Many faith-based asset owners rely on financial advisors or investment consultants to guide or inform important investment decisions. How confident is this group in providing advice or guidance in ways that incorporate values?
Swiss-based asset manager Vontobel is out with a survey of investment advisors showing in fact they’re not all that confident in recommending investment products which are ‘…profitable and aligned to [values] preferences’.
Vontobel surveyed 300 financial advisors and wealth managers across 15 countries in the Americas, Asia Pacific and Europe – roughly evenly split among the three regions, representing US$400 million in total assets, conducting deeper interviews with just 8, to glean their insights.
Important to note Vontobel uses the 'ESG' acronym to reflect 'values' – but we and others know, and we’ve written that, ESG is not any faith’s values, rather, ‘…ESG can be a very useful tool for the pragmatics of implementing FCI’.
However, sticking with Vontobel’s terminology, and equating ESG with values, they find just over half of those surveyed felt confident recommending products that can meet performance and values expectations:
In fact, whether your faith organization has ‘fully’ or ‘not at all’ integrated values to investment may depend significantly on your advisor’s knowledge of values investing. Vontobel finds a correlation between the level of ‘ESG integration’ in a client’s portfolio that varies in-part depending on the advisor’s self-assessment of their capabilities, where those who can ‘confidently discuss the intricacies of ESG’ are far more likely to recommend ‘fully embedded’ ESG investing, while those with a ‘basic’ or no understanding (they direct you to other resources), are more likely to recommend ‘no role at all’.
Helpfully, for those advisors confident with values investing, they’re focusing on the right issues with their clients, and their discussions have moved beyond simply managing risk. Fully 58% cited ‘balancing financial gain and values’ to be most important to their organizations and their clients, while 56% also said ‘creating a positive impact on society and the planet’.
The authors end with a recommendation to advisors to ‘improve the integrity and credibility of their ESG practice and advice. This is crucial in an environment where investors are increasingly scrutinizing [their] choices’.