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Education is key to driving investor interest in responsible investing
Sixth annual responsible investing survey
In the latest edition of our annual responsible investing survey, we interviewed over a thousand investors on their past, current and future views and activities around responsible investing and their need for engagement with advisors. Education continues to be a driving theme, with investors putting ever more demands on their advisors, or otherwise just going alone.
- Interest in responsible investing (RI) continues to grow year-by-year.
- Throughout the sixth edition of the survey our findings show that more investors with financial advisors than ever are both currently integrating responsible investing into their portfolios, and expect to increase those allocations over the next five years.
- Investors are also taking independent action to align their portfolios with their concerns around climate, social risk and diversity and inclusion. We see a growing opportunity for advisors to engage with their clients on RI, to educate and lead the conversation in a way that frames RI in terms of risk management, alignment of investors’ concerns with investments, and to help non-millennial investors reach the same level of RI enthusiasm as the millennial cohort.
- Nuveen’s annual Responsible Investing Survey was conducted from August 24 to September 3, 2021 and covered 1,007 investors, including 332 who said they are currently engaged in ESG investing.1
53% of investors
polled who have heard of RI (729 of 1,007) are currently participating in RI, the first time it has been a majority of respondents and up nine points from 2019.
57% of investors
say that they are very or somewhat familiar with responsible investing. But there is a significant age gap in familiarity: 30% of non-millennial investors have never heard of RI, versus just 2% of millennials.
66% of respondents
say that recent climate disasters have made them more interested in RI.
81% of investors
agree that it’s important for their advisor to talk to them about their personal values and the same number agree that it’s important that their advisor talk to them about how their investments can reflect their personal values.
63% of all investors
agree that their financial advisor could do much more to help them see the specific societal or environmental benefits of their responsible investing. Even more, 55% of investors who are not currently participating in RI would also like to see their advisor help them see the benefits.
We have seen an uptick in participation and awareness. Significantly more investors who have heard of RI are currently participating in it compared to 2019 and 2018 (53% in 2021, 44% in 2019 and 44% in 2018).
79% of investors
agree they would be much more loyal to a financial advisor who actively helps them invest in a way that also has positive impact on the world.
Investors feel strongly that their advisors are knowledgeable of RI. It also shows stark differences between millennial cohorts and non-millennials. Millennials are significantly more demanding of advisors and asset managers with regards to their knowledge of RI.
82% of investors
surveyed use or would use advice from their advisor to decide on the current allocation of RI in their portfolio.
Throughout this year’s survey we have seen that although there might appear to be a gap between investors and advisors on RI, that gap can be closed with educational resources. That gap is where Nuveen can help. The rapidly developing universe of responsible investing, the associated terminology, best practices and products can be confusing. Dispelling the myths of what RI means, distributing the materials to see the benefits of RI and tying that narrative together can create genuine value for the relationship between an advisor and client. We also understand that some advisors and clients are at different places on the journey of education around RI, and we want to help level that information deficit. The underlying principles of RI can help investors see the benefits, and as our survey shows, this naturally brings about more enthusiasm to engage with RI products further.
Understanding that RI directly relates to risk management in a portfolio, and risk management has a firm relationship to ultimate performance, is a key consideration for getting RI into portfolios. Diversifying away from companies that pose ESG risks to a portfolio can help future-proof against climate risk and against the financial risk that comes with underlying problems of governance. We can help establish the building blocks that tie good management of a company’s employees and stakeholders with its ultimate returns. These are the areas where we have seen investors acting on their own, whether through voting or local organizations, and we want to make sure that they are expressing their personal values through their investments and through conversations with their advisors.
Providing that proof, that measurement, giving that conversation about values a deep financial grounding that directly relates to a client portfolio is what Nuveen can provide and what we want to provide going forward. Our hope is that the conversation about values becomes integral to the conversation about portfolio construction, and that RI is seen as vital to the long-term performance of a portfolio. We want all advisors and investors to have detailed meaningful discussions about aligning personal values into portfolios as we believe that this will ultimately lead to longer-term, deeper multigenerational relationships between investors and clients that can drive returns and integrate values side-by-side.
We firmly expect this conversation to continue across multiple years. Our company’s climate targets stretch decades into the future and we fully expect investors to have the same horizons. We want to move the needle on the number of investors who are acting in their portfolios to reflect their values, and we want advisors to be there for that journey.
1 Nuveen commissioned The Harris Poll to conduct an investor survey to further enhance the company’s leadership position among investors, the media, customers, prospects, and the broader investment community. The investors survey was conducted online within the U.S. by The Harris Poll on behalf of Nuveen between August 24 and September 3, 2021 among 1,007 investors who met the following criteria: U.S. resident, age 21+, $100,000 in investable assets (excluding 401(k) or 403(b) accounts) or real estate, primary or joint decision-maker for household financial decisions, and currently working with a financial advisor.
A word on risk
Investing involves risk; principal loss is possible. There is no guarantee an investment’s objectives will be achieved. Investments in Responsible Investments are subject to the risk that because social criteria exclude securities of certain issuers for nonfinancial investors may forgo some market opportunities available to those that don’t use these criteria. Impact investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating. Investment products may be subject to market and other risk factors. See the applicable product literature, or visit nuveen.com for details.
These views are presented for informational purposes only and may change in response to changing economic and market conditions.
The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC.