Doing Well by Doing Good: Event Summary


Brand Strategy, Private Banking and Wealth Management

Nandini Rao

Nandini Rao

Investment Writer


What springs to mind when you think of millennials? “Lazy”, “restless” and “Peter Pan-like” are some popular stereotypes. But by many measures, this generation is also the most socially and environmentally conscious there’s ever been. A recent event hosted by The Financial Services Forum, chaired by John Elder, the managing director of Knox Investment Consulting, looked to uncover how wealth managers can help millennials achieve their aims of doing good.

What do millennials want to do with their money?

Many millennials have now embarked on their earnings years. They are also set to benefit from their parents’ nest eggs.

But unlike their baby boomer parents, millennials aren’t content with just being rich. “Millennials are not content to be passive; they want to be agents of change” said panellist Natalie Orringe – the director of innovation at Teamspirit Group. Millennials care about the “triple bottom line” and want to use money to improve society and spark change for good. Fellow panellist James Gifford – the head of impact investing at UBS Global Wealth Management – said that most millennials feel that corporate success means more than just good returns.

There are opportunities for wealth managers

While a lot of people feel investments are boring, they get excited about impact investing, according to Gifford. So as BlackRock chief Larry Fink recently said in his open letter, there is an opportunity for investment managers to use impact investing to stand up for something good.

Wealth managers can encourage wealthy millennials to use their inheritances to invest in maximising the good and minimising the harm. In the case of impact investment, this means channelling funds towards companies which actively work on solving society’s problems.

Aside from this, many people are also interested in impact investing for what Gifford termed “experiential returns”. For millennials, this means getting fulfilment from such investments. Moreover, by encouraging young people to invest in impact and SRI, wealth managers can also set them on the path to effectively manage the wealth they will one day inherit from their families. Furthermore, it is not millennials alone who are interested in their “experiential returns”. For several high-net worth families, investing in SRI is a way of passing down their legacies and family values to future generations and encouraging them to do the same.

As the world’s population grows, the pressure on food, water and energy supplies will increase, especially in developing countries. These countries lack the investments necessary to meet these pressures so wealthy investors can step in to fill the gap by putting funds into areas such as improving water and energy efficiency, enhancing access to healthcare and education, and increasing agricultural yields.

But some challenges too

If millennials do have money to invest and are positive about making a difference, what stops them from engaging with the financial services industry when it comes to using their money to do good?

“The attributes millennials look for in life are what they expect from the financial services industry”, said Orringe. But the negative media coverage during the financial crisis planted seeds of doubt about the industry in the minds of many millennials – these seeds have now sprouted into distrust of the industry as a whole.

Furthermore, some millennials feel the products are too complicated – they perceive investments as opaque and complex so are more likely to choose physical products than investment vehicles. This, after all, is a generation that wants to be in control and make its own decisions.

Another issue is brand loyalty. There are mixed findings on whether or not millennials have the devotion to certain brands that their parents and grandparents did. But one thing is clear, Orringe said: millennials expect exemplary digital experiences from brands they interact with. If they don’t get it, they are perfectly happy to switch to a brand which does offer this. For example, she said, over half of millennials would change their banks for one which offered better digital interaction.

Can these challenges be overcome?

Gifford said that wealth managers should communicate with millennials in a way that keeps them engaged on the journey to improving the world with their money. But some firms might be missing out here: Copylab’s research has identified content gaps when asset managers talk about ESG and sustainable investments.

Given millennials’ perceptions that the industry is too complex, industry participants need to focus on putting out information that encourages them to make their own decisions. While marketers can do little to simplify the structures of some of the products on offer, they can definitely simplify the language they use by weeding out jargon – something which regulators are also keen on.

The solution to overcoming millennials’ inertia towards investing doesn’t lie in just churning out more content, but in improving its quality. Millennials are definitely more social media and tech savvy than their parents ever were.

Unsurprisingly, the panel shared the view that wealth managers need to be proactive when it comes to using digital means to keep millennials engaged. As many companies have found, fintech is generating lasting value for brands and investing in this can pay off.

The elephant in the room

Orringe quoted an article from the Harvard Business Review which suggested that millennials are more willing than their parents and grandparents to sacrifice some financial gain for the greater good.

But this doesn’t mean wealth managers should ignore the performance aspect. Financial returns are “the elephant in the room”, as Gifford put it. He said that sustainable funds are just as (if not more) likely to outperform as others, considering that environmental damage and corporate governance scandals can actually erode shareholder returns for firms.

That said, there is a nagging perception that sustainable investments and impact investing don’t really pay. However, Gifford pointed out that there is no empirical basis for this and Morningstar’s research reinforces this point. So marketers don’t need to be shy in pointing out that investing to do good can also result in investments that do well over time.

The Financial Services Forum would like to thank Nandini Rao of Copylab for the event summary.

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