Apiramy Jeyarajah said the risk advisers faced was failing to ask clients the right questions and ending up with “middle of the road answers”.
“[The best way for advisers to] future proof the profitability of [their] businesses is to dial into customers' emotional preferences,” she told the firm’s ESG seminar held last week (May 21).
“We know that they will [therefore] invest more and generate more for themselves and also for their businesses.”
She recommended that advisers incorporate an additional suitability and sustainability questionnaire to the initial stage of their fact finding process when looking at clients’ portfolios.
“It’s not [about] what a provider does, it's all about how they do it,” she added.
“We encourage you all when looking at which profile you're going to be going with, to [ensure] the quality of those types of questions, which is really going to help you link the customer need to their investment desires as well.”
Jeyarajah highlighted the work done recently by Dynamic Planner, which earlier this month launched a sustainability questionnaire, aimed at solving the challenges advisers face when assessing their clients’ individual environmental, social and governance (ESG) investing preferences.
Louis Williams, head of psychology and behavioural insights at Dynamic Planner, said sustainable investing was not straightforward and preferences can be complex and encompass a broad range of factors.
He said: “Expectations of the impact it can have can be misjudged, along with the importance and balance clients place on potential returns and their sustainability preferences.
"The key to fully understanding the ESG and sustainability hopes and expectations of a client is real engagement, so that their preferences can be accurately captured and the implications of their choices discussed.”