According to a survey, a majority of advisors surveyed are willing to recommend sustainable investments, formerly known as socially responsible investments, making the potential markets as big as $650 billion.
The report, Gateways to Impact, surveyed 1,065 financial advisors, and the majority said they’d be willing to recommend sustainable investments to as much as a third of their clients. What’s more, they said they would allocate 10% to 20% of a client’s portfolio to the investment style, which the report’s authors estimate works out to 2.5% of their total assets, a slice that could amount to as much as $650 billion.
The report is from the Calvert Foundation, a nonprofit collaboration between Calvert Investments, the SRI mutual fund company, and foundations including the Ford, MacArthur and Mott Foundations. Other organizations that supported the study include The Rockefeller Foundation and Deutsche Bank. The report, issued Wednesday, examined the demand among advisors for sustainable investment products and information, and discussed how wealth managers can support advisors and clients dipping their toes in the sustainable waters.
“People want to align their money with their values, and there is growing recognition on behalf of financial advisors that they need sustainable and impact investment products to offer their clients,” said Lisa Hall, President and CEO of Calvert Foundation. “This report shows that the firms that succeed in this market will be first to give their advisors the tools and education they need to effectively advise their clients on sustainable investment opportunities.”
Thirty-eight percent of advisors surveyed expressed strong interest in recommending sustainable investments to their clients; 72% expressed some interest. The advisors with the strongest interest in sustainable investments tended to be female, have advanced certifications, are affiliated with national registered investment advisor firms, have average client assets under management between $1 million and $10 million and have less than 10 years tenure as advisors.
The study tested advisor interest using descriptions of eight sustainable investment products. The most interest was in the most traditional products advisors were already familiar with: a US Large Cap Equity Fund with a focus on environmental, social and governance considerations; US Corporate Bond Fund with ESG focus and Global Equity Fund with sustainability focus.
The survey also found that 23% of advisors thought so-called “impact investments,” direct investments in community development, microfinance and other social enterprises, are appropriate for some or all of their clients.