Just thirty eight percent of European wealth managers fully understand MiFID’s directives on sustainability assessments, according to a new study from behavioural finance company, Oxford Risk.
The study he research was conducted with wealth managers whose firms collectively manage assets of around €4 trillion.
It found that despite European Securities and Markets Authority (ESMA) updating its guidelines on the integration of sustainability factors, risk and preferences into investment firms’ organisational requirements last September, 13% of wealth managers say that they don’t know what the directives on sustainability assessments are or are unsure that they understand them.
“It is concerning just how many wealth managers still are not to speed with MiFID II requirements, given we are not far off a year since they came into force,” said James Pereira-Stubbs, chief client officer at Oxford Risk.
The research found that 30% strongly believe that the ESMA MiFID directive on sustainability assessments will improve investor outcomes.
Over half or 57% said that they do believe that it will improve investor outcomes, and 11% are not sure whether it will or not.
The study also revealed that just over a quarter or 28% of European wealth managers strongly believe that their current process for establishing a client’s sustainability is helpful to building their relationship.
Around 61% believe their processes are helpful but 11% are not sure whether their current process for establishing a client’s sustainability preferences are helpful to building their relationship or not.
“The list of requirements may be long, with sustainability assessments making up just one part, but the key to understanding the solutions is simple: it is all about client insights. Better insights into a client’s sustainability preferences; better evidencing of these preferences; and better presentation to clients of how these preferences match up with suitable investments for them,” said Pereira-Stubbs.
He added, “Get this right and you not only meet the spirit as well as the letter of the law, but also have more engaged clients, better asset growth and higher retention.”
It also found that less than one in three or 30% ‘strongly believe’ the EMSA MiFID directive on sustainability assessments will improve investor outcomes, while one in 10 are not sure.
© Markets Media Europe 2023
