Financial Advisors Respond to Increased ESG Demand Among Clients

Financial advisors across all channels are increasingly turning toward environmental, social, and governance products as a direct result of heightened client demand for socially responsible investments.

According to a recent Broadridge Financial Solutions survey conducted by 8 Acre Perspective, 61% of financial advisors across wire, regional, IBD, and RIA channels revealed they were using ESG-related products, and the number was even higher among female advisors at 71% and advisors under the age of 40 at 67%.

Among those advisors who are using ESG products in their client portfolios, 81% plan to raise their exposure over the next two years as more investors actively seek out sustainable investments. Sifting through the various channels, the survey results reveal wirehouse advisors are the most likely of all to incorporate ESG products as they have indicated that both inclusion on their broker-dealer platform and promotion by their home offices were main reasons for doing so.

“Now more than ever, investors are speaking up about the types of products they want to invest in, whether it be ESG, private markets or other emerging asset classes. As advisors become more focused on providing the best client-centric experience and are optimistic about the year to come, they are looking to be equipped with the right tools and products to service their clients and investments,” Matthew Schiffman, Principal of Distribution Insight at Broadridge Financial Solutions, said in a press release. “Asset managers are primed to step up and address the demand for these products.”

The survey results also reveal adjustments that financial advisors have had to make as the coronavirus pandemic upended our normal lives.

“Forced into a fully remote environment just over a year ago, many advisors dramatically accelerated their digital journey to maintain and grow their business. Today’s advisors are actively focused on business development and client-facing activities, and are increasingly using model portfolios as part of their practice to allow for increased efficiency in a post-COVID world,” Schiffman added. “Advisors were not able to engage with wholesalers in the same way they did before the pandemic and were initially hesitant to engage virtually. Now, as the COVID-19 vaccine rollouts progress and we may see a return to normal sooner than expected, advisors are eager to re-engage with wholesalers and are receptive to new relationships.”

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