Financial advisers have had to play catch up with the rise in demand for environmental, social and governance strategies, with 41% reporting a surge in client requests for sustainable investments, research by Aegon found.
The most common change advisers have made is revising client factfinds to specifically ask about ESG preferences, 30% of respondents said.
The pension provider expects the majority of advisers to follow suit, as client demand for greener options is set to increase.
Nearly a quarter (22%) said they expanded the pool of ESG options on offer through their centralised investment proposition.
This was made possible by the roll out of several broad-based and niche products that cater to client requests, which are becoming more specific and going beyond issues such as climate change, social justice and equality.
A small number of advisers (11%) have added ESG to all their recommended portfolios as part of their standard offering; while 3% have bought in ESG expertise as the demand for ESG specialists is set to grow in the next few years.
But just over a third (35%) have not taken any steps to include sustainability criteria in their advice process, the firm discovered.
Upskilling, recruiting and restructuring
Tim Orton, managing director of Aegon Investment Solutions, said: “UK savers put almost £1bn ($1.3bn, €1.1bn) a month on average into ESG funds in 2020, up 66% 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. Adviser businesses, asset managers and providers alike will be upskilling, recruiting and re-structuring over the next few years to build the ESG capability they need to meet ─ not just increased demand from customers, but increased legislation from regulators.”
