobalDataOver 63% of advisers in all three markets anticipate that their clients will have invested 10% or more in ESG by the end of the next three years, indicating that this is a booming sector.
Nonetheless, advisers with minimal or no ESG allocations, the most common rationale (80%) given was that ESG is simply a passing trend.
Moreover, earlier worries about how ESG might have affected financial results seem to have subsided in all markets.
Nowadays, the majority of advisers (65%) think that ESG investing has no negative effects on investment performance and instead has a neutral to positive influence. 76% of advisers think it has a neutral to positive impact, with Europe having the highest prevalence of this.
Even with this increasing self-assurance, advisers still encounter a number of difficulties when suggesting ESG investments. Inconsistent standards, measurements, and taxonomies are the main barrier; according to 88% of advisers, this made it very or extremely difficult.
The availability of insufficient sustainable products across all asset classes (82%), the evolution of ESG rules (81%), and the lack of ESG data, research, and knowledge (80%) were among the other reasons given.
Moreover, the study indicates that advisers use various information sources, including financial institutions, industry reports, whitepapers, and financial news, to provide better advice on ESG products.
Christoph von Reiche, Vontobel’s head of institutional clients, commented: “Although ESG has been facing several headwinds recently, our study shows that it is set to continue to rise in popularity among investors in the coming years to the extent that Bloomberg Intelligence estimates that global ESG assets will rise to $40trn by 2030. With their knowledge, competence and closeness to clients, financial advisers and wealth managers play a key role in helping the ESG sector to grow further and enabling investors to benefit from this important trend.
“However, there still are significant hurdles and the whole investment industry needs to provide greater support in helping advisers overcome these obstacles. On the perceived lack of suitable ESG products across asset classes, a closer and more open dialogue between both parties could help ensure that advisers’ needs, and those of their clients, are met appropriately.”
