Fidelity has launched an ESG tool, called Fidelity ESG Pro, for both Fidelity and non-Fidelity advisors, the firm announced on Tuesday. Designed to help advisors initiate and navigate ESG-focused conversations with their clients, while providing reporting and fund insights from Fidelity Institutional Wealth Adviser LLC (FIWA), the tool helps advisors create and deploy ESG models.
The tool’s launch is the culmination of 18 months of planning and development, 12 of which were spent in pilot mode with a dozen clients, according to Rick Smyers, managing director of Fidelity Labs, the entity responsible for developing ESG Pro. It brings together a mix of technology to catalyze ESG-centric conversations with clients, allowing advisors to act on those conversations by building their own ESG models, or using pre-built models. Research from FIWA is converted into sortable and filterable fund lists.
Critical to the tool is a personalized quiz that can be sent to clients prior to a meeting. The “Values Discovery Quiz,” evaluates a client’s mindset around ESG investing, what types of ESG investments she or he values and major dealbreakers for the client in terms of inclusion in a portfolio.
For example, the client mindset portion of the quiz might reveal that the client is interested in ESG investing, only so far as it contributes to a larger movement, or that the client only wants a portion of his or her portfolio invested in ESG-sensitive vehicles. An individual’s investing values could indicate a high importance placed on gender diversity, while a much lower factor placed on alternative energy. The investing concerns screener allows advisors and clients to engage in conversation around issues like palm oil, GMOs and civilian firearms.
While faith-based and socially responsible investing styles have been utilized for many years, ESG-style investing is getting new emphasis through association with Gen X, Millennial and Gen Z investors, according to Fidelity. Citing figures from the FPA and its own investor insights survey, a Fidelity spokesperson noted that ESG-style investments are gaining popularity.
Even though Fidelity is providing end-clients with an onboarding quiz and providing advisors with pre-built ESG models, there are no “immediate” plans to turn ESG Pro into an automated investment tool, said Smyers.
The tool is available as a standalone feature, with plans to integrate it into Fidelity Wealthscape. Advisors are charged an annual subscription fee, per advisor, of $2,388. “We’re trying to make ESG advising available to all advisors,” said Smyers. “We will be looking at integrations with other companies.”