Values-based investing entices advisers as client demand grows

New survey finds 83% of financial professionals are interested in investing based on societal or environmental impact.
AUG 26, 2014
Nearly five of six financial advisers say they are interested in values-based investing, and they're getting the nudge from clients. Robust client demand has been the biggest driver behind adviser interest, according to a national survey commissioned by Incapital, an underwriter and distributor of securities. And as more investors choose to align societal values with their portfolios, potential market-beating returns also have spurred optimism. "The survey finds that while many financial advisers are looking for products that provide a social or environmental impact, they also want those investments to provide a financial return competitive with the overall market,” said Jim Schaberg, managing director at Incapital. “Increased awareness among advisers and their clients, more frequent offerings and a wider range of values-based investment options are additional indications of this sector's growth potential." Most advisers who have a hand in value investing are veterans with more than 15 years of experience in the industry, according to the survey. And more than half of all advisers say that both financial and social impact goals are paramount when selecting investments for their clients. Because of the high demand from both prospects and clients, 41% of advisers believe offering value-based investing options are a way to stand out from competitors, the survey found. So, is value investing an emerging trend for wealth management firms or just a flash in the pan? "Issuance in the values-based investing sector, including green bonds, is up 30-40% compared with last year," Mr. Schaberg said, citing previous research. Advisers responding to the survey were nearly unanimous in their belief that the rising level of interest positions values investing for further growth. Correction: Mr. Schaberg originally said it appeared that values for these investments were up 30-40% compared with last year, when he instead meant issuance was up by that amount.

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