What You Need to Know
- Despite client interest, only 34% of RIAs surveyed had implemented sustainable investing strategies for their clients., SEI found.
- RIAs were nearly three times as likely to cite climate-related issues as priorities than issues such as multicultural and gender diversity.
- Forty percent of respondents said they did not know enough about sustainable investments to make suitable recommendations to clients.
A third of RIAs in a new survey say they have experienced increased client interest in sustainable investing amid the pandemic and the racial equity movement, SEI reported Tuesday.
“COVID-19 and the racial equity movement accelerated the already pronounced investor effort to match their investments with their sustainability priorities,” Jana Holt, SEI’s global director of sustainable investing solutions, said in a statement.
“RIAs play a central role in supporting their clients’ portfolio construction, so it’s crucial that they are well positioned to provide the insight and support clients need to determine how they can best allocate in alignment with their values.”
SEI conducted the survey in late 2020 among some 800 RIAs who answered questions about sustainable investing, which SEI defined as the alignment of investment objectives with social or environmental considerations. Approaches to sustainable investing may include environmental, social and governance integration, exclusions/negative screening and impact investing.
Client Demand and Preferences
The vast majority of RIAs in the survey cited client demand as the primary driver of incorporating sustainable investing strategies in a portfolio. Forty-two percent reported that their clients express interest in sustainable investing strategies at least sometimes.
RIAs with clients who express interest said demand is fairly balanced across millennials, Generation Xers and baby boomers.
Forty-seven percent of survey respondents said they were most interested in ESG integration strategies, while nearly equal numbers prefer impact and exclusionary strategies instead.
RIAs were nearly three times as likely to cite climate and climate-related issues, including alternative or renewable energy and natural resources, as priorities than issues such as multicultural and gender diversity.