PIMFA
2022 research Report
Summary
ESG: A LEVER TO ENCOURAGE SAVINGS AND INVESTMENT
- Findings across demographics on aggregate show a focus and interest on ESG that can be a potential catalyst to encourage people to invest for the first time, or to invest more of their current wealth in not just ESG but more widely.
- However, the way in which ESG encourages people varies significantly depending on the audience; key differences in approach are needed depending on the age and/or gender of the investor.
- Greater education and a more standardised approach to assessing Environmental factors is required.
TARGETING APPROACHES
- The younger demographic also reported higher levels of confidence when investing. They are making use of unregulated info and are holding investments in new and highly volatile products such as cryptocurrencies, suggesting there is still some work to be done on educating them on traditional investments and highlighting the value of regulated advice.
- Overall, they have a positive view of the industry but delivery via technology is important and an easy-to-use app was the joint highest reason – alongside evidence of high returns over the long term – that would encourage people to invest in stocks and shares. However, the majority (63%) of respondents have never used an investment app which represents an industry opportunity.
- 72% of investors between the age of 18 and 25 said that all or part of their existing investments aim to positively impact the environment or society, whilst just 29% of 56-75s and 21% of 75+ can say the same, showing the importance of ESG to them.
- Research shows that ESG issues are more important to women than men when investing, but they report having lower knowledge and confidence around ESG investing and are less likely to currently invest than men. This could present an industry opportunity in light of the growth in the percentage of female investors expected in the future.
- Across the spectrum, age played a significant role in shaping the primary concern of respondents. Younger people appear more aware and concerned with net-zero, while older age groups (65+) are more concerned with the affordability of clean energy.
- There is a contrast when communicating ESG to younger audiences – an older audience may be used to the more established style of written articles and documents and may not trust online communications at all, for fear of scams. There is a gap in the market for providers to develop more explanatory and trustworthy visual representations.
- 82% of respondents, with an even split across genders and across socio-economic groupings, believe that school and college/sixth form (<18 years) is the most effective time to begin learning about investments and savings – this is especially prevalent in younger investors. This is clearly a strong argument for the investment of time and money into furthering the financial awareness of school children.
- Low-cost professional service is appealing, and family-based advice remains highly influential across the board, with the research showing that for all age groups, over a third (34%) have taken and acted upon advice from family and friends. This was closely followed by a financial professional (28%) or an employer (28%). This is followed by the internet (24%) and social media (18%).
- Media focus, education and the topical nature of environmental causes have a more pertinent impact on younger age groups, whereas affordability has a greater impact on those approaching, or at, retirement age.