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Advisors Leave Women, Youngest Investors in Lurch on Sustainable Investing

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What You Need to Know

  • While 72% of clients surveyed are interested in ESG investments, 87% said their advisor hasn't suggested them.
  • Fifty-nine percent want their investments to address issues such as climate change or diversity, equity and inclusion.
  • Half of respondents aged 20-25 had sustainable investments, but none had received suggestions about them from their advisor.

A recent survey by FlexShares Exchange Traded Funds found that 72% of investors are interested in environmental, social and governance focused investment strategies. Women and young investors are most likely to be interested in these investments.

Yet 87% of respondents said their advisor had not suggested sustainable or ESG investments. Instead, investors said their primary sources of information are the media and their own research.

FlexShares ETFs fielded the survey in November to 285 consumers working with a financial advisor, each of whom had a minimum of $100,000 in investable assets and a minimum annual household income of $100,000.

Total assets in U.S. sustainable funds topped $300 billion in mid-2021, nearly double the amount one year earlier, according to Morningstar.

Investors in the survey reported several reasons for their interest in these investments.

Sixty-nine percent said they want to align their investments with their values; 59% want to address priorities such as climate change or diversity, equity and inclusion; and 45% want to capture growth potential from sustainable business practices.

Calling Advisors

Investors still have a limited understanding of sustainable investing. Forty-six percent of respondents said they had heard the term but were not quite sure about it, and 20% did not understand it. 

Still, they are willing to be persuaded. Fifty-two percent said they would consider investing sustainably if their advisor recommended it, and 57% said they would do so if an advisor explained how it would help their portfolio.

Seventy-nine percent of women in the survey said they are interested in sustainable or ESG investing, compared with 68% of men. But only 16% of female respondents said they fully understand sustainable/ESG investing, compared with 42% of male respondents. 

Sixty-two percent of women surveyed said they would consider investing sustainably if their advisor recommended it.

When the survey results are parsed by age, 100% of respondents age 20 to 25 said they were interested in sustainable or ESG investing. And 100% said they would be interested in sustainable investing if their advisor recommended it.

Half of this young cohort had sustainable investments, but none had heard about or received suggestions about them from their advisor. Half said they understand the term, but the other half did not fully understand it.

Asked whether they would leave their financial advisor if they were unwilling or unable to build sustainable or ESG investment portfolios, half of these young investors said yes.