BLOG: Y impact investing can win over the next generation

February 20, 2017 10:12 pm Published by Leave your thoughts

In brief:

  • Adopting socially responsible practices is quickly becoming a requirement for doing business in the investment industry
  • Soon investors of all types will demand that their wealth and asset managers provide products that not only outperform, but also align with their values
  • Sustainable and impact investing offer attractive investment opportunities that meet millennials desire to see their money achieve purpose
  • Financial advisors who look to collaborate with this generation will find richly rewarding new client relationships
  • Advisors must be trained and ready with the knowledge and tools to advise on sustainable and impact investing.

Who are millennials?

Millennials are those, like myself, born between 1980 and 2000, and now vastly outnumber our Baby Boomer parents making up a quarter of the UK population[1].

Our formative years have been shaped by such events as the dotcom boom, 9/11, Hurricane Katrina, the iPhone, the financial collapse of 2008, Barack Obama’s election and the advent of legal gay marriage to name but a few. We engage with the world in ways like no other generation (almost 90% of us look at our smartphones within 15 minutes of waking[2] and vastly favour mobile devices over desktops[3]) and feel a sense of awareness, responsibility and interconnectedness with those not just outside our family, but also outside our community, country and our continent.

But we are not all the same; this generation is diverse and heterogeneous. Our finance needs will differ not only from previous generations but also from each other and therefore financial services need to adapt with us.

What does this mean for you?

An EY report[4] outlines that there is an “opportunity ahead for wealth and asset management firms to redefine the standard for investment options in an industry that will soon be dominated by the socially responsible millennial investor.” And they’re right.

Millennials are no longer simply looking to make money; we are looking for what impact our money can have. To be able to deliver a positive outcome as well as generating a financial return will be a no-brainer to Generation Y. A study by Morgan Stanley[5] found that 78% of HNW Millennials are interested or very interested in impact investing compared to 45% of HNWIs overall. This sits beside findings from EY[6] that “a financial advisor that provides values-based investing” comes 3rd for millennials in a list of nine identified priorities. However, a recent Toniic survey[7] revealed that one of the four key challenges shared by millennials when it came to impact investment was “Lack of support from financial advisors.” It would appear advisors have a bit more work to do to win the trust of millennials.

How do we bridge the gap?

Fast forward to the hotly reported $30 trillion[8] wealth transfer due to happen over the coming decades. Unsurprisingly, InvestmentNews[9] reports that 66% of children fire their financial advisor after receiving their inheritance. Evidently, despite the changing client demographics, advisors are failing to adapt and engage the next generation.

A report by Accenture[10] outlines: “with a majority of Millennials identifying themselves as “self-directed” investors, they spend a significant amount of time researching alternatives and consult multiple sources before making major investment decisions.” So, it’s time for financial advisors to make sure they are one of those sources.

Firms most move quickly to advance the skills, competencies and products needed to effectively serve and support the coming swell of the millennial generation through impact and sustainable investing. Ensure you have product research tools at your fingertips so you are thoroughly armed with a library of information. EY[11] explains that “[i]n recent years, investors have used positive screening of ESG risk factors to create a modern ‘best-in-class’ investment approach that generates performance that is in line with – and often exceeds – market benchmarks.”

Similarly, they go on to say that “firms must train advisors on how to have targeted and effective conversations with clients around sustainable investing. Training and communication play key roles in strengthening firm culture, especially when compared with other firm initiatives.”

What can you do today?

Prioritise increasing advisor awareness of Millennials’ values, hopes and global consciousness and use the latest technology to empower them to make their investment decisions. Guarantee advisors are fully trained and equipped with the impact investment knowledge to carry out significant discussions around sustainable and impact investing. Look out for a new training initiative for social impact investment that will be launching in the next couple of weeks.

And remember that “providing sustainable investing opportunities enables firms to not only capture financial returns for clients, but also to realize intrinsic returns not replicated elsewhere [that can] lead to deeper connections between the clients and their investing habits, creating long-term customer appetite.”[12]

With every new generation, there will be shifts in attitudes and behaviours; this is not something to shy away from nor to write off as the folly of the young. It’s not a case of rebellion, it’s a new view of the world than needs to be responded to.

Be bold and make sure you’re ready for Generation Y.


[1] Inkling Millennial Report 2015

[2] Millennials and wealth management

[3] The Global Mobile report 2015

[4] http://www.ey.com/Publication/vwLUAssets/ey-sustainable-investing-the-millennial-investor-gl/$FILE/ey-sustainable-investing-the-millennial-investor.pdf

[5] Investing in the Future 2016

[6] op.cit.

[7] Millennials & Impact Investment Report, 2016

[8] The “Greater” Wealth Transfer 2012

[9] http://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisors-at-risk

[10] https://www.accenture.com/gb-en/insight-generation-d-emerging-important-investor-segment-summary

[11] op.cit.

[12] op.cit.


Written by Megan Lawrence, Operations and Communications Manager at Worthstone with assistance from Jeannie Boyle, Technical Director at EQ Investors.

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