Capital Preferences, a leading behavioural economics, decision science and financial technology firm, has released a new study which represents a valuable opportunity for fast-acting Australian financial advisers.
The ESG is Personal: 2022 Study of ESG Preferences and Advisory Practices in Australia, study has highlighted key findings around the ESG investment landscape in Australia, equipping financial advisers across licensee groups, wealth management firms, super funds and digital platforms with insights required to fulfill the highest standards of suitability and construct personalised portfolios.
Advisers who provided investors with high-calibre ESG investing experiencing were rewarded with higher rates of advocacy, loyalty and wallet share growth, the study has shown. Furthermore, the Net Promoter Score (NPS) for advisers that provided ESG experiences is 67 per cent, as opposed to a -1.1 per cent for those who didn’t.
The study profiled more than 300 Australian investors, revealing that 59 per cent of respondents placed high importance on ESG factors in their investing. Only one in 10 believed they’re receiving a high-calibre ESG investing experience and 14 per cent believe their current portfolios match their values.
CEO and co-founder of Capital Preferences, Bernard Del Rey, said their latest study uncovers what is a ”sizeable segment of investors with highly individualised ESG preferences,” who quickly want to act on investments but “may not presently feel they are being catered to.”
“For advisers who can deliver confidently on ESG investments and put even a fraction of these assets in motion, this represents a particularly valuable opportunity for them,” Mr Del Rey said.
The study has also shown that two out of three investors are not knowledgeable on ESG concepts such as impact investing or negative screening. Additionally, only 34 per cent of investors reporting on how much of their portfolio they would like to invest in ESG.
Moreover, it has become evident that Australian investors need better ESG education, while advisers need to upskill and be provided the with necessary tools to produce meaningful ESG conversation. Only 20 per cent of investors clearly explain ESG concepts to their advisers, and 38 per cent feel as though their adviser is actually committed to help them invest sustainably.
“As the Asia-Pacific region more fully embraces ESG investment, it is the ideal time to bring our technology to Australian shores,” Mr Del Rey said.
“Insights from our study have shaped our understanding of how best to serve Australian advisers and their ESG-aware clients – with engaging, educative experiences that are low effort for clients, and insight-rich for advisers.”
Still have never had one single client ask/enquire/request anything ESG related in my 25 years of advising. This is a classic “if you build it they will come” scenario. The ESG industry is creating a need and then offering us products to meet the need they have created.