Worldwide, 78% of wealth clients now have goals related to sustainability in their lives, while 62% of clients, regardless of age or gender, have goals related to generating a legacy. But wealth providers’ understanding is failing to keep up with clients’ beliefs. True, half of clients believe wealth managers understand their goals, but 41% feel their provider could understand those goals better and 5% think firms don’t understand them at all.
This deficit in understanding is concerning, given the vital importance of delivering tailored, differentiated experiences to clients. The gap is especially stark in some key Asia-Pacific markets. For example, 97% of clients based in China have sustainability goals, but three in five feel their provider does not understand these well enough. In Japan, 86% of clients have sustainability goals, but three-quarters believe wealth firms could do more to understand their priorities.
A major reallocation of investments is clearly on the cards, with 76% of clients believing it is important to integrate Environmental, Social and Corporate Governance (ESG) parameters into their portfolios. Some issues, such as climate change, are a major concern in every region. Others are more localized; for example, deforestation is a growing concern for 61% of Latin American clients but just 19% of those in Asia-Pacific. On the social front, clients are most focused on diversity and inclusion, data protection and human rights.
But understanding clients’ sustainability beliefs is only half the story. Clients also want to change the investing techniques they use, and just 36% globally expect to rely primarily on traditional investing approaches by 2024. That’s a fall of 16% and the decline will be even faster in Europe (-22%), in Asia-Pacific (-25%) and among the ultra-wealthy (-43%).
For the industry, the ultimate goal should be to deliver end-to-end investing journeys underpinned by a wide choice of ESG investing options, tailored advice, flexible education and supplemental research.