The majority of financial advisers in the US are failing to educate clients on ESG investing despite a growing number of Generation Xers (aged 38-56) and baby boomers (aged 55-73) showing an interest in the sector.
Allianz Life’s latest ESG Investor Sentiment Study found 30%of Americans working with a financial professional had discussed ESG investing with their adviser, with the majority (69%) saying they had initiated the conversation.
This is despite three-quarters of these respondents stating they have positive perceptions of ESG investing, while over half (51%) said they would be interested in investing.
The study, conducted among 1,000 respondents in December 2018, also found that although millennials (aged 24-37) are more likely to make investment decisions based on ESG issues, Gen Xers and boomers are also putting their values into action.
A matter of priorities
Nearly two-thirds (64%) of millennials said ESG factors are important in their investing decisions, with Gen Xers not far behind at 54% and boomers at 42%.
But, only 17% of millennials are currently participating in ESG investing, compared with 7% of Gen Xers and 3% of boomers.
Despite the low numbers, nearly half of Gen Xers and boomers say they are interested in having some money in ESG investments at 49% and 47%, respectively.
All generations agreed social issues including diversity in the workforce and consumer protection are the most important factors when doing business with a company, followed by corporate governance issues and environmental topics.
Educate clients
The study also revealed millennials are more likely to be interested in learning about various types of ESG. But, all generations said they are unsure of how to evaluate if companies care about causes they support, with 71% of millennials, 64% of Gen Xers, and 69% of boomers stating they wouldn’t know how to evaluate a firm’s ESG stance.
“Millennials get a lot of attention for driving ESG investing,” said Todd Hedtke, chief executive of Allianz Investment Management.
“But, when it comes to investing in and doing business with good corporate citizens, there is interest across the board and it’s only going to grow.”
Kelly LaVigne, vice president of consumer insights at Allianz Life, added: “These stats show people from all generations are looking to learn more about ESG and want to put their values into action. But they feel they need more education and guidance on how to best make ESG investment decisions.”
For more insight on ESG issues for investment managers, please visit www.esgclarity.com
