SRI (Socially Responsible Investing) may have evolved into ESG (Environmental, Social and Governance), but ESG is still a three-letter acronym that some will dismiss as a niche. A three-letter acronym doesn’t describe the future of investing – it just reinforces the negative reaction from the uninitiated or under-educated. This is a movement in the investing world that isn’t going away. Corporate Sustainability, Shareholder Advocacy and Activism, Community Investing, Targeted Divesting, and Impact investing are all parts of the broader message that is gaining the attention of both corporations and investors. If a self-described financial professional does not see that, they’ll be left on the sideline as the industry around them continues to innovate and evolve.
Here’s the funny thing… If a financial advisor asked us to convince them, we wouldn’t even start with all the facts. We would begin with the following logic: Your clients are paying attention to this, learning about this, and looking for guidance. Many of your clients have children, and those children are paying attention to this new shift in investing. Those children are the people that will inherit the accounts you manage, so if you aren’t connecting with them… You won’t be their financial advisors. Beyond potential underperformance, you are risking losing accounts because “you don’t believe in that stuff”.
The question should not be whether you believe in “that stuff”, but rather: “I wonder if there’s an ETF for that?”
This article was written by Michael Marinus Young, AdvisorShares Institutional Consultant.