New data shows a stark divide in values-driven investing across wealth channels.
Just 7.2% of independent RIAs currently identify as active ESG investors, according to new data that reveals a wide gap between how registered investment advisors and family offices approach values-driven investing.
The figures from private wealth data provider FINTRX, found that of 12,895 independent RIAs analyzed, only 932 carry an active ESG investor classification, a designation based on ADV disclosures and platform data showing the firm factors environmental, social, and governance considerations into its investment process.
That national figure sits well below a separate measure from the Financial Planning Association, which found planner usage of ESG strategies fell from 38% in 2020 to 34% in 2022 amid rising rates and political headwinds.
FINTRX noted the two figures are not directly comparable, since its classification captures firms that explicitly brand themselves as ESG investors in regulatory filings rather than any advisor who deploys an ESG fund for any client.
State-level variations
Vermont posted the highest ESG concentration among RIAs at 20.6%, though with only 34 independent RIAs registered in the state, that figure reflects just seven firms. Hawaii followed at 16.7% on a similarly thin base.
Among states with larger advisor populations, Colorado led at 12.0%, ahead of Massachusetts (11.7%), Minnesota (11.3%), New Hampshire (11.0%) and Pennsylvania (10.6%). New York, home to the country's second-largest RIA population, registered 9.6%, while California, the largest state by firm count with 1,780 RIAs, came in at 6.3%.
At the bottom of the table, Mississippi, North Dakota and West Virginia each showed zero ESG concentration among independent RIAs in the FINTRX database, with Arkansas at 1.5% and Montana at 2.9%. FINTRX cautioned that low advisor populations in these states mean small shifts in raw firm counts can swing the percentages significantly.
Family offices
Family offices, however, tell a markedly different story. Looking at the global family office universe of 4,602 firms, FINTRX found active impact investor adoption, a separate classification indicating a firm weighs ESG factors as part of its strategy, running between 26.6% and 34.4% depending on domicile, four to five times the rate seen among RIAs nationally.
Non-US family offices showed meaningfully higher adoption than their US counterparts, a gap of 7.8 percentage points that FINTRX linked to broader regional trends. The firm pointed to Morningstar data showing Europe held 83% of global sustainable fund assets at the end of 2022 and continued to draw inflows, while the US saw roughly $6.2 billion in outflows over the same quarter.
FINTRX flagged that the RIA and family office classifications are not interchangeable. The RIA measure identifies firms as active ESG investors, while the family office metric denotes active impact investors, a distinction the firm said reflects impact investing's tendency toward more direct, mission-driven capital deployment compared with the screening or integration approach more typical of ESG strategies layered onto traditional portfolios.
Client demand disconnect
FINTRX also cited Cerulli research showing that in 2020, a majority of advisors pointed to a lack of client demand as the primary reason they had not built out ESG offerings, even though nearly half of retail households surveyed said they would prefer to invest in line with their values.
FINTRX said that disconnect between advisor perception and investor interest may help explain why RIA-level ESG concentration remains in the single digits nationally even as family offices show adoption several multiples higher.
