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A lack of information may be holding investors back

Almost half of financial firms offer SRI solutions, but customers may not be aware of them and rarely inquire about them.

In anticipation of increased investor interest, advisors have already begun to expand their offerings. Nearly half (43%) of respondents currently offer SRI investing options and another 25% have plans in place to offer them in the future.

These solutions are not featuring prominently in investors’ decision-making processes, however. Only 18% of advisors report that their customers frequently ask about SRI solutions in their introductory conversations. Roughly a third (36%) of advisors say they field at least some client questions about these investment types, but almost half (47%) say customers rarely or never ask about them. This dynamic creates a potential issue when it comes to getting investors to adopt these strategies, as 55% of firms say customer requests represent the primary reason they would offer or consider offering SRI solutions. 

A lack of familiarity with the available options may be partly to blame for investors’ reticence, according to Gwen Le Berre, director of responsible investing at Parametric. “Investors and customers want to pursue ESG investments, but the ambiguity about the terminology and the lack of standardization in the market can make people hesitant about pursing them,” she says. “Advisors need to be more willing to start these conversations and educate clients about how ESG and SRI opportunities can impact their portfolios.”

Le Berre says as ESG becomes more relevant and the younger populations gain more financial influence and interest in investing, she expects more clients to initiate ESG conversations with their advisors during introductions.