America’s millionaires are far less likely than rich folks in other countries to invest sustainably, and financial advisors have the power to change that, new research shows.
Only 12 percent of wealthy investors in the U.S. allocate a portion of their portfolio to a sustainable investment strategy, compared with a global average of 36 percent, according to a survey by UBS Global Wealth Management. Of the 10 countries included in the research, the U.S. ranked dead last, and the U.K. didn’t fare much better at 20 percent.
China topped the list at 60percent, followed by Brazil, United Arab Emirates and Italy, where more than 50percent of investors had some allocation to sustainable investments.
UBS polled 5,300 high-net-worth investors (those with at least $1 million in investable assets) during June and August and considered whether they hold at least 1percent of their portfolios in sustainable investments.
Whether they do or not depends a lot on their financial advisor. Nine of 10 investors who hold sustainable investments in their portfolio say their advisor played a key role in that decision.
“In our view, the advisor is absolutely critical to driving sustainable investing adoption,” said Andrew Lee, head of sustainable and impact investing at UBS Global Wealth Management.
This raises the question: When it comes to adopting sustainable investment practices, do U.S. investors trail their counterparts in other countries because U.S. advisors trail theirs?
It’s difficult to know for sure, but one variable is regulation. Government policies related to sustainable investing have helped bolster the practice in some markets.
Meanwhile, in the U.S., some advisors may still be unsure about how advising a client to adopt such a strategy relates to fiduciary duty, Michael Young, manager of education programs at U.S. SIF, said in an email.
FAs may also have uncertainty about how to add relevant products and/or what exactly their strategy will be, Young added.