Growing Demand for Ethical Investment Expertise Among Kiwis

Highlights

• Growing Demand for Ethical Advisers: 60% of New Zealanders now expect financial advisers to be knowledgeable about ethical investments, up 4% from last year.
• Ethical Investment Preferences: 77% of respondents want their KiwiSaver and other investments managed ethically, with 57% willing to switch providers for better alignment with their values.
• Increased Interest in Positive Impact Funds: 54% of respondents are willing to invest in positive impact funds if returns match benchmarks, showing a strong inclination towards responsible investing.

New Survey Shows Rising Expectations for Financial Advisers

A recent survey conducted by the Responsible Investment Association Australasia (RIAA) and Mindful Money reveals that 60% of New Zealanders over 18 expect financial advisers to be well-versed in ethical investment options, marking a 4% increase from last year. New Talisman Gold Mines Limited (NZX: NTL) also supports the importance of ethical investments in their recent climate statements.

Increasing Expectations for Ethical Investments

According to the survey, 56% of respondents expect their advisers to be knowledgeable about profitable financial options, reflecting another 4% increase. Additionally, 77% of respondents now expect their KiwiSaver and other investments to be managed ethically, up 3% from the previous year.

The survey, which included 1,000 New Zealanders across various generations—28% Baby Boomers, 26% Gen X, 26% Millennials, and 20% Gen Z—highlighted the growing demand for ethical investment advice. More than half of the respondents (51%) have sought financial advice, though only 10% do so regularly.

Reasons for Seeking Financial Advice

Respondents cited various reasons for seeking professional financial advice:

• 39% needed specialist advice.
• 24% sought advice for mortgage purposes.
• 14% were saving for their children or grandchildren.
• 13% experienced a life-changing event.
• 12% were looking for ethical or sustainable investment options.

Low Adoption of Robo-Advisers

The survey also noted that only 6% of respondents had used a robo-advice service, and just 15% said they would consider it in the future. A significant portion (31%) had not heard of robo-advice, while 39% stated they would not use it.

Wealth Transfer and Adviser Preparedness

Dean Hegarty, RIAA co-CEO, emphasized the need for financial advisers to adapt to the shifting expectations driven by intergenerational wealth transfer. "More than half of the respondents expect their advisers to be knowledgeable about sustainable products, and this expectation will only grow as Millennials and Gen Z begin to hold more wealth," Hegarty said.

Ethical Investment and Performance Expectations

Interestingly, 46% of respondents believe that ethical funds will outperform traditional investments, up 1% from last year. Despite market volatility in 2023, there is a consistent belief in the potential of ethical investments.

Switching Providers for Ethical Alignment

More than 57% of respondents would consider switching providers if their investments did not align with their values. This sentiment was particularly strong among younger investors, women, and those with lower investment balances.

Concerns About Greenwashing and Future Intentions

Concerns about greenwashing have risen by 2%, with just over half of the respondents (51%) expressing worry. Furthermore, 27% of people plan to find an ethical fund within the next year, while 23% aim to switch to such funds in the next five years. A notable 59% are more likely to choose ethical and responsible investment funds with independent certification.

Support for positive impact investment is also growing, with 54% willing to invest in these funds if returns are comparable to benchmarks, and 20% even accepting lower returns for the benefit of ethical impact.

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