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Projected Growth in ESG Investments Decreases for Financial Advisors

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  • Predicting ESG’s Future™ Uncovers Barriers and Explores How Advisors Meet Investor Needs

A new report from Escalent finds that previous growth projections for ESG investing have come to a halt, with financial advisors significantly reducing their use in the investment category even as wealthy investors continue to show interest.

From the perspective of financial advisors, the future of ESG investing is bleak. Fewer than 6 of his 10 advisors (58%) currently use ESG investing, up from 68% in 2020. A key factor in attracting trends or new clients, and only 15% of advisors currently using ESG agree on its importance or expansion.

Today, less than 1 in 20 wealthy investors (3%) use ESG investing, while nearly 4 in 10 (38%) are interested. His current ESG investors are directing an average of nearly 37% of their assets into this category, and expect allocations to increase slightly (to nearly 39%) over the next two years.

These are the main findings of Escurrent. Predicting the future of ESG. This report is designed to provide key insights for asset managers looking to optimize their ESG strategies for the future. We asked wealthy investors and financial advisors about the changing attitudes and attractiveness of ESG investing, the objectives that make it attractive as an investment opportunity, how ESG influences investment decision-making, and the barriers/unmet barriers to ESG investment. We are investigating needs that do not exist.

Linda York, senior vice president of financial services research at Escurrent, said: “If traditional advice providers continue to overlook the needs of younger investors, the use of financial advisors may die out, or conversely, the ESG investing category may disappear.”

For both advisors and wealthy investors, growing concerns and barriers continue to influence their decisions to avoid ESG investing. Inconsistent definitions and perceived negative public opinion raises concerns and barriers for advisors. Advisors over the age of 55 are more concerned than younger advisers that government guidance is unclear. For wealthy inventors, barriers to ESG investing relate to apathy and lack of knowledge about change.

“The topic of ESG investing has become even more divided over the past six months amid heightened political tensions,” added Yorke. “Firms have received public backlash for using what many refer to as ‘awakened’ investment strategies, with many advisors seeking clarification from regulators before using ESG investments. I’ll be waiting. Increased oversight from federal or state legislatures with additional qualifications and reporting will only help in making ESG more popular among both advisors and investors. ”

Source: Escurrent

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