Are you ready?

The direction of travel is clear to see, and our study provides evidence that advisers believe root and-branch ESG integration is imminent. However, many firms do not feel ready for this, regardless of the incoming MiFID II rules. 

Only 2 per cent of non-ESG advisers had fully integrated ESG into their business, which compares to 34 per cent of the ESG adopter sample. Similarly, there was a wide divergence when the two groups were asked whether they felt prepared to deal with a rapid increase in client interest. Nearly two thirds of the ESG group had processes in place, compared to 38 per cent of non-ESG advisers.

Just over a third of the advisers said they would like to receive greater support when they introduce ESG investing to their clients, be that from providers, industry CPD or other channels. In addition, a combined 61 per cent had concerns about their clients’ lack of knowledge. 

The amount of suitable ESG products available appears to be a key challenge, with 92 per cent of the combined sample highlighting this as an issue. In addition, a little over four-fifths found it difficult to match client aims to a specific strategy. 

Both groups acknowledged that working with specialist partners could provide a solution.

Close to two thirds of the combined group would consider using a centralised investment proposition (CIP), while 53 per cent were open to using a discretionary fund manager and 43 per cent said they would deal directly with fund providers.

Adoption of ESG across the UK adviser world is likely to soar over the coming years, and our report suggests there are numerous potential benefits associated with this. They include greater client engagement, the speed of business growth, and extended client tenure.

There appears to be little resistance towards this oncoming trend. However, our study underscores that greater support is needed across the broader industry, not least among product providers. 

There are clear gaps in ESG strategies and product ranges, which suggests that adviser businesses and providers must work closely together to ensure clients’ values are met with suitable propositions. This can only be achieved by keeping the dialogue open.

Let’s make sure that we, as product providers, can do everything we can to help you to embrace the benefits that ESG can bring to your business and clients.

Mike Webb is chief executive at Rathbone Unit Trust Management