Expert: Edward Turner, Private Banker, Dreyfus Sons & Co Ltd, Banquiers Facilitator: Simon Minder, Family Office Adviser, M76 – Family Office Consulting
Overview:
The session focused on challenges related to sustainability and ESG investing for wealth management. The conservative nature of private banks, lack of clear standards and definitions around sustainability, and reconciling different client preferences remain a concern.
However, the ‘Great Wealth Transfer’ is an opportunity because the younger generations see ESG as a priority. This needs to be carefully managed so that everyone’s needs are met.
Discussion:
Trust was emphasised as critical, particularly as continued scepticism remains around many ESG products and ratings. Investors need to trust in the adviser’s capability to choose the right investments and to align with client preferences and values. Independent standards, improved corporate sustainability reporting focused on investors, and better data visualisation were suggested as ways to build long-term client trust.
The discussion also touched on tailoring offerings to specific clients versus standardising. But the reputational risk of overpromising ESG capabilities, and the cultural shift required in wealth management to become more client-centric with technology like client dashboards are potential obstacles to being able to do so.
Indeed, while in-person relationships remain important, AI and digital tools can supplement conversations and provide ongoing personalised ESG insights. Overall, the session reflected the complex, early-stage nature of ESG investing and the long journey still required to fully align wealth manager and client sustainability objectives to deliver strong returns.
Key findings:
- The conservative nature of private banks, lack of clear standards and definitions around sustainability, and reconciling different client preferences are an issue
- The ‘Great Wealth Transfer’ is an opportunity for wealth managers because the younger generations see ESG as a priority, thus driving demand
- Investors need to trust in an adviser’s capability to choose the right investments and to align with client preferences and values
- There is potential reputational risk in overpromising ESG capabilities
- ESG investing is still complex and at an early-stage
