Rise in advisers bringing ESG into retirement planning

Four in ten (43%) financial advisers consider sustainable investments when building retirement portfolios, according to new research.

The number of advisers considering ESG in retirement planning has risen from 33% the previous year, according to the research from Aegon.

The number of advisers who considered sustainable investments only at the request of the client fell to 47%, from 57% the previous year.

However, only 3% of advisers surveyed by the retirement provider said they apply strict ESG screening to all funds selected, a figure unchanged from the previous year.

Two thirds (66%) of advisers said the preference for sustainable investing is the same for retirement advice clients when compared to other clients.

However, 21% of advisers said sustainable investing was more relevant for retirement clients and 14% said it was less relevant for retirement clients.

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The research also suggested that advisers are well prepared for the Financial Conduct Authority’s upcoming rules to implement Sustainability Disclosure Requirements.

Over eight in ten (81%) of advisers said there will be ‘no’, ‘low’, or only ‘moderate’ impact on future advice if regulation were introduced requiring advisers to consider client attitudes to sustainable investing.

Only 14% expected the regulation could have a significant impact.

Hilkka Komulainen, head of responsible investment at Aegon, said: “It’s positive to see that more advisers are embedding sustainable investing into their processes and increasingly raising this with retirement clients. There is still more progress needed but with new regulation on Sustainable Disclosure Requirements (SDR) on the horizon, we may see an even greater number of assets move towards sustainable funds and solutions.

“The lack of industry standardisation means advisers have faced challenges when dealing with the different sustainable investing considerations, but the new rules on the classification and labelling of sustainable investment products should better support advisers and their clients to make informed decisions.”

Aegon and Next Wealth interviewed 212 financial advisers in December 2021. Yearly comparisons are offered to similar research conducted in December 2020.

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Rise in advisers bringing ESG into retirement planning