Millennials and women are exerting a growing influence on the investment landscape as they gain a growing portion of wealth — and it will benefit financial advisors to understand their values and direct them to investments that line up with their concerns, according to experts who spke at the Responsible Investment Association’s (RIA) annual conference in Toronto on Monday.
“I passionately believe that RI [responsible investing] is a good way to connect with the next generation as well as make the world a better place,” said Michael Silicz, an investment advisor with National Bank Financial Ltd. in Winnipeg, who spoke as part of the Millennials, Women and the Future of Investing panel discussion.
During the presentation, the audience was introduced to research recently commissioned by OceanRock Investments Inc. of Vancouver that examined the attitudes of different generations towards RI as well as the differences between men and women. The research found that 66% of millennials, now the largest segment of the Canadian workforce, are more likely than older generations such as Generation X and the baby boomers to consider environmental, social and governance (ESG) factors in their investing. A lesser 48% of Generation X sure respondents, and 40% of boomers said ESG factors are important.
In addition, although roughly half of both men and women believe it’s important to consider ESG factors, women are more likely than men (62% vs. 52%) to believe it’s important for their advisors to be on top of RI trends, the survey found.
Among other survey findings, 67% of millennials believe that companies with superior ESG practices are better long-term investments compared with 39% of those in Generation X and 36% of baby boomers. In addition, 52% of millennials say ESG practices offer better protection as downside risk vs 21% of baby boomers.
Furthermore, a significant 82% of millennials believe RI will become even more important in the next five years, and 67% say financial advisors should be informed on RI trends.
The survey of more than 1,000 Canadians was done in April and defined millennials as being 18 to 34 years of age, Generation X as 38 to 54, and the baby boomers as 55 years of age or older.
Millennials in North America are set to inherit $30 trillion during the next decade, and their strong interest in RI indicates a positive trajectory for related investments, said Dustyn Lanz, director of communications and member affairs with the RIA.
In addition, women are estimated to control 33% of financial assets in North America, and this is expected to grow for a variety of reasons, including longer life spans than men, rising salaries relative to men, and a growing percentage of female university graduates, he added.
“There is a huge opportunity for advisors to engage women clients in the topic of RI,” Lanz said.
Furthermore, Silicz said he found conversations about RI to be a more effective way to engage the interest of potential and current clients than having discussions about “[price/earnings] ratios and balance sheets.”
With RI touching on such issues as human rights, environmental concerns, climate change and women on boards of directors, there are a multitude of ways to bring it into the conversation, he said.
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