Financial advisers underestimate consumer interest in ESG
New research from consumer website and insights company BoringMoney.co.uk reveals that, despite confusion around terminology and definitions, a clear consumer appetite for ESG is underestimated by advisers.
25 September 2019;
Awareness is low - even when presented with 5 different options, only 21% of consumers picked that ESG stands for environmental, social and governance.
Yet once articulated, appetite is strong. 72% of fund investors would value a conversation about ESG – but only 30% of advisers think clients would value this.
Women consistently report a higher interest in ESG investing than men – 49% of women investors plan to invest more in ESG funds over the short-term, compared to 45% of male investors.
If presented with a range of investment options, including various ESG approaches and one which simply prioritises returns above anything else, 22% of male investors opt for pure returns compared to 13% of female investors.
Despite many strong indicators of customer interest, advisers remain hesitant, citing fears about performance and costs along with a perceived lack of client interest.
32% of advisers believe that ESG funds will underperform over a 2 year window. End investors are a lot more bullish – just 14% expect funds to ESG underperform and indeed 43% expect them to outperform. Blacklisting certain sectors polarises – 44% of fund investors would see a blanket ban on tobacco if there were no impact on returns. 21% would wear a 2% performance hit to avoid tobacco in their portfolios.
Holly Mackay, CEO of Boring Money comments:
The customer appetite for ESG investing is clear. Some investors indicate some willingness to give up returns in pursuit of better social and environmental outcomes, but actually most don’t believe that they have to. General expectations about performance show that ESG is not seen as a sacrifice. Advisers are more hesitant and reflect a broader anxiety about who might be responsible down the track for pursuing any strategy other than a single-minded focus on optimal financial outcomes.
Research indicates a polarised landscape but one thing is consistent across all channels. Investors and advisers alike want to see better reporting and more proof points – 95% of advisers report wanting better proof points on social outcomes from providers.
The full report, ESG Investing, The Retail Appetite, is published on September 25 2019. For more information, see the Boring Money Business website.
Find out more about our ESG Report
ESG is perhaps the hottest, yet most poorly communicated topic in investment circles. We have researched demand, interest & planned actions from consumers & advisers.
Our new report feeds back on what both advisers and consumers want, understand & do today, when it comes to ESG-led investing
Notes to Editors:
Data for the report is taken from the following sources:
- A nationally representative YouGov survey of 2,101 UK adults aged 18+, run in September 2019.
- An online survey of 2,000 UK fund investors, run between September 4th – 11th 2019.
- In-depth telephone interviews with 100 financial advisers in September 2019.
For media enquires please contact:
Cara Whitehouse, Boring Money
020 3871 2524
About Boring Money:
Boring Money is an independent research and content business which provides information, tips and Best Buys to consumers. The business conducts regular research with industry providers and consumers and looks at the developing DIY investment market from both the customer and provider perspective. Boring Money holds test accounts with over 25 providers and also holds regular focus groups and interviews with consumers to ensure regular input and feedback from the user perspective.
Founder Holly Mackay has worked in the investment industry for 20 years and is supported by a team of 10 researchers, analysts and marketing execs. Boring Money is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.