The value in talking to your clients about values: Invesco

Trust is fundamental to the adviser-client relationship. The establishment of trust between an adviser and client has been found to be the most important factor in relationship quality and can lead to more open conversations with clients, drive greater client satisfaction, loyalty and advocacy and assist with delivering improved financial outcomes to your clients.

One way to build trust is to actively find ways to better understand your clients – not just about what assets they have and what they want to achieve, but also understand more about who they are as people. What are the values and the principles guiding their investment decisions?

Invesco Global Consulting recently conducted a study of more than 1,100 investors across the US and Canada, looking into the language of ESG and values-based investing. We explored which investors are more open to their adviser raising the topic of personal values and beliefs with them and whether investors feel there would be any benefit to having this conversation. Nothing taps into personal values more than our views on ESG.

When we asked investors the question, “If your adviser asked you about your personal values when it comes to investing, would that be appropriate?” 75 per cent agreed that not only would it be appropriate, it would also help their adviser better understand them and their goals.

However, in the same research we found only 43 per cent of investors had actually had that conversation with their adviser. 

Which leads us to wonder – why are advisers not bringing this topic up with their clients more often?

We know that the topic of values and ESG is a very personal one to most people and the potential for these conversations to become uncomfortable is high. We also had advisers tell us during our research that they didn’t think their clients were interested in ESG as they hadn’t brought it up.

Recent Google Trends data shows us that the topic of ESG is three times more popular in Australia today than it was three years ago. In fact, a search of “ESG” produces over 530 million results. This is a topic that you may not be able to avoid.

When it comes to who is already having these conversations with their advisers, three significant investor groups stood out to us: the boomers, female investors and millennials. 

Let’s take a look into some of the research.

In the case of boomers, we have seen from multiple studies out there that this cohort are generally the most skeptical about ESG. Our research found that:

• 13 per cent have already talked to their financial professionals about ESG
• 65 per cent believed it would help their financial professionals to better understand them and their goals
• 70 per cent are open to talking to their financial professionals about ESG

While the numbers show there are very few boomers having the values conversation with their adviser, we see that the majority are open to it. Raising the topic of ESG and values-based investing with your boomer clients may deepen your relationship. You may not be there to promote ESG or discourage ESG, but simply introducing it to your boomer clients and offering them the choice can have a profound impact on your relationship.

The second group that stood out was female investors:

• 33 per cent have talked to their financial professionals about ESG
• 75 per cent believed it would help their financial professionals to better understand them and their goals
• 81 per cent are open to talking to their financial professionals about ESG

They are quite big numbers there – three quarters believed the conversation would help their relationship with their adviser, yet only 33 per cent have actively engaged in that conversation. We see there is a large opportunity with this client group, especially when it comes to the adviser being the one to raise the subject, instead of waiting for your client to bring it up.

And when it comes to millennials, I am sure it is no surprise to see that:

• 80 per cent have talked to their financial professionals about ESG
• 84 per cent believed it would help their financial professionals to better understand them and their goals
• 89 per cent are open to talking to their financial professionals about ESG

What stands out with these numbers is knowing how closely connected millennials are to boomers, having the conversation could lead to a positive impact on holding on to the next generation when it comes to intergenerational wealth transfer. 

Sometimes the most challenging conversations to have with clients are those that explore their values and personal beliefs, especially when you are unsure of the best way to approach the discussion. However, our research shows that discussing these topics with your clients is more likely to help the relationship than hurt it. 

Offering your clients choice by bringing relevant topics to them and being interested in learning more about them personally, is one big step toward establishing a deeper level of trust.

Jacquelyn Mann