A heretofore unparalleled intergenerational transfer of wealth is poised to take place between now and 2030, marking a sea change that numerous studies say will first and foremost be sustainable.
The great inheritance
Within the next ten years, individuals with a net worth of USD 5 million or more will bequeath a combined total of around USD 15 trillion to the next generation, according to the Family Wealth Transfer Report. That’s an enormous sum equal to the annual gross domestic product of China, the world’s second-largest national economy. The approximately 550,000 beneficiaries of this transfer of wealth stand to inherit an average of USD 28.2 million per person.
The generation that will inherit this wealth already has one main objective in sight today: according to the Morgan Stanley Sustainable Signals Report, 95% of investors aged 25 to 39 are interested in investing sustainably and invest twice as often as the general population does in companies that pursue positive social or environmental impact goals, and this trend is growing.
In the research spotlight
Younger generations prefer or plan to invest sustainably and responsibly. This finding alone isn’t news. Countless studies have been corroborating this interest in sustainable investing for years. But the reasons why this younger demographic group has committed itself to investing sustainably has been given far too little attention.
Younger generations prefer or plan to invest sustainably and responsibly.
Often derided as being self-centered, the Millennials generation actually nonetheless appears to possess a certain amount of altruism. But just who exactly are the Millennials? Anyone born between 1981 and 1996 is considered a Millennial. Members of this generation are known for being globally and digitally networked and for striving to achieve an ideal work-life balance and seeking out new experiences. Millennials are more diverse and more educated, but also poorer than people in their age group were decades ago. Consumer behavior among Millennials particularly differs significantly from older generations’ consumption patterns: Millennials have their own values system, they engage in social cooperation and seek meaning in the way they utilize their assets.
Giving wealth meaning
Against the backdrop of global and digital interconnectedness, Millennials thus are better educated than previous generations, but their assets are less equitably distributed, and Millennials are generally less wealthy than their parents were when they were the same age. Preserving wealth essentially continues to be important also to the younger demographic group, but Millennials also give a lot of thought to the impact that their wealth has on our world, society and environment.
85% of the Millennials believe that their investment decisions can bring about positive change.
Moreover, 85% of the Millennials surveyed by the Morgan Stanley Sustainable Signals Report believe that their investment decisions can bring about positive change in ESG topic areas such as climate change or eliminating poverty. Millennials’ evident interest in investing responsibly appears to be a lasting one that transcends the current discourse on global warming and plastic waste proliferation.
But there is no one-size-fits-all solution because Millennials ultimately would like to personally tailor their investments as much as possible and decide for themselves whether the focus is to be placed on climate protection, religious values or gender aspects. Ascertaining the exact subsequent effects of their investments is likewise very important to today’s 25- to 39-year-olds: 91% of them would like to be able to track their impact return. However, three out of four Millennials generally fear the perceived potential complexity of integrating sustainable investments in their portfolios.
The latest analytical and ESG reporting capabilities and simple investment solutions actually make it easy to engage in sustainable investing, for any age group. Our experts will be happy to walk you through specific options regarding customized investment strategies and impact reporting on request.