Has this happened to you? A valued client comes to you asking about impact investing or a new sustainable investing fund, and you are caught flat-footed, not knowing what to say or how to advise the client on this growing segment of investments.
If this hasn’t happened yet, don’t worry, it will. And given changing investor demographics, it will probably happen sooner than you think.
So, in addition to eating less and exercising more, why not start the new year resolving to learn more about this new, exciting and opportunity-filled segment of investing? Indeed, interest in sustainable and impact investing of all stripes—from ESG to gender lens investing, microfinance and climate change—is growing rapidly.
Morgan Stanley estimates that money managers already have almost $23 trillion earmarked with an ESG mandate. The Global Impact Investing Network (GIIN) said in its eighth Annual Impact Investor Survey that the amount of money being invested in deep impact (private debt and equity) investments doubled in the last year to $228 billion.
And thanks to demographics, demand will continue to soar. A 2018 public opinion poll by American Century Investments found that impact investing appealed to 49 percent of survey participants, up from 38 percent in 2016. At 56 percent, millennials find impact investing most appealing, followed by Gen Xers and baby boomers at 52 percent and 44 percent, respectively.
These latest numbers confirm a trend that has picked up steam in the past three years. Across the industry, impact investing is reaching further into the mainstream of mass affluent investors, particularly among women and millennials.
In its annual survey of high-net-worth and ultra-high-net-worth Americans, U.S. Trust found in 2018 that 45 percent of all high-net-worth investors either own impact investments or are interested in adding them to their portfolios. Over half of millennials surveyed indicated interest in investing for impact, according to the report. Women outpace men in impact investing, interest among men has risen 16 percent since 2015, now sitting at 31 percent compared to 34 percent for women.
Morgan Stanley research found even stronger support for impact investing, with 86 percent of millennials indicating they’re interested in socially responsible investing.
Rather than resisting, resolve to take the plunge into impact investing. With new products and a growing library of research and educational materials, advisors can get up to speed on this important trend relatively quickly—and safely. Here are some ways to fulfill your impactful resolution:
Read More: Information is power, and with a resolution to read more, advisors can tap several resources to get up to speed on sustainable and impact investing. The Forum for Sustainable and Responsible Investment has been an educator and advocate for sustainable, responsible and impact investing across all asset classes since 2010. More recently, Morningstar has put the full force of it research capabilities into sustainable investing, developing ratings and advice for advisors entering the space. Other platforms, like Fossil Free Funds, can help advisors screen for funds that meet client criteria.