Reluctant to taking risks and being concerned about the uncertain economic environment, savers are content with conservative investments. Euro funds in life insurance are popular, while unit-linked products are struggling to convince. Despite a slight increase in interest rates expected in 2021, this situation poses a risk to the profitability of financial institutions. To get out of this uncomfortable situation, salvation could well be found on the side of sustainable finance. Green investment is indeed favored by savers and the regulatory ecosystem is becoming more and more refined to support the growth of ESG product sales. Find out in this article how to benefit from this upturn to boost your clients’ savings!
Sustainable finance: a fundamental trend
Once thought to be nothing more than a fad, green finance is now becoming a permanent fixture on the global financial landscape. In this respect, the 2020 report of the Global Sustainable Investment Alliance1 makes an eloquent statement: assets considered as sustainable represent 35,300 billion dollars, which is equivalent to 36% of all assets managed in developed countries (United States, Canada, Japan, Australasia, Europe). This represents a growth of 15% in two years.
From the first green bonds issued by the European Bank in 2007 to the outperformance of ESG funds during the Covid-19 crisis, sustainable finance has continued to grow. To such an extent that the outperformance of the sectors best suited to support the ecological transition has led some observers to fear the emergence of a green stock bubble. But this is not the case2, and the enthusiasm for ESG products remains unquestionable.
Moreover, the question of ESG product profitability is no longer a question. Numerous studies have shown that the profitability of green finance is no less than that of other investments and that responsible investment funds run a lower risk of losing ground on the markets, particularly in periods of volatility. Even so, a significant proportion of investors are willing to forego profitability as long as their investments are in line with their values. In any case, this is what a which revealed that 28% of the investors surveyed were ready to sacrifice their profitability for the benefit of sustainable finance.
Add to this the particularly favorable regulatory context, with the inclusion of investors’ ESG preferences in the suitability test introduced by MiFIDII, and all the conditions are in place for sustainable finance to have a bright future. Given that the vast majority of ESG funds fall into the unit-linked category, green finance appears to be an excellent lever to boost your clients’ savings.
How to capitalize on investors’ ESG preferences to boost their savings?
While regulations now require investors to assess their ESG preferences, this regulatory requirement should be seen above all as an opportunity to boost investors’ savings. To succeed in this exercise, f advisors must be able to accurately capture their clients’ expectations. Do they prefer to act solely in favor of E, S, G criteria or all three? If they favor environmental criteria, do they want to act in favor of preserving biodiversity or fighting global warming? How much of their assets are they willing to devote to ESG? Do they prefer to exclude financial products that do not comply with ESG criteria from their portfolios, or do they prefer to invest only in labeled funds, in companies that invest directly in clearly identified sustainable operations? There are many questions to ask, but they are crucial to be able to offer the right financial product.
To simplify this regulatory exercise, Neuroprofiler has developed the ESGprofiler: a tool capable of accurately assessing investors’ expectations, to address them with the ESG product that is perfectly in line with the impact they wish to have.
ESGprofiler: an investment game to help sell ESG products
The ESGprofiler allows your clients to discover their investment profile and values through a fun investment game. This unique module, developed by the behavioral finance start-up Neuroprofiler, can be used for various purposes:
- Meet the new MiFIDII and IDD equirements to consider investors’ preferences in terms of sustainable finance, to recommend ESG products to clients in line with their values.
- Raise awareness about sustainable finance and increase sales of ESG products, via a marketing campaign on social networks or via e-mail.
- Segment client expectations for sustainable finance and products via a survey and detailed analysis of ESG preferences.
Through these three use cases, the ESGprofiler allows to:
- – Acquire new customers, using the ESGprofiler as a lead generation tool for online marketing campaigns
- – Increase the number of outstanding balances of existing customers by offering products tailored to their preferences
- – Boost your unit-linked sales by directing savers towards more sustainable products via a gamified and engaging path.
Are you interested in the possibilities offered by the ESGprofiler? Ask for a demo!