2021 RIA Advisor Opinion Survey

Study shows Canadian financial advisors are comfortable engaging with clients on ESG, but subject matter knowledge is limited

The 2021 RIA Advisor Opinion Survey, which is based on a Newcom Media poll of 539 financial advisors in Canada, found that 85% of the advisors surveyed said they’re very or somewhat comfortable starting a conversation about responsible investment (RI), which refers to investments that incorporate ESG issues. However, the results show that advisors’ knowledge of the subject is low, as only 6% of respondents correctly identified 3 true statements out of 10 statements about RI. Moreover, some advisors appear to be overestimating their knowledge, as nearly one-fifth of advisors who claimed to have excellent or very good knowledge of RI failed to correctly identify any of the 3 true statements about RI in the same assessment.

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The survey, sponsored by Mackenzie Investments, NEI Investments and Vancity, found that environmental issues top the list of concerns for advisors’ clients. In a year that saw an international focus on net zero emissions and climate change at COP26, 84% of advisors reported that environmental topics are the most important ESG issues among their clients.

Highlights:

• 85% of advisors said they’re very or somewhat comfortable starting a conversation about RI, while 15% indicated they’re not comfortable doing so.
• Among advisors who have discussed ESG or RI with clients, 37% reported that they usually initiate the conversations, while 32% indicated that the client does so, and 31% said that they and their clients start these conversations equally.
• 94% of advisors who said their RI knowledge is excellent or very good also said they are comfortable starting RI-related discussions. In comparison, only 35% of advisors who described their knowledge as poor said they are comfortable taking the lead.
• Some advisors appear to be overestimating their knowledge. Advisors’ demonstrable knowledge was similar regardless of their self-assessed knowledge levels. Of those advisors who said their RI knowledge was excellent or very good, one-fifth did not correctly identify 3 true statements out of 10 statements about RI.
• 84% of advisors reported that environmental matters (such as climate change, biodiversity, and toxic waste) are the most important ESG issues for their clients.
• Advisors who have discussed ESG or RI with their clients cited various reasons, including client interest (41%), the desire to make suitable investment recommendations (25%), their sense of fiduciary duty (12%), and to distinguish their practice and services (12%).
• Many advisors also shared concerns about RI, which may be preventing them from initiating RI-related conversations. For example, 81% of respondents expressed concern about greenwashing, and 74% expressed concern about lack of standards. Many advisors left comments indicating that standardization around responsible investments would help them to overcome their concerns.