By Fidelity

Our investment team discuss how we are evolving and enhancing our sustainability research and ratings. Find out more about how we are moving away from solely using ESG as a risk management tool, with an increasing focus on delivering real world change.

In recent years, we have seen rapid growth in interest in sustainability and rising desire for sophistication from investors in how it is approached. Today, investors are increasingly looking to influence positive change by directing capital to address ESG problems, not least climate change.

As part of this evolution, we have developed the core tools within our sustainable research platform, making enhancements. We have evolved our ESG ratings and version 2.0 now makes more in-depth assessments of how companies are managing the impacts of their businesses and mitigating any negative effects on all stakeholders, including workers, society, the environment, etc. We are also measuring alignment with the SDGs and how companies are making positive contributions to these goals; as part of this, we try to disaggregate different activities to provide more granular information.

Broadly speaking, what we are doing is moving away from using ESG as a risk management tool that contributes solely to financial outcomes. Instead, we are moving towards an approach focused on delivering real world change. It means much more holistic assessments of the opportunities and risks faced by an issuer, as well as more forward looking.

The first stage in our process regards materiality mapping – we have developed customised materiality maps for 127 individual industry subsectors, each with a different weighting combination of 14 social and 26 environmental indicators. These maps are determined by our research analysts alongside our dedicated sustainable investing team on the basis of each company’s operations, but also the context of their impact on other stakeholders, such as suppliers and broader society. For example, we would include Scope 3 emissions linked to airports, whereas other ESG ratings might not.

Our extensive corporate access enables us to engage with corporates to investigate sustainability issues in great depth. This is a key differentiator – we use a combination of qualitative and quantitative inputs, rather than relying on publicly-disclosed quantitative data as many external rating systems do. Our qualitative assessments are undertaken by our analysts, who have detailed knowledge of the companies in their coverage.

We are lucky to have relationships with and access to senior management teams all around the world that enable us to take this approach, it is not something that every firm can accomplish. Our local research teams are able to engage on ESG issues with countries in all cultures and languages in order to drive improvements in their behaviour.

Click here to read the full article and watch the webinar >

Important information
This information is for investment professionals only and should not be relied upon by private investors. Past performance is not a reliable indicator of future returns. Investors should note that the views expressed may no longer be current and may have already been acted upon. Changes in currency exchange rates may affect the value of an investment in overseas markets. A focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited.

Jim Henning – Head of Investment Services at Dynamic Planner – outlines the current climate and confusion around the labelling of sustainable investing solutions. In step with COP26, regulatory pace has been gathering in the UK in 2021. But how will new measures, aimed at asset managers, help advice firms and their clients? Plus, with investors’ sustainability preferences too being discussed, what can firms do now to prepare?

Broadly, what problem is the industry facing around solution labels for sustainable investing?

The fundamental problem of course is mankind being on a ‘code red’ warning, because of catastrophic consequences of climate change, and time is running out fast to do something about it.

As we have seen during COP26, this is a global problem, which requires global solutions on an unprecedented scale. The whole financial sector has a crucial and urgent role to play in reorienting capital flows towards a more sustainable global economy, if we are to have any hope in slowing down the rate of global warming.

However, defining what ‘sustainable’ actually means has always been the problem. Opinions vary; self-disclosed company data can be patchy and without external scrutiny; while of course science and regulation continually evolves.

The encouraging news is that global regulators and governments have been busy trying to get agreement for concerted action in setting clear and measurable targets and a comprehensive and common baseline of sustainability disclosures applying to businesses as well as asset managers.

Among the intense media coverage during COP26, HM Government showcased its ‘Greening Finance: A Roadmap to Sustainable Investing’, which will apply to UK listed businesses, including the financial services sector as well as investment products.

It included ambitious plans for reporting environmental impact using the UK’s own version of a Green Taxonomy, which provides an essential reference point for companies to report against and timescales on additional broader sustainability disclosures, referred to as SDR. Also, in recognition of the key role of retail advice within the investment chain, there can be no surprise it will be brought into the scope of this regulatory framework, subject to industry consultation.

