Connecting with a new generation of investors

Jean Archary

Ethical and responsible investing is becoming increasingly important to the millennial segment of the population and the financial services sector would do well to consider this when advising and developing products for these potential clients. Millennials are now entering their prime earning years, and this is a crucial stage where they need relevant investment advice that will put them in good stead for the future.

This is according to Jean Archary, Head of Business Management Solutions at Old Mutual Wealth, who notes that one way to connect with this new generation of earners is through the acknowledgment and grasp of responsible investing principles. “These particular individuals born between 1981 and 1996 – which would make the youngest 23 and the oldest 38 – are generally better educated than previous generations, they have an increased entrepreneurial drive with many being self-employed, they choose to delay marriage, and they are much, much more aware of environmental and societal issues than previous generations.”

Archary notes that it is well known that this generation has a passion for purpose and sustainability. It is especially imperative for financial advisers to acknowledge this and ensure that they provide solutions that align with the values of each member of the millennial market that they deal with. “Thanks to innovation in asset management products, which rely on the use of both financial and non-financial indicators such as ESG scores to inform investment decisions, it is now possible for investors to align their personal philosophy with their financial goals,” she explains.

“The millennial generation holds massive buying power,” adds Archary. “This is not even considering Generation Z, the younger generation following them, which includes individuals born in 1996 onwards. These individuals place even more emphasis on ethical practices and largely refuse to buy a product they don’t believe in, or if it doesn’t align with their personal values.”

Responsible investing, with a focus on environmental, social and governance factors (ESG), is not just a ‘buzz word’ for the younger generation, says Archary, it speaks to their core values. “The financial services industry and especially financial advisers, as the interface between clients and the industry, should be cognisant of the factors that give rise to these traits in younger individuals. These include unlimited access to news and knowledge, the real threat and impact of climate change, global political and social uncertainty, and the restrictive high cost of living. Only then can they offer an investment solution that speaks to these issues and meets these clients’ needs,” she says.

Archary believes that sustainable investment is an essential component of all investors’ portfolios. “Our world is changing every day; from environmental changes such as water and food scarcity to the rise in political and social instability to an increased focus on corporate governance. A rapidly transforming world makes responsible investment a priority for all investors, whether they know it or not.  However, for this new generation of investors, ensuring a sustainable future is part of their core values and therefore an essential aspect of their investment portfolio, which is why asset managers and financial advisors should position themselves to meet these needs,” she says.



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