Gillian Hepburn, Intermediary Solutions Director, Schroders
From ’Extinction rebellion’ to ‘The Blue planet’ and the ‘Plastic Pledge’ we are surrounded by a global focus on our future.
This is no longer confined to the younger generation. A survey conducted by Schroders1 indicated that the percentage of people who will always consider sustainability factors when selecting an investment product is higher for Generation X2 than millennials.
In the next few years, legislation and rules which are currently making their way through the EU decision-making processes will compel financial advisers to discuss sustainable investing with clients, however many feel on unfamiliar territory.
Three points for financial advisers to consider are:
1. Don’t wait for regulation:
A range of measures from Brussels and the UK indicate that all financial institutions will be expected to play their part in encouraging investment into sustainable investments.
Whilst some of the details of the EU legislation are still being finalised and the EU rules may not come into force until 2021, demand for sustainable investments means that advisers will increasingly need to have conversations with clients. Despite what may happen with Brexit, we also have to assume that European legislation will continue to be implemented over the next few years in the UK.
2. Be informed:
Many advisers and clients are rightly confused by the terminology and how this translates into the investment solutions available. It’s therefore a good time to get educated in order to support client conversations.
Whilst, legislation designed to ensure a consistent approach to terminology is also in progress, it’s still some way off.
However, financial advisers should use all the various resources available from providers. Those offering ESG and sustainable investment solutions will typically have articles on their websites and many offer ‘face to face’ support.
3. Review your Centralised Investment Proposition (CIP):
It’s never to early to start to review your CIP and ensure that you have a range of solutions available for clients who want to put their investments to good use. Depending on the required customer outcome, you may require a range of funds, model portfolios on a platform or a bespoke portfolio available from a Discretionary Fund Manager. For example, if a customer has very specific screening requirements for their portfolio, a bespoke solution may be required. Alternatively for those wanting to address climate change and sustainability, perhaps a fund or model portfolio designed to support these requirements is available.
In summary, this subject and rising client interest is not going away so don’t wait on legislation before taking action!
1 Schroders Global Investment Survey, 2019
2 Those born between early 1960s to late 1970s
Please remember that the value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
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