In response to demand from individual clients and home offices, asset managers are increasing their sustainable investing options, but advisors are slow to adopt those strategies, according to a new report from Cerulli Associates.
All asset managers now report incorporating environmental, social and governance issues to at least some degree in their offerings, most commonly embedding ESG into their fundamental analysis, and many are also offering investment products developed specifically from ESG criteria, according to Cerulli.
At the same time, only one-third (33%) of advisors reported using ESG strategies in 2017, ranging from 30% for independent broker-dealers and RIAs to 39% for wirehouse advisors.
Advisors often avoid ESG strategies because they fear such strategies will negatively impact performance, according to Cerulli. Three-quarters of advisors cite this as a moderate concern; 35% as a major one.
“Providing advisors with materials that can be used to educate clients about a firm’s approach to ESG is crucial in increasing advisor adoption,” says Ed Louis, senior analyst at Cerulli, in a statement.