Using this framework, the FCA recently issued a discussion paper ‘Sustainability Disclosure Requirements and investment labels’ which, following the consultation process, is likely to bring about improved clarity when categorising funds. The paper floats the concept of four potential fund type labels and how their underlying holdings are aligned to the Green Taxonomy of business activities:

  1. Not promoted as sustainable
  2. Responsible and Sustainable ‘Transitioning’
  3. Sustainable ‘Aligned’
  4. Sustainable ‘Impact’

Asset managers/owners and investment products will be required to substantiate ESG claims they make in a way that is comparable between products and is accessible to clients and consumers.

They will also need to disclose whether and how they take ESG-related matters into account in their governance arrangements at overall entity level, which will be useful additional information for the first two fund categories above and vital that a wider range of businesses are also encouraged to a greener transition pathway.

‘Drive now towards sustainable investment is unstoppable’

We know the barriers that many advice firms who use Dynamic Planner are currently facing in incorporating sustainability within their process. The graph below illustrates responses to an online poll conducted at a sustainability webinar we held for firms this October.

The drive towards sustainable investment is now unstoppable and these new regulations aim to help demystify some of the confusion felt by advice firms, improve the clarity of fund disclosures and increase trust in the sustainable outcomes claimed. While the UK regulator chose not to incorporate EU regulations for client sustainability assessment last year due to Brexit, the intention now is clearly for advice firms to do so.

What can advice firms do today, to get ready for regulation?

While these global initiatives are vital, they are very much focused around the provision of improved disclosures and objectivity of data reporting. However, what can’t be codified is how to measure individual preferences around sustainability, which must be based on discussions with clients. Approaches here clearly depend on individual circumstances.

There is a place for detailed, factually based questionnaires for those clients who are interested in aligning their portfolios with their personal values or religious beliefs. However, for the majority, bringing out those unique preferences in a more engaging way without bias could really help cement the future relationship.

Our sustainability preference questionnaire comprises 15 questions and has been developed using rigorous psychometric and statistical based techniques, to accurately predict these preferences. It offers a repeatable and structured framework to enable further client discussions within the wider suitability assessment process.

There is really no reason to delay trying out the sustainability questionnaire and marrying it with Dynamic Planner’s risk questionnaires, so you can properly demonstrate a ‘client profile’ assessment within your process.

What about ESG fund research?

Industry and regulatory efforts to improve clarity will no doubt shift the dial, but this will both take time and evolve. Dynamic Planner’s sustainability questionnaire uses five categories of investor preference, ranging from ‘low’ to ‘very high’ importance and can be used with any form of additional fund research as the follow-on step in the process.

In Dynamic Planner, you can also access ESG fund ratings and reports from MSCI, providing your firm with institutional grade research across the wide market of funds [hear from Naomi English, MSCI’s Head of ESG Product Strategy].

The good news is that the majority of formally risk profiled multi-asset solutions, in Dynamic Planner, have strong ESG credentials according to the MSCI research, meaning that your existing panel of funds may already be meeting the sustainability preferences of many of your clients.

Download our guide to sustainable investing and share with your clients, in support of your conversations

“Investors can find unprecedented investment opportunities through investing sustainably and it is mission critical for tackling the profound environmental and social challenges facing humanity.” Dr Ben Caldecott, Founding Director, Oxford Sustainable Finance Group, University of Oxford

Ahead of the UN Climate Change Conference (COP26), Dynamic Planner has created a white paper style Sustainability Discussion Guide for financial advisers to use with their clients. The foreword has been written by Dr Ben Caldecott, founding Director of the Oxford Sustainable Finance Group at the University of Oxford.

The guide is launching in the week ahead of the 2021 UN Climate Change Conference (COP26) when consumer interest in sustainability is expected to peak. It aims to help the financial adviser community and their clients properly explore the topic of sustainable investing. With recent reports that the FCA and HM Treasury are exploring how to best introduce sustainability related requirements for advisers, Dynamic Planner’s Sustainability Guide will support advisers in more fully understanding investor preferences when it comes to sustainability and ultimately, suitability. The guide focuses on:

Dr Ben Caldecott, founding Director of the Oxford Sustainable Finance Group at the University of Oxford said: “The 2021 UN Climate Change Conference (COP26) is a key moment where governments, companies, and financial institutions will make bold commitments to tackle climate change. Financial firms representing tens of trillions in pounds of assets will be committing to align with the Paris Agreement and shift their portfolios accordingly. These and related developments will further accelerate existing trends in sustainability.

