The growth of portfolios that incorporate environmental, social, and corporate governance factors (ESG) has been considerable, with financial advisors a crucial conduit for providers and distributers offering mutual funds, ETFs, SMAs, and other vehicles that facilitate ESG investing. The extent advisors focus on ESG investing, their motivation for doing or not doing so, the key challenges they face, and their needs and preferences related to using these solutions are important subjects for consideration.
“Financial Advisors Use of ESG Investments” examines advisor perspectives on ESG investing among both users and non-users. The 62-page study reviews the ways advisors employ ESG investing including the vehicles they most typically use, the extent of use across their base of clients, key challenges in using ESG, and how ESG usage may change going forward. For non-users, the research examines key reasons for not using ESG and the likelihood of offering these types of products in the foreseeable future. The report breaks out data and findings for the entire sample and for key advisor channels – Wirehouse/Regional broker-dealers (Full Service), Independent broker-dealers, and fee-based RIAs (not affiliated with a broker-dealer). Insights are based on proprietary research completed in October 2018 with over 550 advisors working with retail investors.
Key Topic Areas: Financial Advisors and ESG Investing
Familiarity and Consideration of ESG Investing
Advisors Using ESG Investments
Advisors Not Using ESG Investments
To Order the Report
The study is available in PDF format for the subscription price of $1,495. To order the complete 62-page, 38 exhibit report or for more information, please contact:
Howard Schneider, 978-590-7290
or email howard.schneider@practicalperspectives.com
Introduction and Methodology
The growth of portfolios that incorporate environmental, social, and corporate governance factors (ESG) has been considerable, with estimates of over 1,000 funds and more than $2.5 trillion in assets in packaged solutions that rely to some extent on ESG screening. As with most solutions, financial advisors are a crucial conduit for providers and distributers offering mutual funds, ETFs, SMAs, and other vehicles that facilitate ESG investing. The extent of advisors embrace of ESG investing, their motivation for doing or not doing so, and their needs and preferences related to using these solutions are important subjects for consideration.
Our goal in this new research report from Practical Perspectives - a leading consulting and research firm focused on support for wealth management firms, product providers, and distribution platforms - is to share up-to-date insights from advisors regarding their use of ESG investments, the reasons why they do or do not rely on ESG, the drivers for their behaviors, and their needs going forward. This report was developed to provide high-level insights and share the voice of advisors, and in turn, offer product providers and distributors fresh perspective that can further inform strategic and tactical planning.
“Financial Advisors Use of ESG Investments” examines advisor perspectives on ESG investing among both users and non-users. The study reviews the ways advisors employ ESG investing including the vehicles they most typically use, the extent of use across their base of clients, key challenges in using ESG, and how ESG usage may change going forward. For non-users, the research examines key reasons for not using ESG and the likelihood of offering these types of products in the foreseeable future. The report breaks out data and findings for the entire sample and for key advisor channels – Wirehouse/Regional broker-dealers (Full Service), Independent broker-dealers, and RIAs (not affiliated with a broker-dealer).
Among the key questions addressed in this report are:
· How familiar are advisors with ESG investing?
· To what extent do advisors consider ESG factors in constructing portfolios?
· How experienced are advisors in considering and using ESG strategies?
· How widespread is use of ESG investments as measured by percent of assets managed and implementation across their base of clients?
· Is ESG investing an explicit element of advisors’ value proposition to clients?
· What investment vehicles are typically used to implement ESG strategies?
· How has use of ESG investments changed in the past 12 months and how do advisors expect it will change going forward?
· What are the key reasons advisors use ESG investments?
· What do users of ESG perceive as key challenges?
· What types of asset managers do advisors prefer for use in ESG investing?
· What sources do advisors rely on for help in selecting ESG investments?
· How satisfied are advisors with ESG investments?
· What insights do users and non-users have regarding ESG investing?
· What are the primary barriers preventing advisors from using ESG investments?
· What changes would need to occur for non-users to begin using ESG investments?
· What types of asset managers might non-users prefer to leverage for ESG investing?
· How likely are non-users to consider or implement ESG investments in the next 12 months?
· What characteristics define users and non-users of ESG investments?
This report is based on input from a randomly selected cross-section of advisors spanning key channels. In October 2018, advisors were asked to participate in a proprietary online survey concerning portfolio construction. More than 550 advisors provided confidential responses that form the basis for this report. Advisors did not receive any compensation for participation in the survey.
A breakout of respondents by key characteristics is as follows:
Table of Contents
Section I: Executive Summary
Section II: Introduction and Methodology
Section III: Advisors Familiarity and Consideration of ESG Investing
A. How familiar are advisors with ESG investing?
B. To what extent do advisors consider ESG factors in constructing portfolios?
C. How experienced are advisors in considering and using ESG investments or strategies?
Section IV: Advisors Using ESG Investing
A. How widespread is advisors use of ESG investing?
B. Is ESG investing an explicit element of advisors’ value proposition to clients?
C. What investments are typically used to implement ESG strategies?
D. How has use of ESG investing changed in the past 12 months and how do advisors expect it will change in the next year?
