If there is one thing that the outbreak of covid-19 and subsequent lockdowns have highlighted is the increased visibility and importance of sustainable business practices.
While the trend in environmental, social and governance (ESG) investing has been steadily growing over the last few years, the pandemic has fuelled even greater interest.
According to Schroders’ latest UK adviser survey, over a third of financial advisers (35%) believe that the crisis will impact client attitudes towards sustainable investments.
Similarly, 65% of those surveyed claimed that it will increase the attention they pay to the ESG risks associated with investments; while 88% said covid-19 has reinforced the importance of stewardship and using an asset manager who actively engages with company management.
Gillian Hepburn, intermediary solutions director at Schroders, said: “In line with our findings from last year’s Schroders annual adviser survey, we are pleased to see ESG and stewardship continue to grow in importance, with 88% of advisers agreeing that the coronavirus crisis reinforces the importance of stewardship and using an asset manager who actively engages with company management.
“In our experience, asset managers have an important role to play in educating advisers on what ESG analysis means in practice and the role it can play in producing returns.”
The Schroders survey, however, was published shortly after research from ShareAction found that some asset managers are failing to engage with companies on human rights issues – while a few are actually worsening the issue.
Keep in touch
These types of conversations have also been facilitated by greater adviser-client interactions, Schroders found.
All of those surveyed revealed they have increased the frequency of communication with their customers: 73% had personal interaction with more than 25% of their clients; while previously, in an average month, only 36% would do so.
Additionally, 25% of respondents are interacting with between 76% and 100% of their client base, while during a regular 30-day period just 9% of advisers would personally engage with the majority of their customers.
The most useful communication tools seem to be web-conferences and emails – 31% of advisers claimed both are the most useful – while audio is the least preferred, with only 16% finding it very helpful.
Answers showed a very mixed bag of preferences, proving that there is no one-size-fits-all solution when it comes to keeping in touch with customers or colleagues, Hepburn added.
Overcoming challenges
Communication also helped in keeping client expectations and investment attitudes updated with the current market volatility.
Respondents to Schroders’ survey reported that their client sentiment has been mostly neutral (45%) or slightly bearish (38%), while only 5% deemed their clients very bearish and 11% as slightly bullish.
But one of the biggest challenges that advisers are having to tackle is managing their client portfolios against the coronavirus pandemic backdrop.
Between dividend suspensions, reduction in natural income, encouraging clients to sit tight and stay invested as well as managing 10% drop notifications, the virus outbreak has created challenges left and right for the advisory community.
Schroders’ survey was carried out between 15 and 23 April 2020 and it gathered responses from 63 financial advisers based in the UK.
