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COMING SOON: ESG FOR PLATFORMS?

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This announcement from AJ Bell caught my eye yesterday. You really should click on the link to find out more (and come back to this blog once you are done) but in case you want to stay with me, let me give you the TL/DR.

AJB has launched the “AJ Bell Wage War on COVID 19” under the umbrella of the AJ Bell Trust (a registered charity). The trust has kick started the fund raising to the tune of £50k, and Andy Bell and other Directors/Senior Management have donated their wages for April, May and June. All proceeds will be distributed to charities supporting the COVID-19 efforts, with the aim of getting the monies out asap over the coming months. In addition, AJ Bell is making a number of commitments to support its staff throughout the crisis.

Now, AJ Bell is a big successful company so it can afford to do this. Its 2019 annual report shows revenue of £104.9m, with profit before tax of £37.7m. However, this is a seriously impressive message to be putting out. Quilter and Aviva to name but two have also made similar announcements.

Much has been written elsewhere about the rise of ESG within asset management and fund selection. It’s a deeply personal area. Some individuals won’t care about ESG at all, and that’s perfectly cool. Our most recent State of the Nation adviser survey shows 45% of firms have clients “occasionally” asking about ESG with 40% “hardly ever” so things are starting from a low base. Platforms probably don’t have much to do with the E part, but the S & the G interest me, both for advised and direct platform selection.

To a certain extent advisers are already required to assess the G, (governance) as part of their due-diligence process, but the S (social) is, until now, rarely a consideration. Some advisers I know talk about the importance of cultural alignment between provider and advice firm, but that normally translates to being aligned in terms of business strategy.

The world is moving very fast at the moment, and it’s very difficult to assess what the long term impact of the last month will be, but already there is a reasonable case for suggesting that investors will be much more interested in the social part of ESG. How a firm is treating its employees, and the wider community they are part of is increasingly under the spotlight. There are many examples of firms that are being labelled as “the bad guys”, and firms that demonstrate greater social responsibility are rightly being lauded.

So, as well as talking about ESG criteria from an investment point of view, I wonder if this could become relevant for platform selection as well. If clients are going to decide whether to drink in certain pubs, shop in certain sportswear outlets or frequent certain restaurants depending on how they have treated their people and wider community over recent weeks, might they think the same for their platforms? Or put it another way, where would you want your hard earned to be invested? With a provider that has not demonstrated any corporate social responsibility over the past few weeks, or one acting in a compassionate way?

Posted in: #industry   #Platforms  

About Mike Barrett

Consultancy director and sole proprietor of the Isle of Wight division of the lang cat. Superstar DJ by night and investment and platform proposition expert by day. Driver and survivor of several major platform change projects. Ask him anything.

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