Millennials. Generation Y. Often touted as the “Me” generation. More selfish than their predecessors, the Generation Xs and the Baby Boomers.
But when it comes to investing, this myth about millennials just doesn’t hold up.
Millennials are nearly twice as likely as the overall investor population to make investments where the aim of the company or fund is to make a positive social or environmental impact. And they are nearly three times as likely to seek employment with companies whose mandates and practices are environmentally or socially responsible.
Although Gen Y is more risk-averse in general, 72% are willing to give up a certain amount of financial security in order to have a positive impact on society or on the environment. Perhaps that desire to feel special and fulfilled, which characterizes the “me” generation, is actually fueling positive change in the world. So how does a generation that is greedy for purpose, and not just wealth, affect investing trends?
Based on the above, one might think that millennials are more likely to be led by our hearts than heads, but it turns out we can still be fairly conservative -- Polls have shown that our generation is more likely than that of our parents to spend a significant amount of time researching a major investment and consulting multiple expert sources prior to making a decision.
We’re also more likely to be self-directed: with record low levels of trust in governments and financials institutions – likely an upshot of the 2008 financial crisis – Millennials are increasingly seeking alternatives to traditional banking and advisory firms through start-up firms and technological innovation.
None of this is surprising--with social media and technology revolutionizing the way we do everything from taking cabs to finding travel accommodation to connecting with our peers and colleagues, why wouldn’t Millennials expect social and technological innovation to overhaul the way we make and manage money?
I know what you’re thinking – but millennials don’t have money! With university and college tuition skyrocketing, student debt at an all-time high and stable employment post-graduation difficult to find, even though we may have intentions of investing with impact in mind, we simply don’t have as much money to invest. But we will!
There is an unprecedented wealth transfer taking place: the World Economic Forum projects that American Millennials will inherit $41 trillion dollars from older generations in the next 40 years. Financial advisors will need to adapt to changing needs and preferences to stay relevant: according to a recent survey by Accenture, less than half of heirs retain their parent’s advisory firm after inheritance.
So what does this mean for the future of investing? If Millennials are really as well informed, innovative and philanthropic as many of the latest surveys and public opinions would suggest, then this is surely the turning point into an era of massive societal, environmental and financial change. Will disruption come from the inside or out?
CoPower’s first retail-friendly impact investment opportunity, CoPower Green Bond I, will open for investment on February 1. Sign up now at copower.me and we’ll be sure to notify you as soon as you can apply to invest!