Sustainable investing offers another opportunity for advisors to have deeper, more meaningful relationships with their clients.
ESG investing — or “sustainable investing” — continues to gain awareness, acceptance, and assets, but skepticism among advisors is still common, according to a FlexShares insight based on The Flexible Advisor podcast.
Kiley Miller, head of ESG product development and management for Envestnet PMC, suggests that advisors who discount the potential merits of sustainable investing may also be missing a notable value proposition it can bring to their practice.
“We're seeing millennials increasingly turn towards self-directed investment tools. They're more comfortable with technology and they've gathered assets in the context of a 10-year bull market. They aren't afraid to take risks. But we know that this cohort would benefit from a more holistic financial plan. One way to engage is with sustainable investing,” Miller said.
Sustainable investing also adds a notable dimension to personalized advice.
“As investor needs evolve toward more customized investment approaches, advisors should really arm themselves with a deep understanding of who their clients are, what they stand for, and how they want to really put their money to work in the world. That results in higher retention,” Miller said. “Advice these days is increasingly commoditized, and no two clients have the same values. So that personalization can really act as a differentiator.”
FlexShares has five strategies in its ESG ETF suite that offer the building blocks of a diversified core portfolio for individuals or model portfolios. Together, they provide broad market exposure, the risk characteristics of core benchmarks, and holistic integration of key sustainability criteria.
The three equity ESG strategies offered by FlexShares include the FlexShares ESG & Climate U.S. Large Cap Core Index Fund (FEUS), the FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (FEDM), and the FlexShares ESG & Climate Emerging Markets Core Index Fund (FEEM).
The suite also includes two fixed income strategies, including the FlexShares ESG & Climate High Yield Corporate Core Index Fund (FEHY) and the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (FEIG).
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