Clients seek advisor guidance on values alignment

For years, the world has been heading for the intersection of personal values and investments. Whether due to investors having more fluid access to information, the mounting existential threats posed by environmental and social issues, or the clear influence that corporations have on day to day life, sustainable investing has taken root.

Financial advisors are at the heart of the equation. Their role as a trusted advisor and financial intermediary thrusts them into the conversation, and clients increasingly expect that their personal values will be considered.

While advisors have sometimes expressed discomfort with this role, it is actually an evolution of the relationship they strive to achieve. Understanding client life goals is a common theme that frequently gets personal: what kind of life do they want to live in retirement? How do they hope to support their children and grandchildren? What health concerns do they have? These types of issues have long been a part of the dialogue around financial planning and portfolio construction.

Aligning clients’ personal values with investments is no different. It may add a layer of complexity, but it leads to better outcomes and a deeper partnership with clients.

Nuveen’s 2021 Responsible Investing Survey found that incredible opportunity lies ahead for advisors willing to add this element to the personal conversation. A whopping 81 percent of investors interested in sustainable investing responded that it’s important for their advisor to talk to them about their personal values and how they can be reflected in their portfolio.

One of the primary takeaways of the survey? It boils down to this statistic:

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.

“…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.”

ESG is a critical element of portfolio construction, however it is just one piece of the puzzle when it comes to values alignment. There are nuances that advisors must understand in order to makes meaningful, constructive strides with their clients.

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