The vast majority of Canadian investors are interested in responsible investing (RI), but most know little or nothing about it, according to a new report from the Responsible Investment Association (RIA).
The 2017 RIA Investor Opinion Survey, sponsored by Vancouver-based OceanRock Investments Inc., found that even though 77% of investors are interested in RI, a significant 73% have little or no knowledge of what it is. Only 5% of survey participants said they had no interest at all in RI.
The results highlight a huge “RI awareness gap,” the report says, and an opportunity for financial advisors to raise the conversation with clients and steer them toward suitable RI investments.
The report found that only 22% of investors said they know a fair bit about RI, and a meager 5% said they know a lot about it. A sizable 19% have never heard of RI.
However, 73% of survey participants said they buy socially responsible brands generally and check product labeling for sustainability.
“A strong majority of investors told us that they are more likely to choose responsible investments if their advisor suggests suitable options or if their financial institution, credit union or online brokerage informed them about responsible investments,” says Deb Abbey, CEO of the RIA, in a statement.
Upon being asked what would make them more likely to choose RI, investors’ top response was they would be more inclined if their advisors suggested suitable products.
They also said they would be influenced by more confidence in RI’s investment performance. It would also be helpful if their financial services institution or online brokerage provided them with information, or if responsible investments were easier to access online, they said.
It’s also important for advisors to inform clients that RI performs just as well if not better than traditional investments, the report found.
A 2015 Carleton University study that OceanRock Investments commissioned found that Canadian RI equity funds have historically provided financial outperformance while simultaneously reducing risk; other studies in the U.S. have had similar findings.
“Advisors could add significant value to client relationships by informing clients about suitable RI options,” the report said.
The research also found that:
> 82% of investors believe women should be better represented on corporate boards in Canada.
> 55% would be willing to sell their investments if they learned a company does not pay men and women equally for equal work while another 25% said they would consider selling their investments.
> 82% would like to dedicate a portion of their portfolio to RI and 52% would like more than half of their portfolio dedicated to RI, while only 3% would allocate nothing to RI.
> 77% agreed that companies with good environment, social and governance practices are better long-term investments.
The survey found that millennials are keenly interested in RI and that their interest exceeds that of older cohorts. The data found that 85% of millennials (aged 18 to 35) are interested in RI, followed by 80% of Generation X (aged 36 to 54) and 69% of baby boomers (aged 55 or older).
Looking ahead to the next five years, 81% of millenials said they’re likely to invest in an RI product compared with 49% of baby boomers.
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