U.S. Wealth Managers Building Out ESG Capabilities for Investors and Advisors

U.S. Wealth Managers Building Out ESG Capabilities for Investors and Advisors


September 2018, Boston. Broader adoption of retail environmental, social, and governance (ESG) investing will be driven by wealth management firms building platforms for these investments, rather than solely being reliant on asset managers creating new products, according to the latest findings from Cerulli Associates, a global research and consulting firm.

Bing Waldert, managing director at Cerulli, explains, “The theme of ESG investing is not a new one for the asset management industry. Products and strategies that purport to invest more ethically have long been a part of the industry.” He continues, “Early products were relatively simplistic, screening out ‘sin stocks,’ such as tobacco or gun stocks. However, growing awareness of client change and social issues has revived interest in ESG and socially responsible investing.”

Cerulli believes that the recent revival of interest in ESG investing is different from other product launches. “As with other product trends, asset managers are inventing and adapting products,” says Waldert. “However, unlike past product introductions, wealth management firms are creating platforms and asset allocation models for investors to allocate to ESG investments.”

Cerulli is also optimistic about the future of ESG because of the end-client. “Both asset and wealth managers cite demand from younger investors as the reason for creating ESG investments. However, advisors working with wealthier clients are more likely to recommend ESG investments today,” Waldert explains. “In addition, many wealth management firms offer private investments with impact characteristics, designed to help affluent investors make a difference with their wealth.”

These findings and more are from the September 2018 issue of The Cerulli Edge–U.S. Asset and Wealth Management Edition, which explores the reasons surrounding retail, asset managers’, wealth managers’, and institutional interest in the burgeoning ESG space, along with potential barriers to adoption.

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