ESG, which encompasses environmental and social values that influence customers' willingness to invest and their investment behaviour, is a decidedly current topic. The interest in sustainable investments is growing rapidly! According to Morningstar, funds that used ESG principles captured $51.1 billion of net new money from investors in 2020. Also, the number of advisers having ESG-related conversations with customers rose 2 percent between October 2020 and March 2021, according to the NextWealth ESG Tracker Study. As a result, 2020 is considered a record year for the investment volume in sustainable funds and ETFs.
Additionally, new regulations, such as the Sustainable Finance Disclosure Regulation (SFDR) or a proposed amendment to the suitability test of MiFID II, are increasing the pressure on financial services providers. Therefore, ESG is driven by increasing customer demand, and likewise the regulatory obligations increase.
For financial services providers, it will be crucial to not only implement necessary regulatory requirements, but to broaden their scope to embrace the contemporary mindset of sustainability and focus even more on the customer's need. But even for wealth managers, ESG opens up a lot of new opportunities:
Even though ESG – as a relatively new topic for providers and customers – comes with some challenges, such as ensuring data quality and mastering increased complexity, financial services providers should take a proactive approach, take action early and seize the opportunities that this "new" market offers. The following solutions of aixigo's Wealth Management Platform allow you to seize the opportunities of this new market:
If you would like to find out which further modules aixigo's Wealth Management Platform offers, allowing you to seize the opportunities of this new market, take a look at Christian Neuenhaus' article in The Wealth Mosaics' new WealthTech Views Report "The rise of ESG in Wealth Management". The complete The Wealth Mosaic report is available here.
To summarise, there are many opportunities arising from ESG to position yourself as an expert in wealth management. If financial services providers take this chance, they will gain a competitive advantage, prove their expertise, and increase their profits!