Majority of UK advisers already asking about sustainability in suitability assessments22 July 2021
- Nearly nine in ten advisers (86%) are already asking clients about sustainability in their suitability assessments
- However, a quarter (24%) say none of their clients have asked them to incorporate their sustainability preferences into their investment portfolio in the past year
- Meanwhile, advisers highlight too much variation in industry descriptions of ESG as a barrier to adopting their own fixed definitions
The vast majority of advisers are already factoring sustainability into their suitability assessments, despite a lack of client demand, according to new research from abrdn.
Nearly nine in ten (86%) respondents to abrdn’s bi-annual survey of UK financial advisers said they currently ask clients about their sustainability preferences during suitability assessments.
More than half of these advisers (55%) said they had been doing so for more than a year, while just under half (45%) have started doing so within the past 12 months. Of those that haven’t yet incorporated sustainability questions into their assessments, nearly two fifths (37%) plan to start doing so in the year to come.
The findings indicate advisers are ahead of mooted regulatory changes that would make environmental, social and governance (ESG) factors, like sustainability, a mandatory part of suitability assessments.
However, most advisers are seeing only a minority of clients ask for their sustainability preferences to be incorporated into their portfolios.
A quarter (24%) of respondents said that none of their clients had asked them to incorporate their sustainability preferences into their investment portfolio in the past year, while two fifths (39%) said just 1-10% had.
Only one in ten (9%) said that more than half of their clients had asked for their sustainability preferences to be factored in.
Steve Owen, Solution Delivery Director at abrdn, said: “These findings show that advisers are taking sustainability seriously when it comes to suitability and taking the lead in prompting conversations around sustainability with their clients.
“As advisers look at how they can refine and evolve their ESG advice offering, considering technology will be key. The right technology, including solutions that help advisers screen for ethical funds or funds that make a positive and measurable impact on society or the environment, can ensure the portfolios they’re building for their clients match their preferences as closely as possible.”
abrdn’s research also found that the majority of advisers (63%) have no fixed definition of ESG investing when it comes to selecting funds. More than half (51%) of those that do have a defined concept of ESG in place have developed the parameters themselves rather using ones from a third party.
Variation in industry guidance on what constitutes ESG investing (37%) was the most common reason why advisers did not have a fixed ESG definition in place.
abrdn polled more than 185 advisers via an online survey in June 2021.
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Notes to editors
At abrdn, we empower our clients to plan, save and invest for their futures.
We structure our business into three areas – and together they reflect our focus on enabling our clients to be better investors:
Investments: We work with clients to create solutions across markets, asset classes and investment strategies – combining our global network of investment professionals with research, data and technology.
Adviser: We offer market-leading platform technology and tools that enable UK wealth managers and financial advisers to look after the diverse needs of their clients.
Personal: We help people throughout the UK plan for their financial futures – through our financial planning business, our digital direct-to-consumer services and discretionary fund management services.
Through the expertise, insight and innovation of our team, we aim to help clients create more ways for money to make an impact. We set our sights on giving them more confidence to achieve their goals, and more clarity about what they need next. And we focus on delivering outcomes that are more than just financial – by investing sustainably to build a better world.
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