Fidelity Investments has developed technology to make it easier for RIAs to create ESG portfolios for clients, the firm announced today.
The platform, ESG ProSM, is designed to support a growing demand for sustainable investing, which is exhibited in particular by younger investors, Fidelity said. ESG ProSM was created to help financial advisors facilitate environmental, social and governance (ESG) investing conversations with clients by providing a simple ESG solution that brings together portfolio construction and client experience tools, the firm said. It is available to Fidelity and non-Fidelity advisors.
According to Fidelity research, more than two-thirds of Gen YZ and Gen X investors think it is very important for their advisors to include ESG investments in their portfolios, yet fewer than one in three advisors are very comfortable having ESG conversations with clients.
“Fidelity ESG Pro gives advisors everything they need to get started with ESG in one streamlined solution,” Rick Smyers, managing director of Fidelity Labs, said in a statement. “It provides advisors with tools to deepen their relationships with existing clients, and engage prospective clients, by developing sophisticated investment strategies that align with clients’ distinct values.”
The platform uses ESG research from Fidelity Institutional Wealth Advisor that has an open architecture that allows advisors to create and customize ESG models using thousands of curated mutual funds and ETFs from Fidelity and other leading asset managers. Advisors can leverage professionally constructed, ready-to-use ESG Pro models designed to enable them to scale their ESG offering while meeting the individual needs of their clients, Fidelity said.
Advisors have the ability to compare up to four models at one time, which can help advisors show the differences of both ESG exposures and financial characteristics of their portfolios. They can edit holdings and weights while seeing updates to data in real time.
The platform provides fund research that assists advisors with ESG mutual fund and ETF due diligence, covering more than 100 ESG strategies. Research is conducted by Fidelity Institutional Wealth Advisors using qualitative and quantitative analysis, leveraging its proprietary technology that focuses on cost, performance, style alignment, and people and process consistency. Advisors also can filter funds based on share class and expense ratio, Fidelity said.
Techniques the platform uses include a quiz that shows a client’s values, which generates talking points for advisors on how to best address particular focus areas and how to emphasize what is top of mind for the client.
The program also customizes reports that illustrate how clients’ ESG portfolios perform on up to 24 ESG characteristics compared to traditional portfolios. The reports allow advisors to compare clients’ existing portfolios to an ESG model and a traditional benchmark, offering a tangible way to assess ESG differences between portfolios and help clients understand how their portfolio could better align to the issues they care most about, Fidelity said.
Both the ESG Pro platform and reports can be branded with the firm’s logo and primary colors, resulting in a seamless brand experience for their clients, the firm added.