E. What are the key reasons advisors use ESG investments?
F. What do advisors view as the key challenges in using ESG investments?
G. What types of asset managers do advisors prefer for ESG investing?
H. What sources do advisors rely on for help in selecting ESG investments?
I. How satisfied are advisors with ESG strategies?
J. What characteristics define advisors using ESG investments?
K. In their own words, what additional feedback do advisors have related to ESG investing going forward?
Section V: Advisors Not Using ESG Investing
A. What are the primary reasons advisors don’t use of ESG investing?
B. What changes would need to occur for non-users to begin implementing ESG investments?
C. What types of investment managers might non-users prefer to access for ESG investing?
D. How likely are non-users to consider or implement ESG investments in the next 12 months?
E. What characteristics define advisors not currently using ESG investments?
F. In their own words, what additional feedback do non-users have related to ESG investing going forward?
Section VI: Implications and Outlook
List of Exhibits
Exhibit 1: Advisors Familiarity with ESG Investing
Exhibit 2: Advisors Familiarity with ESG Investing by Channel
Exhibit 3: Advisors Explicit Consideration of ESG Factors in Constructing Portfolios
Exhibit 4: Advisors Explicit Consideration of ESG Factors in Constructing Portfolios by Channel
Exhibit 5: Advisors Experience with ESG Investing
Exhibit 6: Advisors Experience with ESG Investing by Channel
Exhibit 7: Advisors Use of ESG Investing with Clients
Exhibit 8: Advisors Use of ESG Investing with Clients by Channel
Exhibit 9: Average Percentage of Total Assets Managed in ESG Investments by Channel
Exhibit 10: ESG an Explicit Element of Advisors Value Proposition to Clients
Exhibit 11: ESG an Explicit Element of Advisors Value Proposition to Clients by Channel
Exhibit 12: Vehicles Used for ESG Investing
Exhibit 13: Vehicles Used for ESG Investing by Channel
Exhibit 14: Change in Use of ESG Investing in Past 12 Months
Exhibit 15: Change in Use of ESG Investing in Past 12 Months by Channel
Exhibit 16: Expected Change in Use of ESG Investing in Next 12 Months
Exhibit 17: Expected Change in Use of ESG Investing in Next 12 Months by Channel
Exhibit 18: Key Reasons Advisors Use ESG Investments
Exhibit 19: Key Reasons Advisors Use ESG Investments by Channel
Exhibit 20: Key Challenges in Using ESG Investing
Exhibit 21: Key Challenges in Using ESG Investing by Channel
Exhibit 22: Preferred Choice for ESG Investing
Exhibit 23: Preferred Choice for ESG Investing by Channel
Exhibit 24: Sources Advisors Rely on for Help in Using ESG Investments
Exhibit 25: Sources Advisors Rely on for Help in Using ESG Investments by Channel
Exhibit 26: Satisfaction with ESG Investing
Exhibit 27: Satisfaction with ESG Investing by Channel
Exhibit 28: Why Advisors Don’t Use ESG Investments
Exhibit 29: Why Advisors Don’t Use ESG Investments by Channel
Exhibit 30: Drivers of Potential Use of ESG Investments
Exhibit 31: Drivers of Potential Use of ESG Investments by Channel
Exhibit 32: Preferred Providers for ESG Investing
Exhibit 33: Preferred Providers for ESG Investing by Channel
Exhibit 34: Likelihood of Considering or Implementing ESG Investments in Next 12 Months
Exhibit 35: Likelihood of Discussing ESG Investments with Wholesalers or Sales Support in Next 12 Months by Channel
Exhibit 36: Likelihood of Considering Use of ESG Investments in Next 12 Months by Channel
Exhibit 37: Likelihood of Considering Use of ESG Investments in Next 12 Months by Channel
Exhibit 38: Likelihood of Using ESG Investments in Next 12 Months by Channel
“Financial Advisors Use of ESG Investments” examines advisor perspectives on ESG investing among both users and non-users. The 62-page study reviews the ways advisors employ ESG investing including the vehicles they most typically use, the extent of use across their base of clients, key challenges in using ESG, and how ESG usage may change going forward. For non-users, the research examines key reasons for not using ESG and the likelihood of offering these types of products in the foreseeable future. The report breaks out data and findings for the entire sample and for key advisor channels – Wirehouse/Regional broker-dealers (Full Service), Independent broker-dealers, and fee-based RIAs (not affiliated with a broker-dealer). Insights are based on proprietary research completed in October 2018 with over 550 advisors working with retail investors.
