Retail investors’ preferences

In the first step toward our efforts to better understand retail investors’ environmental preferences, in March 2020 2DII published a research report, “A Large Majority of Retail Clients Want to Invest Sustainably“, based on a series of consumer-focused surveys. Among the key takeaways, we found that two-thirds of French and German retail investors say they want to invest in an environmentally responsible manner. 

43% of respondents interested in sustainable investing said their main goal is to have an “environmental impact” in the real economy. Notably, retail investors appear willing to “put their money where their mouth is:” 64% accepted a hypothetical -5% trade-off on their total returns in order to invest sustainably.

However, our research shows that most consumers face major roadblocks in fulfilling their sustainability objectives. According to preliminary results from 100 mystery shopping visits in France, financial advisors almost never ask about clients’ sustainability preferences. And even when prompted by clients, most advisors still offered them unsuitable products.

In order to further flesh out and understand these initial findings, in the context of Finance ClimAct, 2DII and the partners will undertake a series of additional measures. This will include the creation of focus groups on retail investors’ preferences; annual quantitative surveys on this topic; in-depth analysis of products available on the market; and the implementation of several hundred new mystery visits.

In addition, 2DII will create a questionnaire that aims to integrate non-financial preferences into the MIFID suitability tests (a version of which we already developed in Germany as part of a project funded by the National Climate Initiative). To complement this work, we will also develop an implementation guide and consult with key stakeholders in partnership with Finance for Tomorrow. 

Together, these actions will support the development of a public, online, non-commercial platform that will enable investors to perform a MIFID suitability test incorporating their non-financial preferences and to access a list of financial products that match their expectations. Users will then be able to print their test results and show them to their financial advisors, and/or use them to purchase suitable products online. In addition, an open-access version will be made available to distribution networks so that they can adapt the platform and integrate it into their systems.