Will Oulton, Global Head of Responsible Investment, First State Investments asks whether the investment ecosystem IS ready to meet the needs of the next generation of investors?
Much has been made of the demographic changes underway in each generation but none more so than that of millennials who may be far from being old enough to retire but have reached working age. They not only have a major influence on consumption trends, particularly in the digital arena, but also disposable incomes that will grow with age and look set to have their own demands and characteristics in terms of financial services. This applies equally to
individuals’ savings and pension funding, which though maybe a distant concern for most millennials, are an important financial consideration of our current time.
Last summer, First State Investments and Kepler Cheuvreux undertook a joint research project of millennials and nonmillennials to test the views and preferences of millennials regarding their understanding and attitudes towards sustainable and responsible investment (RI) that yielded interesting and thought-provoking results:
- Over 80% of millennials in our survey that don’t already invest in RI are either ‘interested’ or ‘very interested’.
- The majority (79%) of millennial respondents thought friends/ colleagues of their age are more easily convinced than previous generations of the importance/reach/interest of responsible investments. There is significant potential for this drive for responsible purchasing to be applied to financial services.
- The majority of both millennial and non-millennial respondents (81%) want more education on the topic of RI. This presents an opportunity for those in the industry to make responsible investments as a whole more accessible and easily understood to a wider consumer market.
- Well-established specialisms in RI are a major factor in encouraging investment in a particular provider. The majority (78%) of respondents say that expertise in RI would be a reason for choosing an asset manager/financial services provider over another.
- Environmental concerns still reign with over a third choosing this as the most important broad thematic in ESG (environmental, social and governance).
- In our survey, a slight majority of respondents thought the application of ESG investment methodologies would boostlong-term returns. This applied almost equally for millennials as it did for all respondents including all age groups at 57% and 56% respectively.
- We asked how many controversial company incidents over a 12-month period would cause an investor to change an investment fund. The majority (58%) replied that it would only take between two to five controversies to sway their choice. RI products may have a greater potential vulnerability around perceived corporate controversies than is currently realised.
- Almost half believed going digital could be a driver in increasing uptake of RI products. This could be via easier access to investment platforms or a higher level of information on the RI characteristics of a specific product.
Read the full report and our analysis of the RI views of the next generation here: go.firststateinvestments.com/millennial-research
Will Oulton, Global Head of Responsible Investment
Article taken from Hub News Issue 42.
This document is not a financial promotion and has been prepared for general information purposes only and the views expressed are those of the writer and may change over time. Unless otherwise stated, the source of information contained in this document is First State Investments and is believed to be reliable and accurate.
References to “we” or “us” are references to First State Investments. First State Investments recommends that investors seek independent financial and professional advice prior to making investment decisions. In the United Kingdom, this document is issued by First State Investments (UK) Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 143359). Registered office: Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB, number 2294743. Outside the UK within the EEA, this document is issued by First State Investments International Limited which is authorised and regulated in the UK by the Financial Conduct Authority(registration number 122512). Registered office 23 St. Andrew Square, Edinburgh, EH2 1BB number SC079063. he Financial Conduct Authority (registration number 143359). Registered office: Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB, number 2294743. Outside the UK within the EEA, this document is issued by First State Investments International Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 122512). Registered office 23 St. Andrew Square, Edinburgh, EH2 1BB number SC079063.
