How do you have a responsible investing conversation with clients?
Last month, CapIntel revealed its newest module to enable more comprehensive and effective advice to their clients. It aims to do that by solving one of the great dilemmas for advisors today: how to have a responsible-investing conversation.
“We saw significant demand and opportunity around values-based investing, which seems to be coming to the fore pretty significantly among investors,” says James Rockwood, founder and CEO of CapIntel. “More people are adding their values into their investment decisions.”
With a rising tide of regulation, mounting concerns over data security, and increasing focus on sustainability, a growing cohort of investors are demanding ESG information to see how well their investments reflect their convictions. But because ESG conversations aren’t happening, Rockwood says, it’s hard to pin down what specific metrics will produce the greatest good for the greatest number of investors.
The new CapIntel ESG module, in collaboration with MSCI, hopes to help change that. “ESG covers so many potential metrics, and not just on the environmental side,” Rockwood says. “We thought it’s a really good time to introduce a tool to allow advisors and asset management wholesalers to include this in the conversation for their clients on an ongoing basis.”
Survey after survey has shown how millennial investors’ outsized propensity to engage in ESG make them a driving force for the trend. Among baby boomers, Rockwood sees a trend of emerging “modern investors” who are primed to become ESG investors themselves.
“Millennials have such different investment priorities from their parents. But they can have an influence as they engage in dinner-table conversations,” he says. “Boomers aren’t going to say ESG is incredibly important now, but many do want to talk about it. And we may find over time that it will become a factor in their investment objectives.”
Advisors today have few opportunities to address that demand, Rockwood says, as the tools they have access to don’t serve up that information. At the same time, demand is building among asset managers and fund manufacturers for a way to incorporate ESG into their wholesalers’ presentations.
The CapIntel ESG module is moving the ball forward by providing users with five basic ESG-type metrics: ESG Peer Ranking, ESG World Ranking, ESG Ratings, Carbon Intensity, and Implied Temperature Rise.
“There’s so much exciting data out there. MSCI has over 230 data points that they can provide and drill down into,” Rockwood says. “But it’s still early days, so we don’t want to overwhelm people. Users of our platform can work with MSCI to display all or any subset of those data points.”
Over time, he expects advisors will become comfortable having conversations around the data, and investors will get used to interpreting the information. As the discussions build, ESG data platform providers will be able to determine what data is most important to get into users’ hands at a population level – at which point the revolution can truly gain momentum.
“We’re standing at the cutting edge to actually helping kick off ESG investing conversations naturally. Investors are right here; their ears are open, and they’re asking questions,” he says. “I’m excited to check in on this in a year – to see what other conversations we’ll be having, and what other data points we can bring to support them.”
