Collaborating with our adviser client community over the years, we realised an especially important need. While available sustainable investment solutions were gaining in sophistication, differentiation and quality, a tool was missing to assess clients’ preferences against this increasingly diverse set.
We also looked at what had happened in the EU, where the Mifid II requirements for determining client sustainability preferences was developed separately from the SFDR fund categories (Article 6, 8, 9) or available products in the market.
Further, the client preferencing was primarily focused on outcomes (eg “current % in green investments”) and not the intentionality of the investment strategy. If you follow developments in the EU, you may have read that this has proven to be a difficult set of frameworks for advisers to navigate, adding in responsibilities and workload.
It is already good practice to integrate a clients’ sustainability preferences into the advice process, and it is becoming more explicit within consumer duty rules and upcoming FCA’s Sustainability Disclosure Requirements’ knock-on effect on advisers.
Existing client sustainability questionnaires are plentiful, but we found two common drawbacks: 1) they focus on specific outcomes rather than intention, 2) they systematically produce outcomes that cannot easily be matched with existing products in the market.
The toolkit
To reflect our journey, the gap in the market and the needs of advisers, we developed the EQ sustainability questionnaire and associated adviser interpretation toolkit.
The client-facing, editable sustainability questionnaire is designed to ask eight targeted questions that aim to tease out a clients’ sustainability preferences in respect to different sustainable investment approaches and trade-offs.
To accompany this, the adviser interpretation guide helps advisers score the client’s answers against alignment to the aims of the three EQ sustainable MPS, and indeed a traditional investment portfolio that does not apply any sustainable objective (which cannot be provided by EQ).
To support advisers in “having the conversation” with clients in respect to the scoring, we provide guidance against each of the questions and a glossary of key terms.
The toolkit is designed to help with sustainability preferences factfinding, to match these with potentially suitable products, and to integrate this process easily in advisers’ existing recommendation process. Both elements of the toolkit can be filed off for each client/prospect, and each provides space for notes to document your conversation with clients, and any formed conclusions.
