Filters: Millennials

What millennial investors want

Posted on by MBC Strategic

The Millennial generation is set to receive the reins as the US undertakes the greatest generation-to-generation wealth transfer to date. The Millennial generation- those born between the early 1980s and the early 2000s- has a different take on the primary role of business compared to previous generations. As presented in the WEF report From the Margins to the Mainstream, “in a recent study of 5,000 Millennials across 18 countries, respondents ranked ‘to improve society’ as the number one priority of business [36% of survey respondents]. This does not imply that the next generation of investors will not seek market returns [35% of survey respondents]. However, the emerging generation of investors is likely to seek achievement of social objectives in addition to financial returns.”

The Millennial generation also has a larger propensity to donate time, money and work than previous generations. Here are some figures from the Millennial Impact Report conducted by Achieve:

The 75 million Millennials are positioned to become the wealthiest generation ever.

The research is clear: Millennials are generous but also very conscientious of whom and where their money is going. Millennials are understandably skeptical of the investments they make. In “Leading Generation Y,” Lieutenant Colonel Jill M. Newman of the United States Army argues, “The [Millennials] have witnessed more scamming, cheating lying and exploiting than ever before from major figures especially in finance in recent years.” The skeptical nature of this generation requires greater transparency on the part of financial sector organizations to attract this demographic.

Deloitte states that the 75 million Millennials are positioned to become the wealthiest generation ever, surpassing the 80 million Baby Boomers. “From the Margins to the Mainstreams” projects “over the next 40 years, an estimated US$ 41 trillion will be transferred” from Baby Boomers to their heirs, resulting in a powerful Millennial generation. The Millennials’ beliefs and values will be the drivers behind the world’s political, social, environmental and economic changes.

Impact Investing is turning out to be an appealing investment approach for Millennials due to its differing outcomes and operations than those of traditional investing. Impact Investing provides a new way of tackling the world’s most pressing issues while still providing an acceptable financial return. It also enables investors to place their money according to their values without having to forgo financial opportunities. While impact investments may currently represent a small portion of many adults’ portfolios, JP Morgan forecasts a drastic increase in these types of investments as money changes hands on a generational scale. They estimate that impact investing may expand from about $9 billion today to $1 trillion by 2020.

Many companies have sought out to democratize impact investing, in anticipation of the growing popularity. No longer are accredited investors the only investors offered a slice of the impact investing pie. With the introduction of new retail offerings, non-accredited investors, like many Millennials, have been given the opportunity to invest in corporations and businesses that share their values through impact investing.

This generous, yet monetarily wise generation will find ways to advocate for social and environmental missions, while still maintaining financial responsibility. Of course it’s only speculation, but it would seem that impact investing is an investment approach that is in line with Millennials. Demand creates supply. With this evidence the future for impact investing looks promising. Impact investing and Millennials go hand in hand.

Millennials and Impact Investing Go Hand in Hand

Posted on by MBC Strategic

The Millennial generation is set to receive the reins as the US undertakes the greatest generation-to-generation wealth transfer to date. The Millennial generation? those born between the early 1980s and the early 2000s? has a different take on the primary role of business compared to previous generations. As presented in the WEF report From the Margins to the Mainstream, “in a recent study of 5,000 Millennials across 18 countries, respondents ranked ‘to improve society’ as the number one priority of business [36% of survey respondents]. This does not imply that the next generation of investors will not seek market returns [35% of survey respondents]. However, the emerging generation of investors is likely to seek achievement of social objectives in addition to financial returns.”

The Millennial generation also has a larger propensity to donate time, money and work than previous generations. Here are some figures from the Millennial Impact Report conducted by Achieve:

  • 52% of Millennials would be interested in monthly giving.
  • 72% of Millennials are interested in participating in a nonprofit young professional group.
  • 83% of Millennial respondents made a financial gift to an organization in 2012.

The research is clear: Millennials are generous but also very conscientious of whom and where their money is going. Millennials are understandably skeptical of the investments they make. In “Leading Generation Y,” Lieutenant Colonel Jill M. Newman of the United States Army argues, “The [Millennials] have witnessed more scamming, cheating lying and exploiting than ever before from major figures especially in finance in recent years.” The skeptical nature of this generation requires greater transparency on the part of financial sector organizations to attract this demographic.