“The transition underway is also unleashing new technologies and business models, helping to drive innovation and productivity improvements in companies around the world, whether public or private. Finding these companies and helping them grow is essential, and also creates unprecedented investment opportunities for investors, especially those who increasingly want to align their investments with environmental and social sustainability. It is also mission critical for tackling the profound environmental and social challenges facing humanity.”

Ben Goss, CEO of Dynamic Planner said: “Consumer preference around how we can live our lives more sustainably is rapidly accelerating. With estimates of over £5trillion of wealth in the UK being passed down generations by the middle of the century, now more than ever we have the opportunity and responsibility to make investment sustainable. Not only does this make sense in continuing to build wealth, but also to deliver positive changes for the benefit of future generations.

“Financial advisers have a critical role to play in helping investors understand these trends and navigate the complexity and ensure that the asset managers they recommend are properly measuring and managing both climate and nature-related risks and impacts. This is hugely important as it will help ensure capital is channelled efficiently and productively to support the vital transition to global environmental sustainability.

“In a recent survey, 54% of advisers told us that they needed to increase their own knowledge around ESG and sustainable investing. Our guide is intended to inform the discussion and conversation between investor and adviser, written and presented in a way that investors can use to explore all of the issues around sustainability further.”

Earlier this year, Dynamic Planner launched its Sustainable Investing insight, powered by MSCIs global market leading ESG research. In May it launched the industry’s first psychometric sustainable investing questionnaire, combining thinking from schools of psychology and statistics to create a true process where a client’s ESG and sustainability preferences are accurately captured.

Dynamic Planner’s Sustainability Discussion Guide is available to download here

For those of you who couldn’t join us last month for our sustainable investing events, you may not yet have seen the new sustainability questionnaire in Dynamic Planner.

This has been specifically purposed to help you engage with your clients in a structured way, so you can properly understand their level of preferences when it comes to ESG investing.

Using proven, psychometric techniques, the questionnaire has been carefully constructed to enable you to bring out the level of client preferences, calibrated across five categories from ‘low’ to ‘very high’ importance and also, further guidance around what type of solution to consider once a profile has been agreed.

Catch-up on-demand with our sustainable investing event in June, discussing how Dynamic Planner can support you here

To help join up the process of recommending suitable, risk-aligned solutions with a client’s sustainability preferences, we have teamed up with MSCI to host their ESG fund research reports in Dynamic Planner. These are available on an open-architecture basis, so you can easily assess the ESG metrics of funds you are already actively recommending within your current shortlist by downloading the research reports.

The MSCI research is also available across the multi-asset fund solutions we already risk profile and latest analysis shows a positive set of results across the range, with the majority of solutions rated within the MSCI ‘average’ range [A to BB] and plenty too within the ‘leaders’ [AAA to AA].

For your clients who have registered a higher level of interest in sustainable investments, click here for the latest list of risk profiled funds where there is an express policy commitment to an ESG objective.

Not a Dynamic Planner user? We’d love to talk to you about how our end-to-end financial planning process can help your firm, and how we make implementation and onboarding a breeze. Book a call

By Close Brothers Asset Management

In January 2021, Close Brothers Asset Management commissioned Censuswide to survey over 2,000 investors across the UK. Those surveyed had an average of £320,000 invested in a general investment account, stocks and shares ISA, self-invested personal pension or share dealing account. Here, we explore some of the key findings.

By the end of 2019, 38% of the UK’s assets under management were subject to ESG integration, which includes both pooled vehicles and segregated mandates. There was an 89% increase in investment within responsible funds in the 18 months leading to June 2020; sales for the first half of 2020 were four times higher than in the first half of 2019.¹

PwC Luxembourg predicts that by 2025, more than half of total mutual fund assets in Europe could be sitting in ESG-focused funds.²

Our research shows that this surge in demand is reflective of investors’ priorities. Only around a third (35%) of all investors identified as traditional, in that their only priority when investing is to maximise financial returns. This is truer of men than women, at 40% compared to 31%.

Investor types by priority

Clients who use an adviser are by far the most likely to want to invest responsibly, likely a result of access to increased education and insight.

