Risky Business: Getting Advisors to Talk about ESG to Clients


Friday, January 7, 2022 | By Tracy Needham, Sr. Research Analyst

Risky Business:  Getting Advisors to Talk about ESG to Clients

Despite all the headlines about the soaring popularity of environmental, social and governance (ESG) investing, these strategies are still proving to be a hard sell with many advisors. Our recent blog post discussed the factors behind the resistance of the three in five advisors that are not currently using ESG—and what asset managers need to do to win them over.

But many of the advisors that use ESG products are reluctant to sell these strategies, as well. In fact, despite the numerous stories and news articles suggesting that investors are highly interested in ESG investing, only 30% of the advisors who use ESG ask every client if they’re interested in ESG investing.

Just 3 in 10 advisors ask all clients about an interest in ESG investing

More than a third of these advisors only mention ESG products to clients who explicitly ask about ESG or already hold such products. And that’s not often, as 58% of advisors said zero clients had existing ESG assets at the first meeting and another 35% said 10% or fewer clients did.

Client Conversations are a Top Obstacle for 2 in 3 Advisors

 For the advisors who don’t ask every client if they’re interested in ESG investing, two-thirds cited some type of concern about discussing ESG with clients as a top reason for not doing so.

Entering into discussions about ESG issues and personal values can feel like a risky endeavor to advisors. In fact, 22.1% of the advisors said a top reason they don’t explore an interest in ESG with every client was because ESG issues are too political and could potentially offend a client.

Graphic shows the concerns that prevent advisors from asking all clients about ESG

But even if the client is interested, the related environment, social and governance issues are wide-ranging and complex, and advisors don’t want to start a discussion about issues they don’t fully understand with a client who may know a lot and care deeply about those issues.  Advisors want to be perceived as the trusted expert — one misstep that reveals their lack of knowledge about a particular issue or offends a client can jeopardize that.

Therefore, asset management firms interested in the growth of ESG products must help advisors become more comfortable and confident in their ability to discuss ESG with clients.  Our research for Building Confidence in Client Conversations about ESG pinpointed four key strategies that advisors told us would be most helpful for getting them to use and sell ESG strategies more often — which were all about helping them handle that client conversation:

  • Assuage skepticism about ESG performance.
  • Make it easy for advisors to educate clients about ESG and your firm’s approach to it.
  • Prepare advisors for discussions about specific ESG issues.
  • Help advisors gauge client interest and open the discussion.

While the first two strategies are a must-do for every firm in the ESG space, the last two are most relevant to those asset managers who are investing heavily in ESG strategies—so they can make the most of their investment.

Bottom line: For firms looking to grow significant assets in ESG products, finding advisors who are willing to sell them isn’t enough. Getting advisors to consistently talk to clients about ESG investing is critical to increasing advisors’ use of ESG strategies—and that starts with getting these advisors comfortable with talking to clients about ESG, and enabling them to do so with confidence.  For more, read our "Building Confidence in Client Conversations about ESG" report.



Asset Management, Research, Analytics, and Consulting, Wealth Management


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