The Deloitte report Catalysts for Change states that the 75 million Millennials are positioned to become the wealthiest generation ever, surpassing the 80 million Baby Boomers. “From the Margins to the Mainstreams” projects “over the next 40 years, an estimated US$ 41 trillion will be transferred” from Baby Boomers to their heirs, resulting in a powerful Millennial generation. The Millennials’ beliefs and values will be the drivers behind the world’s political, social, environmental and economic changes.

Impact Investing is turning out to be an appealing investment approach for Millennials due to its differing outcomes and operations than those of traditional investing. Impact Investing provides a new way of tackling the world’s most pressing issues while still providing an acceptable financial return. It also enables investors to place their money according to their values without having to forgo financial opportunities. While impact investments may currently represent a small portion of many adults’ portfolios, JP Morgan forecasts a drastic increase in these types of investments as money changes hands on a generational scale. They estimate that impact investing may expand from about $9 billion today to $1 trillion by 2020.

Many companies have sought out to democratize impact investing, in anticipation of the growing popularity. No longer are accredited investors the only investors offered a slice of the impact investing pie. With the introduction of new retail offerings, non-accredited investors, like many Millennials, have been given the opportunity to invest in corporations and businesses that share their values through impact investing.

This generous, yet monetarily wise generation will find ways to advocate for social and environmental missions, while still maintaining financial responsibility. Of course it’s only speculation, but it would seem that impact investing is an investment approach that is in line with Millennials. Demand creates supply. With this evidence the future for impact investing looks promising. Impact investing and Millennials go hand in hand.

Retail Investors: Rising Interest and Opportunity in Impact Investing

Posted on by MBC Strategic

As we start off the New Year, TriLinc Global will be discussing notable trends from 2015 that we see as relevant to the development and growth of the impact investing sector in 2016 and beyond. This is the second post in a four-part series.

As TriLinc looks toward 2016, it is clear that the evolving regulatory landscape is creating a more enabling environment for a myriad of investors to align their capital with their values in pursuit of economic, environmental and social goals.

This environment has facilitated the expansion of impact products available in the market – from social impact bonds, to mutual funds and exchange-traded funds – and has transcended traditional product offerings to more closely meet investors’ specific ESG and impact interests. Until recently, however, few products were specially tailored to retail investors, compared to institutional and high net worth investors. With the arrival of retail, market-rate impact products in the past few years, retail investors at last are receiving due recognition as essential participants in the impact investment space.

Recent studies validate the retail channel’s importance to the sector. A report by the Global Impact Investing Network (GIIN) dated April 2015, “ImpactBase Snapshot: An Analysis of 300+ Impact Investing Funds,” found that 17 percent of market-rate impact funds targeted retail investors. Given the relative size of the retail investing market – roughly 91 million investors according to BNY Mellon – the retail channel represents a significant market opportunity for the impact investing community.

Financial advisors are in agreement. A recent survey by SRI examining financial professionals’ views on impact investing found that over half of surveyed financial advisors either currently offer, or have offered, SRI and/or ESG investment strategies to their retail clients. Perhaps even more revealing is that 73 percent said impact investing would become a “somewhat bigger” or “much bigger” part of their practice over the next five years.

This is in large part because retail investors are driving the demand for impact and ESG products across their portfolio allocations. A study conducted by Morgan Stanley showed that 71 percent of individual investors are interested in sustainable investing.  According to SRI, 58 percent of advisors claimed the foremost reason they offered impact investing to their clients was in response to demand. Millennials, women, and college-educated investors were among the top three investor profiles requesting impact strategies from their advisors, followed by high net worth individuals, baby boomers and senior investors.

With demand for impact investing in the retail space being driven from the bottom up, the development of tailored impact product offerings for retail investors will continue to be of vital importance. As retail investors continue to increase their knowledge and appetite for impact, and gain access to more market-based investment options, they will exponentially increase the flow of capital dedicated to solving challenges facing our society.

– This post is the second in the four-part series, “Impact Investing: What’s to Come in 2016,” written by Melissa Tickle, TriLinc Global Impact & ESG Analyst.