It’s vital that advisers are equipped to meet that demand, by providing solutions that incorporate ethical screens at a minimum; ethical being the top priority for responsible investors.

Investor types by advice

Download the full results of the Responsible investing survey 2021 >

Capital is at risk. Investments can go down as well as up.

¹The Investment Association: UK investment management resilient in the face of headwinds, 24 September 2020.
²PwC report: The growth opportunity of the century.

By Joshua Knight, Head of Product

It’s been a busy few months! And now, in our May release, we’re excited to release a number of exciting changes.

Firstly, our new Sustainability questionnaire is now available for all users. You’ll notice the ‘Risk profiling’ process has been reborn as the ‘Client profiling’ process, with its broader remit of helping you explore other relevant facets of a client’s personality.

Along with the new questionnaire (which has previously been covered here), we’ve introduced a new way for you to select which questionnaires you want to complete with your client. We know it’s not one size fits all.



The new questionnaire responses and results are included in the final report. We’re working on incorporating the questionnaire into a revised client invite process. More on this to follow in the coming weeks.

We’ve also taken the opportunity for a small cosmetic enhancement. The client landing page (pictured below, where you select the planning process you’d like to complete) has been redesigned to make the recent activity more prominent and making it easier to return to your last activity for the client.



We’ve also been busy in our Cash flow process. To help make plans more personalised and engaging, we’ve introduced a visual tweak for client goals and financial objectives.

Where the client has some aspirational future expenditure, be it a round-the-world cruise (once possible!), education costs or just a big party, you can now give the expenditure an icon which will appear in the timeline under the cash flow charts, as you can see below.


The forecast shows the key life phases for the clients and the important financial goals along the way.

On more technical matters, we’ve enhanced the way in which you describe pensions withdrawals, giving you more flexibility with regard to crystallisation, PCLS and drawdown income. We know this can be a complex area, so we’ve added supporting videos in Dynamic Planner you can watch to help show how you model common scenarios.

This is a significant update to our latest Cash flow since it was launched in November last year. Of course, if you do get stuck, we’re always here to help. Please reach out to our Client Success team, in the usual way and they will be happy to assist.

Alternatively, you may wish to pop along to the final two weeks of our Spring 2021 events, where we will be helping you maximise your usage and efficiency with Dynamic Planner. From 8-10 June, our events will focus on sustainable investing; and finally, from 15-17 June, on client target markets, including ‘at retirement’.

Register here.

Advice firms can now benefit from EQ Investors range of solutions being risk profiled on Dynamic Planner. EQ Investors (EQ) is an award-winning B Corp discretionary fund manager focused on sustainable and impact investing and has been running sustainable portfolios since 2012.

EQ offers two sustainable solutions for advisers: Positive Impact (active) and Future Leaders (passive) portfolios. Both are diversified, multi-asset portfolios. The EQ Positive Impact portfolios have a dual mandate: maximising risk-adjusted financial returns while making a positive social and environmental impact. The EQ Future Leaders portfolios use only low cost, passive funds that focus on ESG leaders with additional overweights in selected impact themes. Both solutions have been risk profiled in Dynamic Planner.

Yasmina Siadatan, Sales and Marketing Director at Dynamic Planner said:

“Having recently launched our sustainable investing solution we are focussed on ensuring advice firms have the very latest in understanding the sustainability of both people and portfolios. That also entails partnering with asset managers committed to providing sustainable solutions for the growing demand from investors.

“I’m delighted to welcome our very first B Corp to the risk profiling service, EQ Investors, who have opted to behave as an organisation responsible to both the investment returns according to the level of risk taken, alongside having a positive impact on the environment and society, with both a passive and an active range. Suitability and sustainability are becoming hand in hand, and we feel proud to be part of the jigsaw of positive change.”

Damien Lardoux, Head of Impact Investing at, EQ Investors added:

“Risk-profiling tools have become an integral part of the advice process to ensure investment plans are best suited for each client’s unique goals and circumstances. As we expand our sustainable model & bespoke portfolio service, we are keen to integrate with strategic partners to enhance our offering to advisers, Dynamic Planner is the perfect fit.”

