FT 300 Advisors Lack Interest in Socially Responsible Investing
After tallying the numbers for the third annual listing of the Financial Times 300 Top Registered Investment Advisors, researchers have found there’s still only a small group of RIAs that offer socially responsible investing opportunities.
The lack of interest puzzles Ignites Research director Loren Fox.
Only 4% of firms making the FT 300 list say they specialize in SRI opportunities, up slightly from 3% last year, even though Fox says institutional firms are increasingly offering SRI funds and private investors are increasingly demanding them.
And a number of studies say Millennials – an increasingly larger market for RIAs – are significantly interested in SRI opportunities, as well as environmental, social and governance (ESG) investing. Fox pointed to a May 2016 TIAA Global Asset Management survey that revealed advisors who offer SRI as a specialty may be able to bridge the gap with Millennial investors.
“Where is the disconnect, and why are so few of these firms specializing in SRI?” Fox asks, questioning whether it is an opportunity RIAs might simply be overlooking. “I don’t know how many of these firms are proactively asking their clients if SRI is something that they want more information on.”
Another area where Fox feels RIAs could increase their services is in the ultra high net worth space. To make the list, FT 300 RIAs must manage at least $300 million in assets, but candidates are also scored on annual assets under management growth, compliance, years in business, certifications and online accessibility. Just over a fifth (22%) claim to service ultra high net worth clients (those clients with $10 million-plus investable assets). Fox says 13% of FT 300 RIAs said they provide family office-style services.
Family offices are independent organizations which run the money of extremely wealthy families; according to reports, for a family office to be cost-effective, families typically require at least $100 million in investable assets. However, many families with less wealth are increasingly demanding family office-style services.
Beyond investment management, RIAs could add family office-style services to help their ultra-high net worth clients manage a number of duties including accounting and payroll for household staff, tax preparation for the family, and concierge services for family members.
“It’s interesting that we don’t see more of these high-end RIAs offering those kind of services,” says Fox.
However, he says it’s possible that clients may not be asking their RIAs for family office-style services, or it could be that RIAs are just not interested.
“It’s one thing to manage a portfolio of investments, and it’s one thing to make sure the butler gets paid on a regular basis,” says Fox.
Read the FT’s special FT 300 report and see the full list.