Oxford Risk: Wealth managers failing on ESG issues

Wealth managers are failing to discuss responsible investing and ESG issues with retail investors, suggests a new study from Oxford Risk - the behavioural finance fintech.

The study interviewed 457 investors managed by wealth managers and found that almost half (46%) of respondents have never been contacted to discuss their attitude to ESG and responsible investing, while only 37% said that their own portfolio reflects their views on sustainable investing, reports sister site Investment Week.

This has led to 32% of investors reporting that their wealth manager does not address their ESG investing needs.

A failure to properly engage in ESG has led to underinvesting by retail investors, with 31% reporting that they would invest more if their portfolio better reflected their views on ESG and responsible investing.

The survey found that this was the case especially with younger investors, with more than half (59%) of those under 35 stating that they would invest more money if their portfolio was more weighted to responsible investing.

Oxford Risk's analysts said that not only do wealth managers have the responsibility to match investor intentions with their ESG investment but it also provides a benefit to them. Proper ESG engagement can increase the amount investors are willing to put into their portfolios and specifically ESG assets by up to four times, making investors with high ESG preferences much more likely to invest overall.

Greg Davies, head of behavioural finance at Oxford Risk, said: "Accounting for investors' sustainability preferences needs a deeper understanding both of financial personality, and that suitability - matching investors to the right investments for them - is at the heart of helping people use their wealth for good.

"It is surprising that nearly half of investors claim they have never been contacted by their advisers about their attitude to responsible investing and ESG, and fewer than two out of five say their investment portfolio does not represent their views on responsible investing.

"Advisers could be missing out, as substantial numbers of investors would consider investing more if their money was focused on ESG and responsible investing, something that we can help support as part of their advice suitability process."