Advisers are seeing an increase in requests from clients for environmental, social and governance products, and have adapted their advice processes accordingly.
Aegon’s 2021 Adviser attitudes report found 41 per cent of advisers have seen an increase in ESG requests from their clients throughout 2020.
The firm surveyed 251 financial advisers from across the UK between October 20 and October 28, 2020 and highlighted four ways in which advisers are building ESG considerations into their advice processes.
The most common change, one that 30 per cent of advisers said they had implemented, was to revise client fact finds to ask outright about ESG preferences.
Another change made by more than one in five advisers (22 per cent) was to increase the ESG options they offer through their centralised investment propositions.
Aegon said advisers had many options now as more broad-based and niche products were being launched to give consumers more choice of investments, which go beyond climate change to issues such as social justice and equality.
A less common change highlighted by the research was the move to add ESG to all recommended portfolios as part of advisers' standard offering. Aegon found 11 per cent of advisers had gone down that route.
A further 3 per cent of advisers have brought in ESG expertise. Aegon said it was likely there will be increasing demand for experienced ESG specialists over the next few years as the industry skills up across the board.
Tim Orton, managing director of Aegon Investment Solutions, said: “UK savers put almost £1bn a month on average into ESG funds in 2020, up 66 per cent from the previous year and these findings highlight the changes taking place in the advice industry which are facilitating this movement of money.
“There is clear evidence that advisers are gearing up to meet rising demand from clients and we expect to see evidence of this increasing in future surveys."
However, Felix J Milton, chartered financial planner at Philip J Milton & Company, said the figures did not tell the whole story.
He said: “The figures paint an unsurprising picture. If advisers are asking leading questions within their questionnaires about ESG preferences, they’re bound to see an uplift in clients having ESG strategies.
“I’m yet to see a non-leading question for ESG preferences for clients, with many clients actually having a far more complex view with respect of their own ESG preferences which must be explored further.”
Justin King, chartered financial planner at MFP Wealth Management, said he has experienced little demand for ESG from clients.
“What I couldn’t see is [if] the increase in inflows was from increased demand or increased recommendations. My clients ask me for my recommended investment portfolio and where I have ESG funds to recommend, they are not my default or primary choice.”
Despite some advisers' scepticism ESG sales have surged in the past couple of years.
Earlier this month, it was reported that ESG funds accounted for 90 per cent of equity fund inflows in July, according to global flows network Calastone.
sonia.rach@ft.com
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