Advisory client demand is driving the growing use of sustainable investing strategies in investment portfolios, according to SEI.
That was among the findings from a survey of nearly 800 registered investment advisors conducted by the Oaks, Pa.-based investment management and solutions firm late last year. The results were released today.
The survey also found that one-third of RIAs experienced increased client interest in sustainable investing during the pandemic and at the height of the national racial equality movement protests last year, SEI said.
"Covid-19 and the racial equity movement accelerated the already pronounced investor effort to match their investments with their sustainability priorities," said Jana Holt, global director of sustainable investing solutions at SEI, in a prepared statement. "RIAs play a central role in supporting their clients' portfolio construction, so it's crucial that they are well positioned to provide the insight and support clients' need to determine how they can best allocate in alignment with their values."
Forty-two percent of the surveyed RIAs said their clients expressed interest in sustainable investing at least sometimes, while 34% of RIAs said they have implemented sustainable investing strategies for their clients.
SEI said the issues most cited by RIAs were related to the world's climate, including alternative or renewable energy and natural resources. That issue garnered nearly three times the interest of other areas, including multicultural and gender diversity issues.
SEI said these were among the other survey findings:
• Twenty percent of RIAs said they were unfamiliar with sustainable investing and have no plans to implement such strategies over the next two years.
• Forty percent of RIAs don't feel knowledgeable enough to recommend sustainable investments to clients.
• Thirty percent of RIAs were wary of sustainable investing strategy performance. Only 9% were concerned about "greenwashing," the practice in which some corporations overstate their green credentials.
"Our research demonstrates that RIAs are committed to addressing the rising client and prospect demand for sustainable investing, but don't yet feel prepared to deliver appropriate counsel or investment strategy," said J. Womack, managing director of investment products and services for SEI's advisor business, in a prepared statement. "It's critical that we continue to educate advisors so that they can confidently embrace the increasing demand and empower all investors to achieve their financial and sustainability goals."