ESG considerations and financial advice – Questions to ask your asset managers

28 April 2020
In the second part of this series, Ryan Medlock takes a look at the topics to discuss with your asset manager as part of your responsible investment research and due diligence process.

Responsible investment has grown over 40% since 2014 and is quickly establishing itself as the ‘norm’. There has been a growing prominence of ESG considerations within the institutional market for a good number of years and this is now starting to flow into the retail market. This is largely being driven by a combination of regulatory change and societal shifts, such as the mass rejection of single use plastic and peer-to-peer fashion trading to name a few.

Responsible investment has grown over 40% since 2014

An increasing number of asset managers have announced their intention to take ESG factors into account within their investment process. This increased focus provides a good opportunity for advisers to understand more about the different responsible investment approaches, and to review due diligence procedures in advance of the regulations.

My advice would be to leverage as much information as you can from the asset managers you use on their policies in relation to responsible investment.

Talking to your clients about ESG

We've created the following articles to support conversations around ESG. Click the links to open in a new tab.

Some questions to ask

Here’s a checklist of potential themes and areas to focus on.

These are only examples, but collectively they dig into a firm’s policy and strategy in relation to responsible investment and help you evidence to clients that these are embedded into investment, processes, portfolio management, and governance.

  • Have you signed up to the Principles for Responsible Investment (PRI), and if so, can I see a copy of your most recent assessment report?
  • Have you signed up to the UK Stewardship Code 2020? Are you a member of any other ESG related organisations?
  • Do you have any policies that outline how to incorporate Environmental, Social and Governance (ESG) issues into the investment decision making process? How do you monitor and evaluate compliance with the policy?
  • Do you have any voting and exclusion policies? Do you publish details of your voting track record? If it’s not available, why is this?
  • Do you have an engagement policy? What issues do you typically engage on, and can you provide examples?
  • What ESG data or research do you currently use? Do you have a specialist in-house team, or is it brought in by a specialist third party?

Focusing on these areas can help direct your research and as you start to integrate a responsible investment lens into your service and proposition. The next stage to consider is how to embed ESG considerations within your client fact finds and annual reviews.

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About the author

Ryan Medlock

Senior Investment Development Manager

Ryan’s journey with Royal London began back in 2008 after starting his career in compliance with Norwich Union. As an Investment Proposition Manager, Ryan contributed to the growth and development of Royal London’s Governed Range before moving to Aberdeen Standard Investments for a stint in the Strategic Client’s relationship team. Ryan returned to Royal London in 2018 with a focus on exploring adviser angles amongst complex regulation and investment themes. Ryan is responsible for engagement with the advice community and investment industry initiatives, presenting, writing articles and commenting for the press and holds the CFA Diploma in Investment Management (ESG). Ryan is particularly proud of the fact that he finished 952nd in the 2008/09 edition of Fantasy Premier League.

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