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 www.rsmr.co.uk.”

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