Regulation  

Advisers play 'critical role' in ESG conversation

Advisers play 'critical role' in ESG conversation

Advisers have a "critical role to play" in helping investors understand sustainability trends and matching the products that suit their preferences, Dynamic Planner has said. 

The firm has launched a white paper style sustainability guide for financial advisers to use with their clients, ahead of the UN Climate Change Conference (Cop26) next week. 

The guide is designed to assist advisers in meeting future regulatory requirements and help clients fully understand sustainability preference and the topic of sustainable investing.  

It focuses on what is meant by sustainable investment from the perspective of the environment, broader society and how business activities can align for the common good, as well as key sustainability risks, impact and investment opportunities to bring about change.

Psychological factors that can influence preferences are also covered, alongside an overview of investment solutions that can be aligned to unique sustainability preferences. 

Ben Goss, chief executive officer at Dynamic Planner, said: "With estimates of over £5trn of wealth in the UK being passed down generations by the middle of the century, now more than ever we have the opportunity and responsibility to make investment sustainable. 

“Not only does this make sense in continuing to build wealth, but also to deliver positive changes for the benefit of future generations.”

Change is needed

In a recent survey by the firm, 54 per cent of advisers said they needed to increase their own knowledge around ESG and sustainable investing. 

Dynamic Planner said this guide was intended to inform the discussion and conversation between investor and adviser and was being launched at a time when consumer interest in sustainability is expected to peak. 

Goss said: “Financial advisers have a critical role to play in helping investors understand these trends and navigate the complexity and ensure that the asset managers they recommend are properly measuring and managing both climate and nature-related risks and impacts. 

“This is hugely important as it will help ensure capital is channelled efficiently and productively to support the vital transition to global environmental sustainability.”

Martin Bamford, director of client education at Informed Choice, said his firm is seeing a growing level of interest and demand for sustainable investing.

“Movements like the Extinction Rebellion and the work of Greta Thunberg have highlighted the urgency of making immediate changes, many of which can be driven by better investment choices,” he said. 

“Sustainable investing has moved on considerably too, with less of a focus on 'green' investments, and more consideration around the positive impact money can have, including to make changes to existing poor practices.

“A sustainable portfolio is one which is well-positioned for inevitable changes in the future, rather than a set of investments anyone would consider 'perfect' today.”