Many private wealth managers are keen to invest for positive impact but are often constrained by a lack of quality products and the absence of incentivisation structures.
“There is a very, very high level of interest among wealth managers in impact investing and investing in line with the UN Sustainable Development Goals (SDGs),” Amy Clarke, chief impact officer at London-based private wealth manager Tribe, told Environmental Finance.
“However, I think often what happens is the wealth managers sit in institutions that don’t necessarily know how to then create the products or the solutions for those wealth managers to take to clients, or the wealth managers are not necessarily being encouraged to have those conversations with the client.
“There is a growing sense out there in the wealth-holding community that they want to be able to invest for positive impact but, to a certain degree, they are not being discouraged as such, but they’re finding it very difficult to have those conversations.
“Part of that is because the institution that these wealth managers sit in may not be able to respond to those demands [with relevant products]. Also, a lot of these houses don’t reward this type of advice being given.”
Regulatory intervention by the European Commission, which includes mandatory disclosures by financial advisers on the adverse impacts of investments caused by sustainability risks, is a sign of the increasing pressure on advisers to ask their clients for the sustainability preferences, she said. These disclosure requirements are set to apply from 10 March 2021.