Millennials Impacting Financial Industry

17
Dec

Choosing Planet & People Over Profit

Between now and 2050, baby boomers will pass an estimated $30 trillion in financial and non-financial assets to their Millennial Generation[1] heirs in North America. The result will be a significant increase in demand for impact investing well into the future.

MILLENNIALS SPEND DIFFERENTLY

According to a global Nielsen study, 50% of the most sustainability-focused consumers are Millennials, and, in its latest Sustainable Signals report, Morgan Stanley concludes that Millennials are nearly twice as likely to invest according to ESG criteria. These are significant numbers considering that there are approximately 8.9 million Millennials in Canada, and another 80 million in the US.

By 2020, Millennials will make up 35% of North Americans

Their desire to contribute positively to society, the environment, and to their communities is attributed to their global connectedness. Unlike any other, the Millennial Generation was born into digital technology, and has been exposed to experiences across cultures and geography. Many are willing to choose planet and people over profit to a large extent.

“As Millennials begin to accumulate more wealth and invest accordingly, their perceptions of sustainability are likely to have a significant impact on the financial services sector.”

Morgan Stanley, Institute for Sustainable Investing, Sustainable Signals: The individual investor perspective, 2015

MILLENNIAL INVESTORS ARE ON THE LEADING EDGE OF ADOPTION

Morgan Stanley reports that 84% of active Millennial investors say they are interested in sustainable investing (compared with 79% of Gen Xers and 66% of baby boomers), and nearly 1/3 of young (US) investors have already reviewed their portfolios for non-financial issues.

“Investors who are interested in building portfolios that reflect their ethics should seek out an adviser who specializes in socially responsible investing,” advises Jason Milne, Vice President of Corporate Governance and Responsible Investment, at RBC Global Asset Management. Genus is one of these advisers and offers a full suite of Fossil Free funds that appeal to investors wanting to align their capital with their personal values.

FINANCIAL ADVISORS TAKE NOTE

This shift in wealth and investing behaviour heralds a major acceleration of impact investing, and directs billions of dollars towards social and environmental benefit. The wealth transfer to Millennials has the potential to cement this important practice as a mainstream investment strategy.

[1] Millennials, or Gen Ys, are generally defined as those people reaching young adulthood in the 2000’s. It is widely held that they are born between 1982 and 2004.