Rising demand for responsible investment products will lead to increased innovation in the space as well as an opportunity for financial advisers to stand out to clients, says Heather Brilliant, managing director for the Americas at Colonial First State GAM.
Speaking at the Netwealth US Study Tour yesterday held at the New York Stock Exchange, Ms Brilliant said Australia is ahead of the US when it comes to embracing ESG investing. More investors are attracted to these types of products despite what the returns look like.
“Responsible investments is one of those areas that is so well-known in Australia. It’s important to your client base, especially to Millennials who are a growing part of your client base and future client base,” she said.
“It doesn’t have to be all driven by solely financial return. I’m not suggesting people will compromise on financial return, but the data shows you don’t have to.”
Ms Brilliant believes taking a proactive approach to responsible investing will lead to better competitive positioning for businesses and better outcomes for investors. While demand has only begun, many companies in Australia are already looking to embrace ESG investing.
“The reason why I see it as so much more prevalent in Australia is because the investor managers are thinking about it. Whereas in the US, if you bring it up with an investment manager, you’re more likely to get responses of ‘Why would I even consider that?” she said.
UBS head of global investments Suni Harford also told delegates at the study tour that soon, responsible investing will be a part of all asset classes.
“Everything will be sustainable,” she said. “We will have integrated ESG scoring into every single one of our portfolios. It’s fundamental. Five years ago, we could not have the sustainable portfolios we have today.”
Financial advisers who are starting the conversation around responsible investing with their clients will have an opportunity to stand out from the crowd, Ms Brilliant said.
“I think it definitely demonstrates a way you can differentiate yourself as being forward thinking in that area,” she said.