The lack of awareness and education of investors and their financial advisors around socially responsible investing (SRI) poses a challenge to growth in this area within the retail mutual fund industry, according to experts speaking at the 2014 Canadian Responsible Investment Conference in Toronto on Wednesday.
“[What we’ve] seen globally is the incredible growth in the institutional world,” said John Kearns, CEO of NEI Investments, who spoke as part of a panel on the furture of SRI. “The retail business hasn’t grown anywhere near the pace of that or the pace of the broader retail investment fund business.”
As such, Kearns believes that the retail industry as a whole needs to do more to start building awareness around SRI. “We really need – as dealers, as manufacturers – to step up to the plate and start investing in those [educational] gaps,” he said.
The problem however, according to Kearns, is that because this section of the fund industry is so small, organizations already promoting SRI do not have the economies of scales necessary to feasibly launch educational and marketing campaigns.
Fellow panelist, Gary Hawton, president of OceanRock Investments, agrees and sees the SRI industry in a “Catch-22” which is challenging future growth. “We need to somehow get the advisors – who are the intermediary for the vast majority of assets that are invested in Canada – to at least pose the SRI question,” said Hawton, “but they can’t do that until they have the education.”
Where experts do expect to see growth in SRI is amongst the very wealthy. Said John Montalbano, CEO of RBC Global Asset Management: “You’ll see most of [the SRI growth] though in the ultra-high net worth space and greater growth than you’ll actually see in the retail mutual fund space.”