The EQ portfolios now available risk profiled on Dynamic Planner are:

About EQ Investors
EQ Investors (EQ) is an award-winning, wealth manager providing financial advice and investment management services to individuals, small businesses and charitable endowments. EQ is a Certified B Corporation, an internationally recognised standard for companies that believe in business as a force for good. Making a positive contribution to the wider community is a core part of its business philosophy. EQ operates a matched giving programme to help its clients and staff raise extra funds for their favourite causes and has set up The EQ Foundation as a registered charity.

By Louis Williams, Head of Psychology & Behavioural Insights

Advice firms aim to optimise their clients’ investment returns. But the potential impact sustainable investing can have can be misjudged, alongside the importance clients place on returns and their sustainability preferences.

As sustainable investing, as a subject, considers managing risk, doing well by doing good, reduced financial opportunities, potential for lower returns, and emotional and ethical motivations, conversations pivot on a clear understanding of someone’s goals.

Designing a measure to effectively understand clients’ sustainability preferences, covering such a broad acknowledged area is therefore crucial.

How are a client’s sustainability preferences currently captured?

To date, emphasis has been placed on understanding the impact companies have concerning environmental, social and governance [ESG] issues. However, few advances have been made to create a true process where a client’s sustainability preferences are accurately captured.

Multiple choice questions, using mock scenarios, are one path being explored, allowing a client to select preferred investments after being provided with information about their sustainability and returns. There are advantages to this approach as it removes a very direct line of questioning which can potentially invite a respondent’s biases into the equation. However, such an approach also has disadvantages.

First, hypothetical scenarios are not indicative of decisions made in reality. Second, the fund universe and dynamics within an investment portfolio reach far beyond what can be encompassed by a simple multiple-choice task.

Third, it is incorrect arguably to situate ‘sustainability’ at one end of a spectrum and ‘investment returns’ at the other, when sustainable investments can generate greater returns.

Fourth, multiple choice questions and mock scenarios demand a client has prior financial and mathematical knowledge, which they may not. Finally, fifth, a client’s responses may be distorted in a mock scenario – for instance – involving a company they have a view on.

Why adopt a psychometric questionnaire here?

It is not useful to view sustainable investing as simply a box ticking exercise. Nor is it helpful to overwhelm a client with information available.

To understand a client’s preferences the key is real engagement, so their preferences can be captured and also the implications of their choices can be discussed. Sustainable investing preferences, as we have noted, can be complex, encompassing a broad church of relevant factors. Therefore, a suitable step in your firm’s process is required to serve as a trusted foundation for a conversation with a client.

Psychometrics combines thinking from the schools of psychology and statistics. A psychometric questionnaire therefore is created to cut through the noise of, as we have noted, direct questioning to effectively understand how someone might feel and act both in the short and long-term.

While there is no history or track record of psychometric ESG questionnaires, at Dynamic Planner, we are fortunate that our team have the experience of successfully creating the most popular and most proven risk profiling questionnaire in the UK, supporting more than one million clients of advice firms since 2013.

At the beginning of 2018, we launched in Dynamic Planner a new psychometric attitude to risk questionnaire, which again has proved hugely popular with advice firms and, in the last 12 months, during the Covid-19 crisis, has stood up robustly when continuing to measure a client’s attitudes to investment risk.

We have followed a similar formula now to build and release a psychometric questionnaire to capture a client’s sustainable investing preferences, ensuring it is reliable, valid and that it measures what it intends to.

How did we build our sustainability questionnaire?

There are a number of key things to consider when designing a psychometric questionnaire. They are:

  1. Avoid complex terminology or jargon
  2. No financial knowledge needed for completion
  3. Avoid repetition or redundant questions
  4. Capture multiple dimensions of what is being measured
  5. Avoid double-barrelled or ambiguous questions
  6. Employ an appropriate number of questions
  7. Choose an appropriate question order

That all said, even when questions are clear and well supported by academic thinking, a questionnaire can still fail to capture what it intends to. Clear, statistical steps must be taken to validate a questionnaire.

At Dynamic Planner, we tested our psychometric sustainability questionnaire on more than 1,000 UK investors, alongside taking significant steps before reaching a robust, final version. We also consulted with focus groups of advisers.

What does our questionnaire measure?

#1 Psychological distance
People are more likely to take greater risk regarding decisions which impact far in the future. If we consider the example of climate change, acting now may feel unattractive given that the promise of reward appears distant and uncertain.
An individual may acknowledge the importance of sustainable investing, but when considering benefits are largely for future generations, this can impact their decision in the short-term. Psychological distance measures this balance.

