The 2021 EY Global Wealth Research Report examined what investors valued most in their wealth management relationships and how it changes across service models, engagement choices and value-aligned advice. The report showed clients of all ages and levels of wealth want to look beyond purely financial outcomes and returns in an effort to build more purposeful investment portfolios and wealth management relationships.
"Diversity and inclusion is increasingly viewed by wealth clients as both a sustainability goal, a key driver of provider choice and an important factor in building strong advisor relationships.”
Both locally and globally, environmental, social and governance (ESG) factors are becoming increasingly important to wealth management clients.
In fact, 76 per cent of global and 72 per cent of Australian respondents believe it is important to consider ESG parameters in their investment portfolios. At the same time, interest in specific ESG themes has increased over the past year. For Australian respondents, climate change and carbon emissions, better worker welfare and human rights, and air and water pollution were the top three ESG issues reported as important to have considered or integrated into future investment portfolios.
Although 76 per cent of Australian respondents have personal sustainability goals, 41 per cent feel their wealth manager falls short in understanding their values. These figures align with the global averages of 78 per cent and 41 per cent respectively. This deficit in understanding is concerning, given the importance of delivering tailored, differentiated experiences to clients.
So it’s not surprising a major reallocation of investments could be on the cards with respondents reporting they plan to increase the use of sustainable investing strategies. Locally, over the next three years, positive screening – or "best in class" selection – is expected to grow 7 percentage points to 20 per cent, thematic investing 9 percentage points to 14 per cent and philanthropy 4 percentage points to 25 per cent.