Clients expect their financial advisor to help them prepare for their future while anticipating trends that could develop into good investment opportunities. For a practice to attract and retain high-net-worth individuals, this kind of insight is all the more essential.
During the next few years, existing sustainable technologies should be scaled to price points competitive with traditional technologies, especially in energy efficiency and water conservation. Advisors who build a niche in these types of investments now could take advantage of that trend. Obviously, whether or not sustainable investment strategies work in your practice depends on each client and his or her unique situation.
The high-net-worth clients I work with are attracted to sustainable investing because they have gotten returns but they also want to invest in companies that reflect their values. But despite the quality of these companies and no matter how well-researched they are, a return is not guaranteed.
To help you start integrating sustainable investment strategies into your practice, here are some key concepts and marketing approaches.
What Is Sustainable Investing?
Besides conducting in-depth research, firms that specialize in sustainable investing also engage in shareholder advocacy. They can have dialogues with a company on a variety of issues in order to encourage improvement with particular ESG issues. This appeals to my clients because they want to know that the businesses they are investing in care about the same issues.
The Business Case For Sustainable Investing
Bloomberg now has more than 300,000 terminals around the world that provide corporate sustainability information to keep pace with the growing investor demand for ESG data. MSCI recently purchased two of the largest ESG analytics companies and started offering its own ESG indices and consulting services.
Alternative investors have also started to take an interest. The number of alternative vehicles (hedge funds, private equity, venture capital, and property and real estate investments) that use some kind of ESG criteria in their selection process grew by 285% between 2007 and 2010, says US SIF 2010 Trends Report.