But, questions remain about exactly where this scale is going to come from in the future, especially as the world’s wealth begins to shift from the baby boomers to the millenials.
International Adviser’s sister publication Portfolio Adviser has already written a lot about the technological questions being asked of wealth managers by younger clients, but a new white paper by Standard Life investments highlights the importance a good understanding of social and ethical factors is likely to be going forward.
Quoting a BlackRock survey that stated that 45% of millennials are more interested in investing today than they were five years ago, SLI said the important thing to note is how the nature of this investing has changed.
“The demand for transparency and accountability has taken on significant importance. As with consumer products, many are increasingly looking for investments that reflect their social and environmental concerns,” the firm said, adding: “They are demanding greater corporate responsibly from the organisations from which they buy their goods and services. The democratisation of information, thanks to new technologies, has – and will increasingly – hold companies responsible for their actions.”
"In a world where everyone is looking for clients, ensuring that you are providing the services clients increasingly want becomes ever more important."
The implications for the investment industry of this are two fold, not only do the firms and advisers themselves need to be as transparent and accessible as possible, but the type of investments need to change as well.
“Of course, returns will remain important,” writes SLI, “However, millennials are increasingly demanding investment solutions that ensure their money also has a positive environmental and social impact.”
Andrew Gilbert, investment manager at Parmenion Investment Management says that too much of a focus on the changing nature of millenials’ investment behaviour, however, runs the risk of missing the broader point – interest in ethical, social and governance (ESG) focused investing is rising across the board.
“People of all ages are much more aware of their environment, these days,” says Gilbert, pointing out by way of example that you can buy solar panels from Ikea now.
This chimes well with the findings of the World Wealth Report released in June by Capgemini and RBC Wealth Management.
According to that report,92% of high net worth individuals see it as important to invest their wealth, expertise and/or time to drive a positive social impact, with 92 percent viewing it as important to do so.