5 Myths Socially Conscious Enterpreneurs Need to Ignore

Posted on by MBC Strategic

Impact investing is a new, holistic approach to business that may well be the most significant movement of our time, as well as the most misunderstood. Five main pervasive myths surround stakeholder capitalism today. The first: impact investing is a fancy term for giving money away, while it is really when purpose and profitability coexist, hand-in-hand. Next is the thought that environmental and social welfare is the government’s responsibility; however, businesses taking a comprehensive approach to growth, unlock unrecognized value and create competitive advantages. Thirdly, some believe corporate sustainability is to improve reputation and anything more hurts shareholders, but, in reality, sustainable companies outperform their unsustainable counter parts. Then, it is said that it’s human nature to prioritize profit over sustainability, while consumers are truly more educated than ever about sustainability and corporate values, and they are voting with their money. Lastly, it is thought stakeholder capitalism is a choice. Contrarily, stakeholder capitalism is vital to an industry’s continued survival. The time has arrived to invest capital into opportunities offering both compelling economic and social/environmental returns, while demonstrating a more conscious approach to how we live and do business.

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Impact Investing: Making a Difference and a Profit

Posted on by MBC Strategic

Several not-for-profit organizations have recently been teaming up with money mangers and investment banks to create and market a new line of products that offer investors the opportunity to engage in impact investing, a form of socially conscious investing. The goal is to invest money in companies, organizations, funds or projects across globe that can influence positive social change, while delivering financial return to investors. In recent years, it has gained momentum and product variety leading to more and more retail investors and millennials getting involved in this ex-wealthy investors’ niche. And, with this growing interest, organizations such as the Rockefeller Foundation and Goldman Sachs have created their own funds aimed at deploying capital toward the physical, social and economic revitalization of disadvantaged communities across the U.S. and the world. The groundwork has been laid for the creation of numerous products to meet the demand of a new generation of socially conscious investors, and, as long as such investments produce competitive social and financial returns, their popularity will only grow from here.

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The Next Generation of Impact Investors

Posted on by MBC Strategic

“The mentality of investors has shifted from dollars and cents to dollars and sense,” said Michael Sidgmoore, founder of NextGenEngage, in his interview with Lindsay Norcott of ImpactAssets. Sidgmoore later in the interview explains the role of investing in addressing some of the toughest global challenges. “Some of the world’s biggest problems need market-based solutions and investment to solve problems at scale. But investment alone will not solve these issues. Investment, working in tandem with philanthropic capital, is important to seed a market.” Lastly, Sidgemoore believes the future of impact investing will need to take a collaborative, multigenerational effort. “Experienced investors have capital in the form of experience and expertise. They have lived through multiple market cycles. Younger investors have capital in the form of connections, networks and an understanding of technology.”

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How millennials are driving the momentum behind impact investing

Posted on by MBC Strategic

In a post on Thomson Reuters Foundation website, Judith Rodin and Margot Brandenburg discuss how Millennials will continue to drive impact investing forward. A generational shift is happening, and it means only good things for those of us who are working to solve global problems. More individuals, many of them Millennials, bring a strong sense of purpose to how they make their money, how they spend it, and how they invest it.

In the next 40 years, generation X and the Millennials could inherit up to $41 trillion from baby boomers.  In a survey by Deloitte of 5,000 Millennials in 18 countries, 71 percent of respondents saw the desire to “improve society” as the top priority of business. Impact investing is at a tipping point, and Millennial investors who are looking to invest with purpose are poised to push it into the mainstream for good.

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Millennials Will Bring Impact Investing Mainstream

Posted on by MBC Strategic

In this Stanford Social Innovation Review, Jed Emerson and Lindsay Norcott talk about the most recent ImpactAssets issue brief on “The Millennial Perspective: Understanding Preferences of the New Asset Owners.”  According to the blog and the report, “Next Gen”—the approximately 80 million individuals born in the United States between 1980-2000—values, experiences, and preferences are poised to accelerate impact investing, directing billions of dollars towards social benefits. Accenture has estimated that over the next several decades, baby boomers will pass $30 trillion in financial and non-financial assets to their heirs—that’s in North America alone. In another study, Spectrem Group found that 45 percent of wealthy millennials want to use their wealth to help others and consider social responsibility a factor when making investment decisions. The transfer of wealth to this generation presents a compelling opportunity to take impact investing mainstream. 

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