Responsible Investing Strategies to Wealth Management

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Responsible Investing continues to be a key area of focus for financial advisors according to the latest Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey of more than 600 advisors, with nearly eight out of 10 (79%) reporting they incorporate Responsible Investing into their practices. Of those, 44% said it is an important part of their practices, up from 31% in Q2 2018. Thirty-five percent reported increased interest from clients and 60% said Responsible Investing is an ongoing topic of discussion.

“Responsible Investing strategies allow advisors to take a more holistic approach to wealth management with their clients,” said Anthony Eames, director of responsible investing strategy at Calvert Research and Management. “As Responsible Investing gains in popularity, there’s increased dialogue between advisors and their clients.”

More than half (56%) of advisors said Responsible Investing is driving new business to their practices, yet only 35% classified themselves as “very well-informed” about Responsible Investing.

“We are working to bridge this information gap by offering advisors enhanced tools and educational programs,” said Mr. Eames. “Offering a full suite of Responsible Investing solutions can be a key differentiator for advisors trying to deepen and expand their client relationships.”

Research powers Responsible Investing  
Advisors recognize the value of both qualitative and quantitative research behind Responsible Investing products. Eighty-seven percent said a robust research program is important to Environmental Social Governance (ESG) analysis, but 67% said it is difficult for investors to obtain measurable quantitative sustainability data from companies. Moreover, 54% admitted they don’t understand the connection between ESG performance and financial performance.

Jessica Milano, director of ESG research for Calvert Research and Management, argues there is a direct correlation between a company’s financial performance and its commitment to its customers, workers and the broader community it serves.

“Financial materiality is the key to effective, impactful ESG research,” said Ms. Milano. “Calvert’s proprietary research process leverages multiple data sources to capture and analyze ESG factors that drive company financial performance over the long term.

“Data show that firms that optimize their ESG practices tend to be rewarded for their efforts, along with their shareholders,” continued Ms. Milano.

Material and measurable results are also critical; 93% of advisors said demonstrating the impact of ESG investments is important to them and their clients. Taking an active role factors into Responsible Investing outcomes, with 82% of advisors stating it is important to engage with company leadership to drive positive business and ESG outcomes.

“It’s important to recognize that not all ESG strategies are created equal,” said Mr. Eames. “Our investment strategies follow the Four Pillars of Responsible Investing – performance, research, engagement and impact – which empower investors to seek competitive returns with portfolios that reflect their values and help drive measurable, positive change.”

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