When it comes to dinner table topics for conversation, pensions have not traditionally been high on the list.
But for Joe Parkin, head of UK sales at BlackRock-owned exchange-traded fund provider iShares, never has the time been more ripe to ask people if they know how their pension is being invested.
Sitting down to interview Mr Parkin in a month dominated by climate change protests and the Supreme Court decision on the prorogation of parliament, the subject of geopolitics is never far away.
It is a volatile time and Mr Parkin says the investment and advice sector can play a crucial role in getting people interested in investing their money in companies and organisations they really care about.
Mr Parkin says: “My five-year view, and it would have been my 10-year view until the start of this year, is that [environmental, social and governance] is absolutely everything we are going to do.
“It will be built into every single investment process. Our clients are asking us to build it into investment processes as well as launch products for it.
“It’s not just about the products. It’s about what you stand for as an organisation.”
ESG investing is becoming a significant feature for ETFs.
And Mr Parkin says it is set to grow further, particularly at a time when there is a heightened awareness around climate change.
Effecting change
In his role, Mr Parkin manages the strategy for the institutional, financial advice and wealth management sectors for iShares.
“We have had a record month from an iShares perspective in August with regards to flows into ESG products, it is definitely coming,” he says.
“The key thing for me is, there is a huge amount of people who massively care about the social impact they are having and the effect their lives have on the environment.
“With the protests, we as an industry can connect with those people and allow them to understand that probably the most critical thing they can do to effect change, is to actually call their IFA, investment adviser, their robo-adviser or their fund manager and ask what they are doing to allocate capital to companies that are doing something for the good.”
Mr Parkin adds: “If I am sitting around a dinner table, and we are discussing climate change and I go round the table, and start asking people, what are you doing with your pension, often they will turn around and say, ‘Nothing’.
“I’ll say to them, ‘You can actually effect change’. We can get people engaged, because people will be like, ‘Not only do I not want to have carrier bags in supermarkets, but I also want to do something with my pension. Is my pension fit for purpose?’”
While climate change protests are shaking up cities, the volatility in geopolitics is shaking up the investment market and driving up the level of interest in ETFs among investors, particularly those in the millennial age bracket.
Mr Parkin says: “Investors want to be more nimble around how they move around their portfolio.
“Think about today and how potentially your shorter-term view of the UK has changed and you see how markets are reacting. I’m not saying all investors will change their view on a whim, but they may have prepared themselves for the moment.
“That’s where one of the key unique selling points of ETFs is: the ability to move around a portfolio tactically.”
Thematic growth
Since BlackRock’s acquisition of iShares in 2009, the division’s assets under management has grown to $2tn (£1.6tn), and is expected to double in the next five years.
BlackRock has predicted index usage in UK wealth portfolios is expected to grow by 50 per cent in next two years.
Another area of ETFs that is growing in popularity is thematics.
With the iShares Ageing Population Ucits ETF, investors have the option of investing in golf courses in Japan, cruising companies in China or DIY stores in America.
Mr Parkin says: “It is one that took us by surprise in terms of how popular it became.
“People were looking for a different story other than the familiar asset allocation story.
“Thematic investing allows people who are not familiar with investing to understand it.”
Mr Parkin says his drive to get people excited about their money is rooted in his passion for financial inclusion and building up the level of financial literacy in the UK.
Research by Nutmeg, published in June, showed 60 per cent of UK teachers say students leave school with a poor level of financial understanding.
Mr Parkin says: “In the UK, we have done a huge amount on physical health and we have done some on mental health.
“Where we are really lagging is the financial health. It is absolutely critical that we deliver financial inclusion.”
Ima Jackson-Obot is deputy features editor of Financial Adviser and FTAdviser.com