#2 Personal values
It can be assumed that a client’s sole desire is to maximise their wealth. However, they can also be motivated to promote social change, consistent with personal values and therefore be willing to accept lower returns.
It is important to understand an individual’s views on controversial or unsustainable areas of investment and how far their portfolio should reflect their values and beliefs.

#3 Emotional benefit
It is important to measure the emotional benefits of investing. People can benefit emotionally when they believe they have acted responsibly through their investments and can feel compensated if they receive lower returns, as a result.
Emotions are important when making financial decisions and taking risk. People who are positive can be more risk seeking, while decisions around sustainable investing can, as we have noted, evoke positive emotions. It is therefore important to understand a client’s positive or negative emotions towards how companies manage ESG risks.

#4 Positive impact
We know a proportion of investors express a desire to do good with their investments, producing social and / or environmental benefits. This extends beyond a company simply monitoring or managing ESG risks. Such individuals are socially motivated.
They may be prepared to accept lower returns in order to achieve their goals, whether it is their own investments directly having a positive impact, or whether they are contributing more broadly to change in investing. It is important to identify how a client seeks to actively engage with companies to generate positive and measurable social and environmental impact, alongside financial returns.

#5 Financial considerations
Although investors may display preferences for sustainable investing, there are trade-offs that they should be aware of. Studies have shown that ESG investments can produce at least competitive returns. Nevertheless, it is important to understand how a client prioritises investment opportunities and financial returns in relation to sustainability preferences.

How can Dynamic Planner help your firm regarding sustainable investing? Find out at one of three webinars from 8-10 June

Dynamic Planner is set to launch the industry’s first psychometric Sustainable Investing questionnaire. Launching on 7th May to all advice firms and clients using Dynamic Planner, the ESG investing questionnaire provides a simple, yet academically robust solution to the challenges advisers face when talking to their clients about environmental, social and governance (ESG) factors and sustainability.

The development of the questionnaire has been led by Louis Williams PhD FHEA, Dynamic Planner’s Head of Psychology and Behavioural Insights. It has been designed in consultation with focus groups of advisers and tested by 1000 investors. Its key aim is to provide advisers with a robust and repeatable process to hold sustainability discussions with clients, by accurately capturing an individual’s ESG preferences.

Louis Williams, Head of Psychology and Behavioural Insights at Dynamic Planner said:

“Sustainable investing is not a straightforward tick box exercise. Preferences can be complex, encompassing an incredibly broad range of factors. Expectations of the impact it can have can be misjudged, along with the importance and balance clients place on potential returns and their sustainability preferences. The key to fully understanding the ESG and sustainability hopes and expectations of a client is real engagement, so that their preferences can be accurately captured and the implications of their choices discussed.

“Until now, emphasis has been placed on understanding the impact companies have concerning ESG but few advances have been made to create a process which truly helps clients to understand the whole picture. Bringing together psychology and statistics in the form of our Sustainable Investing questionnaire enables us to help advisers cut through the noise and really understand how someone might feel and act both in the short and long-term. Successful investment and sustainability conversations pivot on a clear understanding of someone’s goals.”

The Sustainability Investing questionnaire will be used alongside Dynamic Planner’s Sustainable Investing insight, launched in February. It has been designed with the client in mind, to avoid jargon and complex terminology; no financial knowledge is needed to answer questions; it employs an appropriate number of questions in an appropriate order; all of this based on feedback and insight provided through testing and consultation with investors and advisers.

Ben Goss, CEO at Dynamic Planner said:

“Our psychometric Sustainable Investing questionnaire is an industry first, built on a combination of the robust academic thinking of schools of psychology and statistics. And importantly, in tandem with investors and advisers.

“Our team has the experience of successfully creating a risk profiling questionnaire that has supported more than one million clients of advice firms since 2013. What we are launching now is built on a similar formula, to capture a client’s sustainable investing preferences – an extension of our suitability process with the extra ‘s’ of sustainability.

“Combined with our Sustainable Investing insight launched earlier this year, we will be able to help advice firms deliver more deeply valuable and bespoke financial plans in line with clients ESG preferences.”

