Asset managers and financial advisors should let go of believing that interest in ESG investing is limited to their wealthy clients because in doing so, they are discounting the interest from a broad swath of the investing public, according to recent research.

Fully two-thirds of asset managers expected high demand from investors with more than $5 million in investable assets. Another one-quarter of asset managers expect moderate demand from high-net-worth investors,  according to the latest Cerulli Edge – U.S. Advisor Edition.

But those expectations do not necessarily align with the preferences of retail investors. Cerulli found that more than half (56%) of households with between $100,000 and $250,000 in investable assets indicated that they would rather invest in companies that have a positive social or economic impact.

Another common misconception advisors have about ESG investing is the demand their clients have for the products. In a 2020 survey of advisors, Cerulli said it found that more than half (58%) of the advisors said a lack of investor demand was a significant factor preventing their adoption of ESG strategies, and an additional 14% reported that it was a moderate factor.

Advisors maintain a widely held belief that demand for ESG strategies among their clients is a non-issue, Cerulli said, noting that in numerous conversations with financial advisors about ESG and responsible investing, most advisors reported that only a handful of clients had reached out to them about ESG investing.

However, nearly half (44%) of households would prefer to invest in an environmental or socially responsible way—far more than the handful of clients that advisors report proactively reaching out around the topic, according to Cerulli.

“Based on our research, advisors generally underestimate the demand their clients have for ESG and should not interpret lack of proactive questions as a lack of client interest,” Cerulli’s senior analyst Matt Belnap said in a statement.

An opportunity exists for wealth management home offices and asset managers to better educate financial advisors on productive ways to broach the subject of ESG with their clients, said the report.

“If home offices can show advisors that their clients are generally open to discussing or implementing ESG solutions, and asset managers can provide them with tools and templates for successful conversations, fewer advisors will be held back by the ‘lack of client demand’ hurdle,” Belnap said.