Nearly Half of Advisors Don’t Offer Social Investing: TIAA

According to the survey, both investors and advisors are also doubtful of the availability of best-in-class products. More than one in four affluent investors and advisors in the survey responded that responsible investment options are very limited or that the category lacks quality choices.

The results of the survey also show that there’s a need to develop a better understanding of responsible investing overall.

The survey finds that four in 10 (42%) of affluent investors “associate responsible investments as charity.” Also, according to the survey, 65% of investors think responsible investing is mostly about excluding companies that fail to meet certain criteria, and 72% of advisors agree.

According to O’Brien, too many investors still question how to define responsible investments, whether they can produce comparable returns to broad benchmarks, and how advisors and investors can distinguish between what is and is not a responsible investment.

According to Jill Popovich, managing director of individual advisory services at TIAA, many people want their investments to reflect their values. In fact, the survey found that over three-quarters (77%) of affluent U.S. investors say that they want their assets to have a positive impact on society.

 “It is critical for advisors out there to become much more proficient in understanding [investors’] needs, goals and objectives and these preferences to maintain long-term relationships,” Popovich said during the media briefing. “Whether it be with a millennial out of the gate as they’re starting to become investors or frankly through intergenerational wealth conversations. We’re having more and more conversations with families about the transfer that happens upon parents’ deaths.”

Popovich said it would be a “fatal error” if advisors did not ask clients about their responsible investing preferences.

“Our industry is very highly regulated, and we have a core responsibility to know our individual clients,” she said. “But I think it has to go much deeper than just a suitability requirement for individual investors. We need to truly understand who they are at their core, what are their goals and objectives, and how we can meet those.” The survey does find that talking to clients about their personal values as well as their financial goals helps build deeper and lasting relationships. According to the TIAA Global Asset Management survey, almost three-quarters of investors (74%) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65% of investors would be more likely to stay with an advisor who could discuss responsible investing with them.

And retirement plan sponsors should take note: 71% of respondents said having social investing options in their retirement plans would make them feel good about their employer.

Half of investors said they were interested in stock funds emphasizing low carbon emissions. Slightly more than half cited U.S. stock and bond funds, while slightly less than half expressed interest in international funds.

The study included responses from 275 currently employed financial advisors in the U.S. (1/3 wirehouse, 1/3 RIAs, 1/3 broker-dealer affiliated) and 2,206 affluent investors who were U.S. residents over age 21 with $100,000 in investable assets (excluding workplace defined contribution accounts or real estate). These investors also consider themselves the decision maker for financial decisions and currently work with a financial advisor.

— Check out Can Calpers Live With Responsible Returns? on ThinKAdvisor.