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Wealth managers spend little time on client ESG preferences

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One in four (24%) European wealth managers spend 40 minutes or less to establish the ESG preferences of new investment clients, despite agreeing that this is one of the most important tasks, according to a study from behavioural finance firm Oxford Risk.

Including wealth managers from across France, Germany, the Nordics and other European countries, responsible for around €4trn in assets, the study also found that more than half (58%) take between 41 and 60 minutes to establish the sustainability preferences of individual clients, while just 4% spend more than 90 minutes.

“Wealth managers are increasingly squeezed for time, and they are expected to take on more clients as well as deliver more value to current ones,” said James Pereira-Stubbs, chief client officer and Oxford Risk.

“Having detailed knowledge and insight into clients’ sustainability preferences is no long a ‘nice to have’, it is an essential part of being able to make the best investment decisions. It is important to ensure that clients and advisers are still getting high-quality, accurate information on which future decisions can confidently be made.”

While there was broad consensus on the fact that establishing sustainability preferences when onboarding a new client is one of the most important things a wealth manager can do, the study shows that too often these assessments and processes are not providing insightful or detailed enough information to base future decisions on.

Only one in four (25%) wealth managers said they were very confident in identifying the portion of a client’s investments that should be allocated to ESG investing after using their current processes. One in 10 (10%), meanwhile, said they were unsure about whether they could identify what should be allocated to sustainable investing after the process.

Additionally, just a third (32%) of wealth managers said they were very confident in being able to identify the portion of a portfolio that should be allocated to Article 8 and Article 9 funds within an investor’s portfolio after using their current process, with more than one in eight (13%) not knowing whether they would be able to do this.

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