Advisers increasingly consider sustainable investments when building retirement portfolios
- Aegon research shows 43% of advisers consider sustainable investments when building retirement portfolios, an increase from 33% the previous year
- The number of advisers who consider sustainable investments only at client request fell to 47%, compared to 57% the previous year
- 3% of advisers apply a strict ESG screening to all funds selected, unchanged from the previous year
- Two thirds (66%) of advisers said preference for sustainable investing is the same for retirement advice clients compared to other clients
- Advisers said they were already well placed for future regulatory change in this area
Aegon research* shows 43% of advisers said they consider sustainable investments when building retirement portfolios, an increase from a third (33%) the previous year**. Alongside this, there has been a comparable fall in those considering sustainable investments only at the client’s request, 47% compared to 57% the previous year**. This suggests more advisers are embedding sustainable investing into their processes rather than being led by requests from their clients.
A small number (3%) of advisers apply a strict ESG screening to all funds when building retirement portfolios. This was unchanged from the previous year.
The research also looked at whether appetite for sustainable investing differs from retirement clients to pre-retirement clients. The majority of advisers (66%) said preferences were the same across their client base. However, 12% of advisers said sustainable investing was more relevant for retirement clients and 14% said it was less relevant for retirement clients. One adviser commented:
“My sense is that there is no real discernible difference between age groups. It’s not the case that all young people want to invest sustainably, and the older people are not interested. That's certainly not my experience, my experience is that they're equally interested, regardless of age.”
Many expect that regulatory reform will push even more client assets towards sustainable investing. The FCA will consult shortly on proposed rules to implement Sustainability Disclosure Requirements (SDR) for asset managers and owners***. This is expected to formalise requirements for suitability processes and will better support advisers by increasing transparency and improve consistency of fund labelling.
The research suggests firms are prepared for regulation in this area. 81% of advisers said there will be ‘no’, ‘low’, or only ‘moderate’ impact on future advice if regulation were introduced requiring advisers to consider client attitudes to sustainable investing. However, 14% expect a significant impact.
Hilkka Komulainen, Head of Responsible Investment at Aegon, comments:
“It’s positive to see that more advisers are embedding sustainable investing into their processes and increasingly raising this with retirement clients. There is still more progress needed but with new regulation on Sustainable Disclosure Requirements (SDR) on the horizon, we may see an even greater number of assets move towards sustainable funds and solutions.
“The lack of industry standardisation means advisers have faced challenges when dealing with the different sustainable investing considerations, but the new rules on the classification and labelling of sustainable investment products should better support advisers and their clients to make informed decisions.”
*Aegon research with Next Wealth. The research was conducted in December 2021 with 212 financial advisers and supplemented with in-depth interviews. Yearly comparisons are offered to the research conducted in December 2020.
**The figures for comparison to December 2020 have been updated (rebased) to exclude advisers who responded ‘prefer not to say’. This makes it comparable to the latest research.
***FCA, DP21/4: Sustainability Disclosure Requirements and investment labels
Notes to Editors
- In the UK, Aegon offers pension, investment and protection solutions to over 3.8 million customers. Aegon employs over 2,000 people in the UK and together with over 1,000 people employed by Atos, we serve the needs of our customers. More information: www.aegon.co.uk Figures correct as at 31/12/2020
- Aegon UK is part of the wider Aegon Group, based in the Netherlands, whose roots go back to the first half of the nineteenth century. Since then, Aegon has grown into an international business, with 30.4 million customers in multiple countries and EUR 979 billion of revenue generating investments as at 30/09/2021. More information on www.aegon.com
The information in this press release is intended solely for journalists and shouldn’t be relied upon by any other persons to make financial decisions.