Advisers keen to offer clients socially responsible investments: Survey

Most believe they can grow their businesses by melding investing, conscience

Jun 8, 2012 @ 3:00 pm

By Liz Skinner

Most financial advisers believe they could build their businesses with investment products that marry financial return with social and environmental impact, according to a Calvert Foundation survey of 1,065 advisers released yesterday.

About 38% of financial advisers expressed strong interest in recommending sustainable investments to their clients, and 72% said they have at least some interest in offering such products, the survey said. Less than half of the advisers had ever put a client into such an investment.

More than half (54%) of the advisers surveyed said that, in order to increase their sustainable investment business, they need evidence of the investments' financial performance, while 44% said they need clients to demand the products and 39% said they need longer track records on the investments.

Overall, the advisers who said they were willing to recommend sustainable investments would do so for about a third of their clients and would allot 10% to 20% of their portfolios to this type of investing. Based on that, the foundation estimates a potential sustainable investment market of about 2.5% of advisers' assets under management, or $650 billion.

“Hopefully this makes advisory firms and broker dealers understand there's a business opportunity here,” said Justin Conway, director of investment partnerships for the Calvert Foundation. “There's demand from investors and from advisers who are interested in this industry.”

Mr. Conway points to a May 2010 report by Hope Consulting that showed investor interest in these products. It found that about 50% of investors are interested in impact investing, with 38% of those also wanting to learn more about the subject.

Of the advisers interested in sustainable and impact investing for clients, 61% were interested in U.S. large-cap equity funds that considered environmental, social and governance factors. Fifty-three percent were interested in U.S. corporate bond funds with that focus, and 51% were interested in global equity funds that consider sustainability.

Some 23% of the advisers believe impact investing — generally private debt or equity investments in community development, microfinance and other social projects — is appropriate for at least some of their clients.

“I hope this research helps more firms understand the value they can provide to their financial advisers and clients by making sustainable investment more accessible,” said Bruce Kahn, a director and senior investment analyst at Deutsche Bank AG, one of the study's sponsors. Other sponsors include the Rockefeller Foundation, Envestnet Inc., Metanoia Fund and Veris Wealth Partners.

Two resources Mr. Conway suggested for advisers seeking information about social investing are the Forum for Sustainable and Responsible Investment, which concentrates on more-traditional equity and bond offerings, and the Global Impact Investing Network.


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