Advisers catching up on clients’ ESG focus

A new whitepaper from HUB24 has highlighted the importance of environmental, social and governance (ESG) standards to boost client-adviser relationships and develop new opportunities.

Titled Investing for the future, with clients of the future, the whitepaper’s release follows the launch of a suite of tools and solutions to support advisers using the HUB24 platform with managing ESG criteria.

A partnership between Morningstar and the Responsible Investment Association Australasia (RIAA) has also provided advisers with data-driven insights and reporting metrics on ESG risk for select managed funds and Australian listed securities through the HUB24 platform.

The whitepaper also found 64 per cent of Australians expect their financial adviser to be well-versed in responsible investing options, showing the importance for advisers to rethink their approach to clients’ individual preferences and alignment with ESG values.

“When investors choose investments that are aligned to their values, beyond just performance, they’re more patient because they have complete clarity on why they’re invested,” Morningstar ESG Analyst, Erica Hall, said.

“As a result, these investors tend to hold the course and stick with their adviser even in times of market volatility.”

Nathaniel Chell, Financial Adviser and Director of Sky Summit Financial, said sustainable investment options have also shown to be suitable for clients intending to invest for 20 or more years.

“Our clients are looking for companies that are still going to be around in 20 years, we don’t want to invest them in companies that may potentially end up with a huge amount of regulatory risk or stranded assets, or companies that won’t be able to operate because they have unacceptable environmental or social standards,” he said.

“Start off somewhere where you think you can align to the client’s value set. For example, if the client wants a portfolio with low CO2 emissions you can start with that. There are plenty of managed funds and ETFs you can research to make sure you’re comfortable with how the money is managed and how the screens, filters and thresholds are used.

“You can even continue to do what you’re doing now and then blend it with an ESG portfolio. Find your starting point to focus on and go from there.”