Effective communication of the reasons behind ESG portfolio performance is crucial for maintaining client trust, especially when returns diverge from benchmarks, revealing a need for clearer, proactive explanations from advisers.
Many advisers can explain how an ESG portfolio has performed, but fewer can make clear why it behaved that way. That distinction matters. In values-based investing, a client may accept lagging a broad market index in principle, yet still walk away if the explanation does not help them understand the trade-off. The result is not just a communications problem but a relationship problem, because trust is often what determines whether a client stays when returns diverge.
One recent example illustrates the point. An investor saw the S&P 500 rise faster than his ESG portfolio and questioned whether the strategy was working. His adviser correctly explained that exclusions such as fossil fuels, tobacco and weapons would be expected to create differences from the broader market. Even so, the explanation did not land. The client understood the mechanics, but not the meaning, and moved his account weeks later.
That outcome is consistent with survey evidence from CapIntel, which found that 72% of investors regard trust as the most important quality in an adviser. The same survey suggested that 61% would switch advisers because of a loss of trust, compared with 54% who would leave over disappointing performance and 46% over unclear communication. In other words, poor returns can be tolerated more readily than an explanation that fails to reassure.
ESG portfolios are especially exposed to that dynamic because they often carry tracking error, the gap between a portfolio’s return and that of its benchmark. Northern Trust has noted that ESG approaches can increase tracking error depending on how they are constructed. For advisers, that means underperformance against a conventional index is not necessarily a flaw in the strategy; it may simply reflect the mandate the client chose. But that distinction only matters if the client understands it before anxiety sets in.
The deeper issue is not the quantity of information, but its orientation. Repeating that a portfolio excludes certain sectors may be accurate, yet still leave the investor feeling that something has gone wrong. What tends to build confidence is a clearer account of the reasoning: why those securities are excluded, what trade-offs are being accepted, and which benchmark actually reflects the portfolio’s objective. When that logic is written down at the start, it can serve as a reference point when markets become noisy.
That is why the most effective moments for ESG communication are before the client feels concerned. At onboarding, the adviser can explain not only what the portfolio is designed to do, but why it will sometimes look different from the market. During regular reviews, advisers can frame deviation in advance rather than waiting for a worried call. The aim is not to expose proprietary process, but to make the thinking visible enough that the client can defend it to themselves.
For ESG advisers, then, the challenge is less about performance than perspective. If clients only hear the mechanics, they may still feel uneasy when returns wobble. If they understand the rationale, temporary divergence can read as evidence that the strategy is doing exactly what it was meant to do.
- https://www.advisorperspectives.com/articles/2026/08/04/esg-trust-gap-doesnt-show-performance-reports?utm_source=articles_feed&utm_medium=rss&utm_campaign=item_link – Please view link – unable to able to access data
- https://capintel.com/2025-investor-engagement-survey – CapIntel’s 2025 Investor Engagement Survey reveals that 72% of investors consider trust the most important quality in an advisor, surpassing other factors like investment experience (50%) and holistic financial understanding (46%). The survey also indicates that 61% of investors would seek a new advisor due to a loss of trust, compared to 54% who would do so over poor performance. This underscores the critical role of trust in advisor-client relationships, especially as investors increasingly incorporate values-based mandates into their portfolios.
- https://www.businesswire.com/news/home/20250121976392/en/ – A CapIntel survey highlights that trust is paramount for investors when selecting a financial advisor, with 72% prioritising it over other qualities. The survey also found that 61% of investors would seek a new advisor due to a loss of trust, while 54% would do so over poor performance. This underscores the importance of trust in advisor-client relationships, particularly as investors increasingly incorporate values-based mandates into their portfolios.
- https://www.northerntrust.com/united-states/institute/articles/esg-and-tracking-error – Northern Trust discusses how incorporating Environmental, Social, and Governance (ESG) investment strategies can impact a portfolio’s tracking error, which measures the deviation of a portfolio’s returns from its benchmark. ESG investing may increase tracking error, depending on the specific approach used. Investors are advised to consult their financial advisors to understand how ESG strategies might affect their portfolio’s active risk relative to appropriate benchmarks.
- https://www.wealthmanagement.com/investment-news/survey-investors-value-trust-in-advisors-more-than-performance – A CapIntel survey reveals that investors value trust more than performance in their relationships with financial advisors. The survey found that 72% of investors consider trust the most important quality in an advisor, surpassing other factors like investment experience (50%) and holistic financial understanding (46%). This underscores the critical role of trust in advisor-client relationships, especially as investors increasingly incorporate values-based mandates into their portfolios.
- https://www.capintel.com/esg – CapIntel offers a straightforward approach for aligning financial products to a client’s values through values-based investing. Their platform provides personalized advice, educates clients with visual comparisons, and leverages MSCI ESG Research to offer in-depth analysis of environmental, social, and governance-related business practices. This enables advisors to showcase an understanding of clients’ preferences and empower them to make informed decisions.
- https://www.capintel.com/insights – CapIntel provides insights into the wealth management experience, highlighting that trust is paramount for investors when selecting a financial advisor. Their survey found that 72% of investors consider trust the most important quality in an advisor, surpassing other factors like investment experience (50%) and holistic financial understanding (46%). This underscores the critical role of trust in advisor-client relationships, especially as investors increasingly incorporate values-based mandates into their portfolios.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
10
Notes:
The article was published on August 4, 2026, making it highly current. No evidence of recycled or outdated content was found. The narrative appears original and timely.
Quotes check
Score:
10
Notes:
The article includes direct quotes from a CapIntel survey, with specific figures such as ‘72% ranked “someone I can trust” as the most important quality in an advisor’ and ‘61% said loss of trust, not poor performance, was the top reason they would seek a replacement.’ These figures are consistent with those found in other articles from Advisor Perspectives, indicating they are not newly introduced. However, the exact wording of the quotes matches the original source, suggesting they are not recycled from other publications.
Source reliability
Score:
8
Notes:
Advisor Perspectives is a reputable platform for financial advisors, offering articles and insights on various financial topics. While it is a niche publication, it is well-regarded within the financial advisory community. The author, Lisa Marie Harast, is identified as a guest contributor, and her credentials or background are not provided in the available information, which slightly diminishes the source’s reliability.
Plausibility check
Score:
9
Notes:
The claims made in the article align with existing research and industry trends. For instance, the CapIntel survey findings are consistent with other studies highlighting the importance of trust in advisor-client relationships. The article’s focus on the communication challenges in ESG investing is plausible and relevant to current discussions in the field. However, the lack of detailed information about the author raises a minor concern about the depth of analysis.
Overall assessment
Verdict (FAIL, OPEN, PASS): REVIEW
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
While the article is current and presents plausible claims, the lack of detailed information about the author and the CapIntel survey’s methodology raises concerns about the depth and reliability of the analysis. The source’s niche nature and potential biases further contribute to the need for a more thorough review before publication.