Impact investing is shaping up to be their method of choice.
By Alice Skipton
Comprised of around 75 million people, millennials are the largest generation in the United States to date, outnumbering baby boomers. Now that this cohort is coming of age, it’s becoming clear that this group will wield large influence on the way we invest, do business, solve social problems and take care of the environment.
Generational stereotyping has long been a favorite American pastime and millennials have experienced more than their fair share of digs by the older folks. But when you start to look beyond the broad-brush generalizations to the data and studies about those roughly between the ages of 18 and 37, an interesting picture emerges, especially as it relates to the intersection between investing and the things this generation cares about.
- Millennials came of age during the Great Recession.
- They are the first generation dubbed “digital natives” for never having experienced life offline.
- Online entrepreneurship and comfort with a sharing economy are built into this generation, versus being new concepts to older Americans.
- Their connectedness enables many to see themselves as global citizens, with corresponding concerns about global issues like climate change and poverty.
It is no surprise, then, that this generation would be drawn to impact investing, with its focus on social and environmental responsibility; partnerships between philanthropy, government and business; leading innovative technology and new entrepreneurial ventures both locally and globally.
With millennials set to inherit more than $59 trillion in the next forty years, and with more than a quarter of family offices now investing in social and environmental issues, it’s clear that impact investing will come of age right alongside the millennials. In fact, millennials are driving this change.
Advisors, take note. Younger members of wealthy families are engaging with their family offices earlier than previous generations and, like their peers, showing a keen interest in actively driving social change. While many will use the family’s existing advisors, another 35 percent of high-net-worth millennials and nearly 70 percent of potential high-net-worth millennials do not use a financial advisor. This presents a unique opportunity for those family offices that can offer hands-on, technologically savvy platforms and services that include ever more sophisticated impact investment opportunities.
Just as important are women, who are playing a leading role in the growing interest in impact investing. Currently, their desire to invest in social and environmental issues is outpacing their ability to act.
"Our generation is just coming into our own,” says Hollywood actress and life coach Hassie Harrison. “There is a lot of power in the way we experience community and can connect and leverage our impact. I am a woman and an entrepreneur and impact investing aligns with who I am and the things I care about in a way that traditional investing often does not.”
Based on the research and trends, it’s not so much a matter of if this generation will invest based on their values. It’s more a question of who will be there to help them grow the sector.