The Dynamic Planner Sustainable Investing questionnaire measures:

  1. Psychological distance: People are more likely to take greater risk regarding decisions which impact far in the future. An individual may acknowledge the importance of sustainable investing, but when considering how future generations or people elsewhere may benefit, this can impact their decision in the short-term.
  2. Personal values: It can be assumed that a client’s sole desire is to maximise their wealth. However, they can also be motivated to promote social change, consistent with personal values and therefore be willing to accept lower returns.
  3. Emotional benefit: It is important to measure the emotional benefits of investing. People can benefit emotionally when they believe they have acted responsibly through their investments and can feel compensated even if they receive different risk/reward outcomes, as a result.
  4. Positive impact: We know a proportion of investors express a desire to do good with their investments, producing social and / or environmental benefits. This extends beyond a company simply monitoring or managing ESG risks. Such individuals are socially motivated. They may be prepared to accept lower returns in order to achieve their goals.
  5. Financial considerations: Although investors may display preferences for sustainable investing, there are trade-offs that they should be aware of. Studies have shown that ESG investments can produce at least competitive returns. Nevertheless, it is important to understand how a client prioritises investment opportunities and financial returns in relation to sustainability preferences.

Dynamic Planner Sustainable Investing insight and the newly launched questionnaire will enable advisers to respond to increasing demand to talk about sustainability, ensure their clients fully understand both the ESG and sustainability opportunities and risk that their investments present, as well as helping to support advisers in fully meeting the fast-evolving regulatory requirements.

Dynamic Planner is running three Sustainable Investing Webinars from 8th-10th June. Visit the training academy page to find out more.

A conversation with Ken Rayner, CEO of RSMR

As ESG (Environmental, Social and Governance) becomes a major theme in investor preferences and adviser-investor conversations, the regulatory pressure also continues to build, with the FCA now fully embedding climate considerations into their remit.

RSMR, whose Managed Portfolio Service (MPS) is now available in Dynamic Planner, has been assessing ESG factors in funds for more than 15 years. Their best fund ideas are included in their MPS, including their three RSMR Responsible portfolios. Here are three questions they come across a lot from advice businesses, and how they respond:

So, what’s the difference between ESG and responsible investing?

“It depends who you ask. Others may say ethical or sustainable investing and that range of terminology is a growing problem. In RSMR’s fund research, we take ESG to mean the widest range of environmental, social and governance risk factors that exist. We have always believed that ESG factors represent potential risks to all companies and as a result, they play a core part in all the funds we rate, whatever they’re called, with ESG integral to the due diligence process.”

How do you help with ESG suitability?

“Many advisers and investors want funds that go further – ESG+ if you like – but find suitability hard to achieve, given the growing number of ESG approaches and fund names on offer. Since 2012, we have been addressing this with our ‘Responsible’ fund rating and we launched our first Responsible portfolio in 2006. Each Responsible fund we rate must satisfy our rigorous process and meet the requirement to be categorised in one of the following four ESG areas: Ethical, Sustainable, Thematic and Impact.”

How do you help with the adviser-investor ESG conversation?

“We provide a range of information in our Research Hub that helps advisers have effective and informed ESG conversations with their clients, focused on improving transparency and investment outcomes. This includes information at the fund and fund group level, incorporated in fund profiles and fund factsheets. We have summarised our ESG services in the ‘Our Approach to ESG’ document. All our information is available free of charge to advice businesses in the ‘Research’ section at”

The three RSMR discretionary models [Cautious, Balanced and Dynamic] also recently joined the Dynamic Planner risk profiling service in November 2020 and are currently badged as Risk Profile 4, 5 and 7 respectively.

Capturing a client’s preferences

Having a repeatable conversation with clients about sustainable investing can be tricky, and regulation is coming. To help you address this, why not find out more about Dynamic Planner’s new sustainability questionnaire?

The sustainability questionnaire is a set of 15 questions, constructed using robust, psychometric techniques, enabling you to assess your client’s sustainability preferences across a wide range of motivating factors. The experience for your clients will be consistent across the board, using simple language they understand and with the ability to produce magazine-quality, client profile reports to download at the end of the process. This provides a solid base from which to have deeper conversations on their sustainability preferences as required.

Sustainable investing in Dynamic Planner – Learn more