We use cookies on all our websites to gather anonymous data to improve your experience of our websites and serve relevant ads that may be of interest to you. Please refer to the cookies policy to find out more.

By continuing, scrolling the page or clicking a link, you agree to the use of cookies.

Paraplanning: how to include customers’ ESG preferences in suitability reports and fact-finds

23 September, 2020Malini Rajendran
Clear light bulb with small green shoot inside

As a paraplanner, you have to understand your customer’s needs and financial objectives to ensure they get the right advice. But what about their values, ethics and attitudes to sustainability and climate change? Malini Rajendran offers five tips on discovering ESG preferences for suitability reports that will help you build a more sustainable relationship with clients.

1. Understand your customer’s ESG preferences

To recommend suitable savings and investment options as a paraplanner, it is important to understand your customer’s:

  • needs and objectives
  • risk appetite and capacity for loss, and
  • their family circumstances.

But this process should also involve understanding their environmental, social and governance (ESG) preferences.

Writing a suitability letter is not a tick box exercise. It is a letter to your customer, demonstrating sensitivity to their values and who they are.

Dig deeper. Ask how they feel about investing in certain sectors, as well as positive and negative screening.

2. Don’t make assumptions

Many customers who may be actively involved in environmental or social projects may not have indicated an ESG preference in their initial meeting with their adviser.

For instance, your customer may be devoting long hours at weekends as a volunteer at an organic farm, or another socially responsible cause. And yet they may still be unaware that their investment decisions could make a positive difference in these areas.

This is why ensuring that adequate information has been gleaned during the fact-find process is pivotal to writing suitable recommendations. As a paraplanner, this is where you play a key role.

3. Understand and explain the terminology

Your clients may already be familiar with the term ‘ESG’. It’s become better known as fund managers seek to satisfy demand for solid investments in well governed companies that have a positive impact on society and the environment.

However, it’s easy to get confused by the array of associated terms:

  • responsible investing
  • impact investing
  • sustainability
  • socially responsible investing
  • climate risk mitigation
  • positive and negative screening

The list goes on. Make sure you understand these terms and can explain them to your customers.

4. Scrutinise the fact-find

When analysing information in a fact-find, look for both the hard facts as well as the soft facts.

These will help you understand your customer and deliver a suitable solution. Look for missing information that may not be apparent at first glance.

5. Build long-term sustainable relationships

Happy and fulfilled customers who are interested in long-term sustainable returns will stay with their investments through economic downturns and periods of market volatility.

The recent Covid 19 pandemic has demonstrated how these funds outperform most sectors through a crisis.

You – and the adviser you’re working with – should likewise build long-term sustainable relationships with your customers by truly understanding their needs, preferences and objectives.

Malini Rajendran
Malini Rajendran is a commissioning manager at The London Institute of Banking & Finance. She commissioned and edited the learning materials for our Diploma in Paraplanning as well as several other qualifications covering financial and operational risk management, trade and supply chain finance, payments, and relationship management.

Related content

Find out about our Diploma in Paraplanning