HUB24 launches ESG whitepaper to support adviser and client conversations

HUB24 launches ESG whitepaper to support adviser and client conversations

HUB24 today announced the launch of a new whitepaper ‘Investing for the future, with clients of the future’ outlining environmental, social, and governance (ESG) trends and insights from leading industry experts and advice practices. The whitepaper follows the recent webinar Investing for the future, with clients of the future and the launch of ESG ratings functionality on the HUB24 platform.

The ESG support tools made available by HUB24 were recognised by the Investment Trends 2022 Platform Competitive Analysis and Benchmarking Report which awarded the company top spot for Best Overall Platform, Best Reporting and Best in Online Business Management.

As the trend for ESG investment preferences continue to rise, with 64% of Australians expecting their financial adviser to be knowledgeable about responsible investing options, starting a conversation about a clients’ individual preferences and ESG risk profile could play a key role in empowering advisers to develop new propositions, drive investment outcomes and deepen client relationships.

Morningstar ESG Analyst Erica Hall said clients who choose responsible investments tend to have a more long-term view compared to other investors.

“When investors choose investments that are aligned to their values, beyond just performance, they’re more patient because they have complete clarity on why they’re invested. As a result, these investors tend to hold the course and stick with their adviser even in times of market volatility.”

Through collaboration with Morningstar and RIAA, advisers using the HUB24 platform can access data-driven insights and reporting metrics for selected managed funds and more than 350 Australian listed securities. The new solution provides visibility over how well ESG risk is managed or considered, enabling advisers to engage with their clients to find investments that align with their values.

As the demand for responsible investing grows, advisers are seeking ways to incorporate ESG conversations into their practices to meet a range of client needs.

In an interview with HUB24, Ethinvest General Manager and Financial Adviser Fiona Thomas said conversations about clients’ preferences and ESG risk profile have significantly changed over the years.

“It used to be more of a tick-box approach where clients selected investment areas they either wanted to avoid or promote in their portfolios. Over time we’ve learnt the value of asking open ended questions to discover this information, so we aren’t leading people towards or away from particular areas but are instead hearing what’s really important to each client.

For advisers, one of the other benefits of matching the investments you recommend to your clients’ values, is that clients then tend to be more focused on what their money is doing in the world, rather than how it has performed over the quarter or the year – they have that long-term perspective.”

Nathaniel Chell, Director and Financial Adviser of Sky Summit Financial said he’s found sustainable investments to be a logical fit for clients with 20 or more years to invest.

“Our clients are looking for companies that are still going to be around in 20 years, we don’t want to invest them in companies that may potentially end up with a huge amount of regulatory risk or stranded assets, or companies that won’t be able to operate because they have unacceptable environmental or social standards.”

Instead, Nathaniel and his colleagues favour companies that have the social and environmental licence to continue operating into the future. In most cases, these are innovative companies that are trying to do the right thing and are set up to be here for the long term.

ESG investing is an evolving space, with more options, research and diagnostic tools becoming available all the time. For advisers who are yet to dip their toe into ESG investing, Nathaniel encourages them to start small, with issues they themselves care about, and build up from there.

“Start off somewhere where you think you can align to the client’s value set. For example, if the client wants a portfolio with low co2 emissions you can start with that. There are plenty of managed funds and ETFs you can research to make sure you’re comfortable with how the money is managed and how the screens, filters and thresholds are used. You can even continue to do what you’re doing now and then blend it with an ESG portfolio. Find your starting point to focus on and go from there.”

 Top tips for having an initial ESG conversation with clients
  1. Understand the scope of ESG investing. Investing responsibly doesn’t mean only choosing investments that are at the forefront of global sustainability. Your client may be satisfied with investments that are at the beginning of their sustainability journey, as long as they’re on the right path. Using an ESG investment framework may be useful to steer conversations and discover your client’s views on ESG.
  1. Initiate the conversation. Ask your client questions and find out what’s important to them in terms of their investment preferences and values. They may not be ready or interested right now, but by asking the question you have given them the opportunity to consider their current and future investment needs and taken an important step to understand their needs at a deeper level.
  1. Incorporate sustainability questions into your fact find. As well as discussing ESG investing in person, add some open-ended questions into your fact find. Well-worded questions will get your clients thinking about what’s important to them and the legacy they want to leave behind for future generations.
  1. You don’t need to be an expert. While understanding ESG investments and what they are trying to achieve is important, you don’t need to be a sustainability expert to provide ESG advice. Your clients don’t expect you to understand every environmental and social issue. It’s okay to say that you will look into it for them and come back to them at a later date.
  1. Have a tool kit to assess ESG investments. One of the things financial advisers may find challenging is not having access to a trusted source of ESG investment information to help them assess and rate investments. In the Investment Trends 2022 ESG Adviser Report, 47% said they needed greater transparency of underlying investments to have richer responsible investing conversations with their clients. In a similar vein, 37% said they needed better selection or comparison tools. HUB24’s ESG Ratings functionality offers one way to assess investments however there are a range of tools and investment managers who can support the process.

 

Supporting ESG investing, choice and flexibility

The new ESG ratings functionality on the HUB24 platform compliments our innovative managed portfolio stock substitution capability giving advisers the ability to tailor their investment approach to meet clients’ individual ESG investment preferences.

Rated number one for Best Overall Investment Choice by advisers, HUB24 has one of the largest investment menus on offer in the platform market with over 1,000 managed funds, exchange traded funds (EFTs) and the largest range of managed portfolios in addition to hundreds of Australian and international listed securities. To support advisers and their clients in meeting their ethical, social and governance requirements HUB24 provides over 150 ESG investment options.

May 15, 2023 | FinTech | Tags: , ,
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