How current times are being reflected in client propositions

The Covid-19 pandemic has affected all of us in many different ways. It has also heightened other, more profound, social and environmental issues not least the damage we were doing to the planet before the pandemic hit.

These concerns about the future, and the future for their children and grandchildren, mean clients at retirement are just as behind the push for sustainability as the younger generations are.

This, along with the ongoing impact of the pandemic, means it’s natural for clients to want to talk about it in their conversations with advisers. They want to help make a difference where they can and to do the right thing. And they care as much about social and governance issues as they do about the environment.

Driven by this ever-growing awareness of Environmental, Social and Governance (ESG) issues, client propositions are slowly being reshaped to meet their sustainable investment preferences. And, due in part to the coronavirus crisis, we expect client demand to continue to grow in this area.

Giving clients a greater sense of wellbeing

I’ve always believed that the biggest value of advice is the sense of wellbeing it gives clients. For clients, knowing they’re ‘doing good’ with their investment choices is a natural extension of that sense of wellbeing.

Understanding clients’ hopes and fears, and the goals they want to achieve, is what advisers do really well. So having the opportunity to discuss ethical issues and sustainability preferences in client conversations can help  advisers  to engage even more with clients on an emotional level and develop a stronger bond.

Understanding how much sustainability issues are important to each client  means advisers can, with fairly limited changes to individual suitability reports, tailor advice to deliver a plan to meet clients’ needs for good outcomes.

Advisers don’t need to be experts in sustainability and ESG to hold a conversation with clients about it, they just need to be knowledgeable about what ESG is; what it stands for and if clients are concerned about sustainability issues, to ask about the  areas they’re particularly worried about.  

Most advisers will be aware that EU regulation is in place which requires advisers, as part of the advice process, to ask clients about their ESG preferences. The UK hasn’t yet adopted the regulation, but the FCA will be looking at it.

Many advisers are already asking clients about their sustainability preferences during suitability reviews, with most having done so for a while now. It was one of the findings revealed in a recent survey we carried out among advisers and means advisers are pulling out more granular details around clients’ concerns to understand their goals better and to deliver more personalised investment solutions for them.

Supporting advisers to deliver on ESG

A key insight that was also revealed in our survey highlighted how most advisers would appreciate additional platform functionality to help with delivering sustainable solutions for their clients. Around half of the advisers we asked would like to be able to search for ESG funds easily, compare different ESG solutions across sustainable themes and see the ESG impact of a selected investment solution to illustrate to clients. Advisers recognise there are inconsistencies with how the asset management industry currently measure  ESG, but this problem will improve over time.

Platforms will continue to evolve to cater more for the needs of clients in those areas of ESG they are concerned about. The important point here is that by continuing to capture clients’ sustainability preferences now, advisers are in the best position to take full advantage of the capabilities and platform developments around ESG as they happen and as the market evolves.

Continuing to deliver better outcomes for clients

The Covid-19 pandemic and protecting our planet mean clients will continue to want to talk about the coronavirus crisis and wider Environmental, Social and Governance issues in their conversations with advisers so they can help make a difference where they can.

For providers, it’s about supporting advisers to deliver better outcomes for clients. And platforms will have a significant role to play in helping advisers meet clients’ individual needs around ESG through delivering  more personalised and tailored client investment solutions.

For our part, we’re actively exploring opportunities to further strengthen our proposition with innovation in this increasingly important area which has been underlined by the impact of the coronavirus crisis on all our lives.

The value of investments can go down as well as up and your clients could get back less than they paid in.

The views expressed in this blog should not be regarded as financial advice.