Environmental, social and governance

Capture ESG Demand from Retail Investors in Europe

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Jared F. Baucom

Jared F. Baucom

Managing Director, Global Sales & Marketing

Growth and Demand

The retail sector’s total AUM across Europe-domiciled ESG mutual funds and ETFs stood at more than €1 trillion as of August 2020. In the four years through 2019, the sector’s assets grew at a CAGR of 17.1% and in the first eight months of 2020, they grew 11.0%.

Although the institutional segment remains a key opportunity for asset managers seeking to increase their presence in the European ESG market, the wealth management space also presents opportunities for product manufacturers to win business.

Investor Preferences

Retail investors favor sustainability-themed investment over other approaches. A key driver of ESG thematic funds’ popularity is their simplicity, which makes it easier for retail investors to understand them.

Distribution Options

64% of the asset managers Cerulli surveyed expect at least moderate demand across all retail distribution channels in every European market and private banks are expected to generate the most demand for responsible investment. This is the case across all retail markets in Europe. 87.5% of respondents expect high demand from investors with more than €5 million in wealth and 76.0% expect to see an increase in demand for ESG funds over the next 12 to 24 months.

Retail banks are the second-most-important distribution channel in four of the seven markets Cerulli surveyed.


Asset Managers' Level of Demand for Responsible Investments in Selected Retail Channels, 2020

ESG exhibit 1.06

Overcoming Challenges

Private banks, independent wealth managers (IWMs), and independent financial advisors (IFAs) clients see different factors as the key obstacles to investing in ESG funds. Private bank and IWM clients consider the lack of track record as the main barrier to investing in ESG funds, whereas IFA clients see the difficulty of benchmark ESG strategies as the main issue.

Next Steps

Cerulli can help you define the challenges and evaluate the total addressable market, distribution options, pricing, and product development trends. Connect with us to learn more about our capabilities.

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Wealth Management

Subject Matter Experts

Bing Waldert

Bing Waldert

Managing Director, U.S. Research

Bio →

Bing Waldert

Bing Waldert

Managing Director, U.S. Research

Bing Waldert leads Cerulli’s U.S. Research team comprising seven research practices that cover all elements of the U.S. asset management, wealth management, and retirement markets. He has authored Cerulli reports on the wealth management industry, high-net-worth market, the annuity industry, and retirement markets. He is a frequent board-level and C-suite speaker and well-regarded industry thought leader. He has spoken in front of the Investment Company Institute (ICI), the Asset Management Association of China (AMAC), the Investments and Wealth Institute (IWI), and the Money Management Institute (MMI).

He has worked on client projects on emerging manager expansion strategies, independent registered investment advisors (RIAs), multi-family offices (MFOs), investment platforms, and the outsourced chief investment officer (OCIO) industry. In addition, he has advised multiple private equity firms on acquisitions in the wealth management space.

Full biography here.

Tom O'Shea, CFA

Tom O'Shea, CFA

Director

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Tom O'Shea, CFA

Tom O'Shea, CFA

Director

Tom has over 20 years of experience in the financial services industry. Prior to joining Cerulli, Tom was an Investment Product Manager at Fidelity’s Global Asset Allocation Division, where he played a leadership role in the ongoing development of Fidelity Personalized Portfolios, Fidelity’s Unified Managed Account (UMA) for retail customers. He also led the investment managers in creating the Breckenridge Municipal Portfolio, Fidelity’s first separate account for consumers managed by a third party. Before working on the retail side of Fidelity, Tom built and led the team that developed Fidelity’s Separate Account Network for registered investment advisors (RIAs), and his group partnered with a third party wrap sponsor to create Managed Account Resources, a UMA platform for RIAs.

Tom began his career in high tech, working in sales, business development, and product management at a number of software firms, including Lotus Development Corporation.

Fill Biography here.

Brendan Powers, CFA

Brendan Powers, CFA

Associate Director

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Brendan Powers, CFA

Brendan Powers, CFA

Associate Director

Brendan is a member of Cerulli’s Product Development practice, which focuses on trends related to asset managers’ product development and management functions. This broadly includes assessing the opportunity for product development, evaluating emerging product trends, and understanding distribution and product positioning for investment products across retail and institutional channels.

Prior to joining Cerulli, Brendan worked as a Senior Client Associate at Eaton Vance Management, focusing primarily on the firm’s exchange funds.

Full biography here.

Daniil Shapiro, CFA

Daniil Shapiro, CFA

Associate Director

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Daniil Shapiro, CFA

Daniil Shapiro, CFA

Associate Director

Daniil is part of Cerulli’s Product Development practice, where he works on the identification, analysis, and reporting of asset management industry trends with a focus on exchange-traded funds (ETFs) and alternative investments.

Prior to joining Cerulli Associates, Daniil was part of the Product Management and Business Intelligence teams with the MainStay Funds, part of New York Life Investment Management. At MainStay, Daniil supported sales efforts via fund and ETF competitive analysis, product research, and development of marketing materials, as well as performance reporting. Before New York Life, Daniil was part of the risk management practice at Accenture, and held risk and compliance roles at HSBC’s investment bank.

Full biography here.

Scott Smith

Scott Smith

Director

Bio →

Scott Smith

Scott Smith

Director

With more than 20 years of financial services industry experience, Scott leads Cerulli’s research efforts focused on investor behavior and advisory relationships. In his time at Cerulli, he has authored more than two dozen in-depth reports on topics ranging from wholesale distribution to digital advice platforms. His research helps Cerulli’s clients understand how to optimize their platforms given the evolving demand for financial advice.

Scott started his career wearing a headset at Putnam Investments’ service center in 1996, before moving to more strategic roles at MFS Investment Management starting in 2000, and then to Cerulli in 2007. In addition, he currently serves as member of the CFP Board’s Digital Advice Working Group, and as a judge for the wealthmanagement.com Industry Awards.

Full biography here.

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