The Advisor Institute: Coach's Corner
Spark investor interest with responsibility

Practical messages intended to help you elevate the success of your practice.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By David GordonDirector, Eaton Vance Advisor Institute

      Many advisors we speak with are wondering how they can possibly grow and strengthen their practices in the midst of a pandemic. A good place to start is to discuss timely topics that will resonate with existing and prospective clients. One to consider — or reconsider — is responsible investing (also known as sustainable, impact and ESG investing).

      Before the pandemic, most people focused more on the "E" in ESG — transparent environmental issues — rather than the more opaque social and governance side of business. Economic weakness, spiking unemployment and human rights controversies have sparked investor interest in how companies:

      • Treat employees and customers (social)
      • View corporate citizenship (social and governance)
      • Structure their management teams and boards (governance)

      Businesses are facing far more than the normal complement of risks these days — revenue loss, employee attrition, supply chain disruptions, public relations challenges and many more. At its core, responsible investing is about proactively addressing off-balance sheet risk — risks associated with reputation, regulation, litigation and so on.

      If you have been waiting for responsible investing to have broad relevance to clients and prospective clients, your wait it over. As off-balance sheet risks become more prominent in the news, investors want to know not only how companies are addressing them, but also how their portfolios can address these risks. One of the best ways to initiate a conversation on responsible investing is to have a plan, a perspective and a thesis. A thesis is a timely, pithy sound bite that connects the dots to what you are recommending for a client's portfolio.

      Suppose clients express concern about companies' employment practices during the pandemic. You might express your opinion in a memorable way: "The real challenge isn't attracting customers; it's attracting and retaining employees." Then connect the dots by explaining how having companies with better ESG scores represented in their portfolios may lead to better portfolio performance over time.

      Bottom line: Responsible investing is a conversation waiting to happen. Now is a perfect time to have that conversation with existing and prospective clients.