Advisers must keep up with the increasing demand for sustainable and green investments, the FCA’s acting director of strategy Richard Monks has said.
Speaking at the Institute of Director's Intergenerational Wealth Autumn Symposium last week, Monks highlighted the need for advisers to obtain a ‘real, deep understanding of what your clients are trying to achieve’ depending on their generational needs.
'Millennials want sustainable investment and believe in profit with purpose. Firstly, the understanding of individual consumer needs, as with the baby boomer generation, this becomes as important as understanding questions around tolerance of investment risk. A real deep understanding of what your clients are trying to achieve. In terms of some assumptions you may have had 10 or 15 years ago now may not be true [for what products clients want].
‘Millennials believe in profit with purpose, so advisers will need to be able to respond to demand for sustainable and green products and possibly balancing financial and ethical returns,’ he said.
However, Monks acknowledged that this change will not come over night. He explained that regulator does not expect advisers to immediately respond to this completely as there is more to be done on the FCA’s part.
‘There’s a huge amount of work that needs to be done in that space including taxonomy, reporting, labelling etc, but we see that that [sustainable investing] is an area of huge growth.’
Monks also highlighted the potential for business with millennials. ‘They are the best educated generation in history with the lowest levels of financial knowledge...so, there is a great opportunity for advisers in this space.’
He explained that with the integration of digital into advice offerings and greater transparency, there is the potential for advisers to build relationships and work in collaboration with millennial clients.