According to FE Fundinfo’s new Financial Adviser Survey, the lack of clear standards and definitions and the potential for greenwashing are the two main industry barriers preventing financial advisors from further promoting ESG investing for their clients. .
A 2022 survey of over 200 UK-based financial advisors conducted towards the end of 2021 found that 56% of advisors said the lack of clarity about what ESG investing really entails It turns out that they think it is a hindrance to further hiring.
Similarly, 55% say greenwashing concerns are discouraging advisors from promoting ESG funds.
This is despite both growing client interest and the expansion of ESG investment options available, with 72% of respondents now offering some form of ESG proposition to their clients, compared to the previous year. 7% increase.
Commenting on the findings, Christoph Dreher, Head of ESG Products Group at FE Fundinfo said: , the industry needs to do more to form understanding and provide relevant information.
“While the industry has made great strides in recent years, client and advisor understanding of ESG investing has hampered greater adoption of ESG investing, and the market has sought to support this interest by creating accessible, understandable, We need to provide more education and information.”
This has led many advisors to develop their own methods of sourcing the information they need for their clients, FE Fundinfo said, with 49% of respondents using multiple third-party sources for ESG information. doing.
In addition, 21% use information provided by foundation groups and only 2% have adopted national ecolabels.
Dreher adds: .
“In such a rapidly changing industry where regulations and their requirements are constantly changing, it is not surprising that there is a gap between the information fund managers need to provide from a compliance perspective and the advisors they are presented with. It contains a lot of information that isn’t necessarily of value to the client.”
In the 2022 survey, 66% of advisors are investing more client money in ESG proposals than last year, and 33% of advisors believe they are “active” promoters of ESG funds, showing a positive have reached a conclusion. Previous year.
