Key take-aways from Research in Finance:
Research in Finance are a market research, consultancy, publisher and data provider specialising in the financial services sector, covering both the UK and European markets.
The insights presented during our Responsible Pathway event are based on findings from their recent Retail Consumer Interest study.
Greater degree of interest in investing in a responsible manner, with 25% stating they current invest this way.
Greenwashing cited as the main barrier for investing responsibly.
Investor motivation ranged from desire to avoid companies and have a positive impact, recent developments around climate change and the strong performance of Responsible Investment funds.
Advisers have an important role to play in overcoming these barriers, in making the subject relatable to clients and demanding more from fund managers regarding clear and transparent information.
Presenting at our recent Responsible Pathway event, Research in Finance shared some of their latest market research on Responsible Investment (RI). Based on a study of over 300 private clients, they offer insight into the drivers behind investing responsibly, the main challenges for investing in this way, and the vital role advisers play in bridging this gap. Outlined below are some of the key findings from the session, as well as the full presentation from the event.
We all know that ESG and RI have become increasingly recognised amongst private investors, and this was echoed throughout Research in Finance's study, which indicated an upward trend in investors claiming to invest in this way, from 19% in September 2020 to 25% in September 2021. Their research showed this greater openness towards RI was being driven by a variety of factors, largely by a desire to avoid companies and industries with harmful practices, and a wish to have a positive impact, with 54% and 52% of investors, respectively, stating these were amongst the top reasons for taking an interest in investing responsibly. Unsurprisingly, with greater airtime around climate change issues, from David Attenborough’s popular documentaries to the recent COP26 conference, the developments around climate change are cited as another one of the major reasons for wanting to invest in this way.
Whilst this supports a positive outlook for RI, Research in Finance also outlined a number of hurdles which persist within the investor community. Greenwashing is an industry wide challenge, and the research shows a growing cynicism amongst investors as to how ‘green’ these investments really are, with 44% citing this as their top barrier, compared to 31% a year ago. In addition, with 38% of the votes, a lack of knowledge or confidence surrounding Responsible Investment was highlighted as the second largest barrier to investing in this way.
This is where financial advisers will play a fundamental role in breaking down what can be a complex area and helping investors overcome these barriers, from providing support in understanding what the language and terminology mean to their relevance to their investments, what is available and how they suit their individual circumstances and financial goals. During their session, Research in Finance shared practical tips on engaging with clients when it comes to RI, such as the importance of sharing examples of companies delivering a positive impact, and the use of the spectrum of capital in identifying client needs. You can find more information on the spectrum, and the responsible investor types here.
If you would like to share your thoughts, you can join Research in Finance’s Intermediary panel. As a member, you are able to take part in their online surveys, in-depth interviews, online communities and focus groups. Your views will help shape the future of our industry and ensure both yours and your clients’ needs are better served. Find out more and sign up here.