- Risk profiling is the bedrock of the advice process, to ascertain a clients willingness and ability to take investment risk and recommend an appropriate investment vehicle.
- More recently, as sustainable investing has become key to the advice process, Pacific has developed a tool to quantify a client’s attitude to sustainability, and understand where on the ‘green spectrum’ they sit.
- We can aggregate the data we have access to, and utilise it to generate an ESG sentiment indicator. This shows us how clients attitudes to sustainability are shifting through time.
- We see that more recently ESG sentiment has deteriorated, which has coincided with a period of underperformance for sustainable strategies. By creating EnlightenESG we hope to have contributed to the sustainable investing ecosystem and help clients to invest based on their true views on sustainability, not just on the basis of recent performance.
Many years ago, advisors started to ask their clients detailed questions about their attitude to risk and these days risk profiling is part of almost every advisor’s toolkit. Now that sustainable investing is becoming an important part of the conversation with clients, at Pacific we decided to build something for advisors to quantify their clients’ attitude to sustainable investing; from that simple idea EnlightenESG was born. The idea behind EnlightenESG is to identify how far along the ‘green spectrum’ they might sit. One of the surprise benefits of implementing this technology has been giving us a large data source to assess overall attitudes to sustainability, and from this we can develop a sentiment indicator to see how sustainable views are changing through time.