Key Topic Areas: Financial Advisors and ESG Investing
Familiarity and Consideration of ESG Investing
- How familiar are advisors with ESG investing?
- To what extent are ESG factors considered in building portfolios?
- How experienced are advisors in considering and using ESG investments?
Advisors Using ESG Investments
- How widespread is advisors use of ESG investing and is it an explicit element of advisors’ value proposition?
- What vehicles are most widely used to implement ESG strategies?
- What are the key drivers of advisors use of ESG investments and what are the main challenges encountered?
- What sources do advisors rely on most for help with ESG investing?
- How has advisor use of ESG investments changed in the past year and how is it anticipated to change going forward?
- Do advisors prefer to use specialized ESG managers who specialize in this area or broad-based managers offering ESG in addition to other non-ESG strategies?
- How do the most active “enthusiasts” using ESG investments differ from other advisors?
- In their own words, what insights do advisors have regarding the opportunity for ESG investing?
Advisors Not Using ESG Investments
- What are the main reasons advisors do not currently use ESG investments?
- What are the potential catalysts to drive advisors future use of ESG investments?
- How likely are non-users to consider and offer ESG strategies in the foreseeable future?
To Order the Report
The study is available in PDF format for the subscription price of $1,495. To order the complete 62-page, 38 exhibit report or for more information, please contact:
Howard Schneider, 978-590-7290
or email howard.schneider@practicalperspectives.com
Introduction and Methodology
The growth of portfolios that incorporate environmental, social, and corporate governance factors (ESG) has been considerable, with estimates of over 1,000 funds and more than $2.5 trillion in assets in packaged solutions that rely to some extent on ESG screening. As with most solutions, financial advisors are a crucial conduit for providers and distributers offering mutual funds, ETFs, SMAs, and other vehicles that facilitate ESG investing. The extent of advisors embrace of ESG investing, their motivation for doing or not doing so, and their needs and preferences related to using these solutions are important subjects for consideration.
Our goal in this new research report from Practical Perspectives - a leading consulting and research firm focused on support for wealth management firms, product providers, and distribution platforms - is to share up-to-date insights from advisors regarding their use of ESG investments, the reasons why they do or do not rely on ESG, the drivers for their behaviors, and their needs going forward. This report was developed to provide high-level insights and share the voice of advisors, and in turn, offer product providers and distributors fresh perspective that can further inform strategic and tactical planning.
“Financial Advisors Use of ESG Investments” examines advisor perspectives on ESG investing among both users and non-users. The study reviews the ways advisors employ ESG investing including the vehicles they most typically use, the extent of use across their base of clients, key challenges in using ESG, and how ESG usage may change going forward. For non-users, the research examines key reasons for not using ESG and the likelihood of offering these types of products in the foreseeable future. The report breaks out data and findings for the entire sample and for key advisor channels – Wirehouse/Regional broker-dealers (Full Service), Independent broker-dealers, and RIAs (not affiliated with a broker-dealer).
Among the key questions addressed in this report are:
· How familiar are advisors with ESG investing?
· To what extent do advisors consider ESG factors in constructing portfolios?
· How experienced are advisors in considering and using ESG strategies?
· How widespread is use of ESG investments as measured by percent of assets managed and implementation across their base of clients?
· Is ESG investing an explicit element of advisors’ value proposition to clients?
· What investment vehicles are typically used to implement ESG strategies?
· How has use of ESG investments changed in the past 12 months and how do advisors expect it will change going forward?
· What are the key reasons advisors use ESG investments?
· What do users of ESG perceive as key challenges?
· What types of asset managers do advisors prefer for use in ESG investing?
· What sources do advisors rely on for help in selecting ESG investments?
· How satisfied are advisors with ESG investments?
· What insights do users and non-users have regarding ESG investing?
· What are the primary barriers preventing advisors from using ESG investments?
· What changes would need to occur for non-users to begin using ESG investments?
· What types of asset managers might non-users prefer to leverage for ESG investing?
· How likely are non-users to consider or implement ESG investments in the next 12 months?
· What characteristics define users and non-users of ESG investments?
This report is based on input from a randomly selected cross-section of advisors spanning key channels. In October 2018, advisors were asked to participate in a proprietary online survey concerning portfolio construction. More than 550 advisors provided confidential responses that form the basis for this report. Advisors did not receive any compensation for participation in the survey.
