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Customization is key as current offerings evolve

Analysts believe clients want the opportunity to customize their holdings based upon their unique ESG preferences.

Most of the time, advisors say they offer or would consider offering SRI solutions for two reasons: client requests (55%) and their personal view that investors should have access to this type of approach (53%). 

No single consideration emerged as “very important” to most firms when selecting an ESG strategy, but 37% said it is “very important” to make sure the ESG process is deeply embedded as part of the strategy.

For clients and advisors alike, the appeal of ESG strategies is personal. More than half (53%) of advisors cite their personal values-based view that this type of investment approach should be made available to investors as a primary reason for offering SRI and ESG products. This may explain why so many advisors are paying particular attention to the strategies they offer for their clients. A little more than half (51%) say they choose ESG funds based on their own research. By contrast, only a little more than a third (36%) use ESG-specific model portfolios provided either through their home office or asset manager.

Being intentional about these choices can be important because client priorities are not universal. “Giving clients choices and flexibility to determine their own ESG values and principles as part of their investment decisions and processes can only create better outcomes for clients and financial advisors,” Le Berre says.

A substantial number of advisors believe it’s important to give investors an opportunity to customize their investments further. The vast majority (78%) say customization is at least somewhat important to clients. In fact, more than a third (37%) consider client customization either very important or critical. Since clients may not even be aware that customization is possible, Le Berre says conveying that information to investors can make them more comfortable about joining the ESG investment trend.