Are advisors arming themselves with RI knowledge?

The opportunity for financial advisors and planners armed with responsible investment knowledge has been clear for some time.

In the RIA’s 2021 Investor Opinion survey, which focused on individual investors, 77% of respondents said they want their financial service providers to inform them about RI investment opportunities that are aligned with their values; however, only 27% said they’d ever been asked if they were interested, and just around one third said they currently owned RI products in their investment portfolios. And in the previous edition of the survey conducted in 2020, 75% of respondents expressed an interest in getting RI options from their financial services provider, but only 28% said they’d been asked.

 “We’re also seeing new guidelines coming through like those from the Investment Industry Regulatory Organization of Canada, which encourages advisors to include questions about their clients’ personal values and ESG preferences in their KYC processes,” Fletcher says. “Our hope is that this will turn into a best practice for advisors.”

Last year, the RIA also conducted an Advisor Opinion survey, which found advisors’ knowledge about ESG and responsible investments seemed to be lagging behind. While 85% of the survey respondents said they were very or somewhat comfortable initiating a conversation about responsible investments, one fifth of advisors who rated their RI knowledge as excellent or very good did not correctly identify three true statements out of 10 statements made about responsible investments.

Over the course of the pandemic, a plethora of ESG issues have become top of mind among the general population, and those concerns are making their way into advisor-client conversations. If investors realize they can help make a difference without compromising their returns or financial goals, Fletcher believes it will be a potent catalyst for advisors to step up their capabilities in providing RI advice.