The growing interest from advisers in investor engagement is to be welcomed

Two emerging initiatives to help banish the winter blues

It’s February. The weather’s dreary, the news is bleak, and the ESG-bashing continues. But for all of us working in sustainable investing, there’s an emerging trend which should lift the winter blues: we’re seeing more financial advisers interested in engagement and stewardship. What’s more, formal groups of like-minded advisers are coming together to work collectively to advance their interests on the topic. This article will outline two of the emerging initiatives, explain why it’s good news for the industry and explore what more asset managers can do to show support.


First up, there’s AdviserAction, a new initiative that enables advisers to participate directly in engagement meetings with companies on social and environmental topics. It is hoped that, having experienced investor-company dialogue first-hand, advisers will be better placed to talk to their clients about the process. Established by CCLA, the other founding members include Clear Financial Advice, ESG Accord (Accord Initiative), Fintel, Kellands Chartered Financial Planners, Lyndhurst Financial Management, Paradigm Norton and ourselves at Castlefield. The group remains open to new joiners and is planning its first engagement around corporate practices to support employee mental health.

Worthstone and Paradigm Norton: A call to action

Separately, Worthstone and Paradigm Norton have joined forces to tackle fund manager engagement from an altogether different angle. Their aim is to bring advisers together to call for higher engagement standards by asset managers. The initiative plans to raise awareness of stewardship practices among wealth managers and financial advisers so that they feel equipped to question investment firms on their current engagement activity. Transitioning to a low carbon economy is a particular focus for the group and those involved recognise that investors are in a position to press companies to take more ambitious action to reach net zero, but only if they engage effectively. The collective is still in its infancy, but advisers can sign up to receive updates and a list of questions on engagement practices that they can use in their own conversations with fund managers.

From an investment management perspective, this call for greater accountability is to be welcomed. It provides an opportunity to hear from key stakeholders on the topics and outcomes that matter most to them. In fact, it has the potential to inform future engagements. Moreover, it makes our discussions with companies all the more compelling if we can say that our clients and intermediaries are asking us to report back.

The role of asset managers

Although the two initiatives have very different objectives, informing and educating advisers on engagement is a common theme. Again, this is great news for investment houses with established stewardship programmes, and after all, advisers are a key conduit of information between investment firms and retail clients. Well-informed advisers can help us convey the highs and lows of engagement directly to the end investor. Plus, we know many of the topics that retail investors often care about – such as carbon reduction and employee wellbeing – are often operational issues that are best addressed through engagement and not through exclusion. Advisers can help to explain this and provide examples of constructive engagement.

In terms of supporting this nascent interest in engagement from advisers, there are many things asset managers can do. There’s opportunity to develop materials on how the engagement process works and the techniques that asset managers use, be that escalating concerns to board level or collaborating with other shareholders. Investment managers could also do a lot more to understand the most useful format and content for engagement case studies, and enable advisers to hone in on the topics of most interest to clients. That said, fund managers also have a duty to be honest and realistic: not every engagement results in a positive outcome and not all companies are willing to move as quickly as we would like. In some instances, this might result in divestment, but not always, and we have a responsibility to be transparent about that too.

On reflection though, this growing interest from advisers in investor engagement couldn’t be more timely or more welcome. It’s a great reminder that outside the rarefied world of high finance and US politics where the ESG debate rages on, there are many individual investors, supported by their advisers, that want their money to make a return and to make a difference. Engagement is a well-established and important part of the investment process for many firms and it’s great to have more advisers interested and willing to spread the word.  


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...