Legg Mason : Advisors Missing Opportunity to Forge Client Relationship Through ESG Discussion

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Maria Rosati (212) 805-6036

mrosati@leggmason.com

ADVISORS MISSING OPPORTUNITY TO FORGE CLIENT RELATIONSHIP THROUGH ESG DISCUSSION

Small Fraction of Investors Told about ESG Investments by Their Advisors

NEW YORK - JUNE 7, 2016 - The vast majority of millennial (88%) and high net worth (82%) investors surveyed by Legg Mason said Environmental, Social, and Governance (ESG) investing was appealing. And yet, less than 20% of high net worth and just over 10% of millennial investors said they heard about ESG investments from their advisors.

Instead, 62% of high net worth investors heard about ESG investing from the media while 51% of millennial investors said their awareness came from their own research.

Perhaps that's because the majority (89%) of advisors also surveyed by Legg Mason said they only discuss or recommend ESG investments when their clients bring it up in conversation.

But investors are eager to learn more about, and invest more in, ESG investments. Specifically, 56% of millennials and 43% of high net worth investors said they would like to learn more about ESG investments; and 60% of millennials and 47% of high net worth investors said they would like to invest more in ESG investments.

"If advisors are not talking to their clients about ESG investing, they're missing out on a critical, relationship-building conversation," said Matt Schiffman, Global Head of Marketing for Legg Mason. "ESG investing is often a reflection of an individual's passion or belief system. Advisors who want close relationships with their clients need to understand the issues their clients are passionate about, and consider how to factor those passions into their portfolios. Not having this discussion is a lost opportunity to diversify a client's portfolio and to forge a strong, long-lasting relationship. It also creates an opportunity for another advisor to seize upon."

Realistic Performance Expectations and Willingness to Take Less

The majority (76%) of both millennial and high net worth investors said they expected ESG investments to perform in-line with or better than investments that do not have the ESG-screen

- and the majority (63%) of advisors said the same.

Even so, more than half of millennial (55%) and high net worth (53%) investors said they would select an ESG investment even if they had to sacrifice a small portion of their long-term returns.

The majority of advisors (69%) said that over the past five years, the importance of ESG investing has increased and they expect this to continue over the next five years. As for future

generations, 92% of high net worth investors expect their children will have similar or more interest in ESG investing.

"Advisors agree that the importance of ESG investing is only going to grow," Mr. Schiffman said. "The subject itself has great appeal to millennial investors - the next generation of family members that advisors need to connect with. Introducing ESG into the client discussion creates a natural bridge to the next generation and the potential to solidify relationships."

About the survey

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On behalf of Legg Mason, Naissance Partners conducted the survey of 250 financial advisors, 233 millennial investors and 235 high net worth investors from across the U.S. at the end of 2015.

About Legg Mason

Legg Mason is a global asset management firm with $707.1 billion in assets under management as of April 30, 2016. The Company provides active asset management in many major investment centers throughout the world. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).

All investments involve risks, including loss of principal. Past performance is not a guarantee of future results.

Please note an investor cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.

©2016 Legg Mason Investor Services, LLC, member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc.

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