Holly Black: Welcome to the Morningstar Investment Conference 2021. I'm Holly Black. With me is Andy Maher from MBL.
Hello.
Andy Maher: Hi, Holly, how you doing?
Black: So you've been talking advice and ESG. So I want to know, as a financial advisor, are you seeing an increase in interest from clients in ESG?
Maher: I think there's been a massive uptake, especially since the outbreak of COVID, where there was an awful lot of articles in the news, an awful lot of data coming out. I think even before that we had more interest. But especially since March 2020, it's been a massive intake where people are actually now, when they enquire are asking, do you offer this? And even existing clients are saying, look, I might be interested, and we've had these conversations with them for a number of years. But now clients are going yeah, I'd like to talk a bit more about it.
Black: So what are some of the most common questions you're getting from clients?
Maher: I think a lot of the questions come around the governance because I think people are interested now in funds that are going to be managed well, for their benefit and for the benefit of society. And I think – the social impact, I think people want to know, is it going to cost them more? That's the one question we get. And are they trading ethics for performance. And I think we've seen a drop in costs. A blended approach where you can have the actives, and the ETFs has really, really helped us because we're saying to people, there's your annual management charge or your ongoing fund charge on that portfolio. And there's your ESG, and they are going, so there's no difference. And I think, the data we've also been able to provide about how well the asset classes have done in these areas, has really made clients go, this is okay, I'm not sacrificing my retirement, or my children's college fund for a belief, they're actually going, hey, this is great, this works.
Black: And do you see a certain type of person is more interested in ESG, is it younger clients or is it retirees?
Maher: I would have thought it would have been people in the 20s. But the Ernst & Young's survey that showed that 75% of their clients are interested in sustainability and talking about ESG funds. Now I can't for the life of me believe they've got an average client base of 22. And it's certainly not with us, we're finding people in their 60s, their 50s, their 40s across, I think some of the retirees who are probably mid 70s to 80s aren't as interested in it. But everyone else is talking about it because it's everywhere. It's on the news, it's in the papers, you can't get away from it. So there's an awful lot of conversations to be had for us as an industry. And I think we generally just thought, oh, it's the younger people. It's certainly not.
Black: So you say it's in the news, it's on social media. Does that mean it's a fad, a short-term thing, or is ESG here to stay?
Maher: No, this one's here to stay. I think we've seen some other fads in areas like this, but this is here to stay. I don't think this will go. In fact, I would openly say this is going to dominate how funds are done, we think. And I think mainstream funds are going to have to take on a more ESG approach to keep up with it. But this isn't going anywhere, not the amount of inquiries and when you read the FT at the weekend or we get the data off you guys and you're looking at it the amount of inflows, one in three new pounds is going into ESG funds. This is here and it's going to keep getting bigger.
Black: Andy, thank you for your time.
Maher: Cheers, Holly.
Black: Thanks for joining us.