A breakout of respondents by key characteristics is as follows:
- Affiliation
- Full Service BD - 21%
- Independent BD – 46%
- RIAs – 30%
- Other BD – 3%
- Industry Experience
- Less than 5 years – 4%
- 5 to less than 10 years – 10%
- 10 years to less than 15 years – 18%
- 15 years to less than 20 years – 18%
- 20 years or more – 51%
- Assets Under Management
- Less than $50 million – 35%
- $50 million to less than $100 million – 20%
- $100 million to less than $250 million – 22%
- $250 million or more – 24%
- Practice Structure
- Solo practitioner – 47%
- Small team (10 or fewer professionals) - 43%
- Large team (more than 10 professionals) – 10%
- Age
- 40 or younger – 16%
- 40 to 50 – 19%
- 50 to 60 – 31%
- 60 or older – 34%
Table of Contents
Section I: Executive Summary
Section II: Introduction and Methodology
Section III: Advisors Familiarity and Consideration of ESG Investing
A. How familiar are advisors with ESG investing?
B. To what extent do advisors consider ESG factors in constructing portfolios?
C. How experienced are advisors in considering and using ESG investments or strategies?
Section IV: Advisors Using ESG Investing
A. How widespread is advisors use of ESG investing?
B. Is ESG investing an explicit element of advisors’ value proposition to clients?
C. What investments are typically used to implement ESG strategies?
D. How has use of ESG investing changed in the past 12 months and how do advisors expect it will change in the next year?
E. What are the key reasons advisors use ESG investments?
F. What do advisors view as the key challenges in using ESG investments?
G. What types of asset managers do advisors prefer for ESG investing?
H. What sources do advisors rely on for help in selecting ESG investments?
I. How satisfied are advisors with ESG strategies?
J. What characteristics define advisors using ESG investments?
K. In their own words, what additional feedback do advisors have related to ESG investing going forward?
Section V: Advisors Not Using ESG Investing
A. What are the primary reasons advisors don’t use of ESG investing?
B. What changes would need to occur for non-users to begin implementing ESG investments?
C. What types of investment managers might non-users prefer to access for ESG investing?
D. How likely are non-users to consider or implement ESG investments in the next 12 months?
E. What characteristics define advisors not currently using ESG investments?
F. In their own words, what additional feedback do non-users have related to ESG investing going forward?
Section VI: Implications and Outlook
List of Exhibits
Exhibit 1: Advisors Familiarity with ESG Investing
Exhibit 2: Advisors Familiarity with ESG Investing by Channel
Exhibit 3: Advisors Explicit Consideration of ESG Factors in Constructing Portfolios
Exhibit 4: Advisors Explicit Consideration of ESG Factors in Constructing Portfolios by Channel
Exhibit 5: Advisors Experience with ESG Investing
Exhibit 6: Advisors Experience with ESG Investing by Channel
Exhibit 7: Advisors Use of ESG Investing with Clients
Exhibit 8: Advisors Use of ESG Investing with Clients by Channel
Exhibit 9: Average Percentage of Total Assets Managed in ESG Investments by Channel
Exhibit 10: ESG an Explicit Element of Advisors Value Proposition to Clients
Exhibit 11: ESG an Explicit Element of Advisors Value Proposition to Clients by Channel
Exhibit 12: Vehicles Used for ESG Investing
Exhibit 13: Vehicles Used for ESG Investing by Channel
Exhibit 14: Change in Use of ESG Investing in Past 12 Months
Exhibit 15: Change in Use of ESG Investing in Past 12 Months by Channel
Exhibit 16: Expected Change in Use of ESG Investing in Next 12 Months
Exhibit 17: Expected Change in Use of ESG Investing in Next 12 Months by Channel
Exhibit 18: Key Reasons Advisors Use ESG Investments
Exhibit 19: Key Reasons Advisors Use ESG Investments by Channel
Exhibit 20: Key Challenges in Using ESG Investing
Exhibit 21: Key Challenges in Using ESG Investing by Channel
Exhibit 22: Preferred Choice for ESG Investing
Exhibit 23: Preferred Choice for ESG Investing by Channel
Exhibit 24: Sources Advisors Rely on for Help in Using ESG Investments
Exhibit 25: Sources Advisors Rely on for Help in Using ESG Investments by Channel
Exhibit 26: Satisfaction with ESG Investing
Exhibit 27: Satisfaction with ESG Investing by Channel
Exhibit 28: Why Advisors Don’t Use ESG Investments
Exhibit 29: Why Advisors Don’t Use ESG Investments by Channel
Exhibit 30: Drivers of Potential Use of ESG Investments
Exhibit 31: Drivers of Potential Use of ESG Investments by Channel
Exhibit 32: Preferred Providers for ESG Investing
Exhibit 33: Preferred Providers for ESG Investing by Channel
Exhibit 34: Likelihood of Considering or Implementing ESG Investments in Next 12 Months
Exhibit 35: Likelihood of Discussing ESG Investments with Wholesalers or Sales Support in Next 12 Months by Channel
Exhibit 36: Likelihood of Considering Use of ESG Investments in Next 12 Months by Channel
Exhibit 37: Likelihood of Considering Use of ESG Investments in Next 12 Months by Channel
Exhibit 38: Likelihood of Using ESG Investments in Next 12 Months by Channel
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