Environmental Disruption

The United Nations’ Sustainable Development Goals were ratified at the U.N. General Assembly in September 2015, when 193 governments agreed to 17 bold goals to help eradicate poverty, address climate change and create sustainable development across the globe. The plan was to do this by 2030.

Achieving these sustainable development goals (also known as SDGs) will take equally bold actions by the business community. Or, as U.N. Secretary-General António Guterres put it, it’s time for the business community to put aside business as usual and “misbehave.” He calls for “enlightened self-interest” in the form of partnerships among the business community, the private sector and the financial sector. The opportunities for collaboration are many, and the use of environmental, social and governance data can help address the global issues tackled by the sustainable development goals.

For financial advisors already using ESG criteria and impact investing in their client portfolios, the sustainable development goals enhance what they’re already doing and present additional opportunities for deepening relationships with clients. For advisors new to ESG investing, the global importance of the U.N.’s goals presents a great opportunity for starting these conversations. What’s clear is that financial advisors can play a significant role in achieving the goals, and in doing so benefit their clients as well as the planet.

Women, Millennials And The $60 Trillion Wealth Transfer

The sustainable development goals are meaningful to advisors because they embed the idea of ESG and impact investing within a global context and present 17 different ways to talk to clients about it. The goals cover a comprehensive range of issues from zero hunger to clean water and sanitation to gender equality to peace and justice. And for most women and millennials, this kind of investing is a priority.

Most advisors know about the $60 trillion in wealth that will transfer to women and millennials during the next 30 to 40 years. “What’s just beginning,” says Amber Nystrom, co-founder and curator of the SDG Marketplace, “is an intergenerational wealth transfer that is larger than any in economic history, and represents a tectonic shift in who stewards capital, how and to what end.” Fully 70% of this wealth will go to women across two generations: baby boomers and millennials.

In the U.S., women already control 39% of investable assets, and recent financial services industry studies confirm that women and millennials are aligned in prioritizing investments that serve long-term sustainability and economic inclusion.

A wealth transfer report in 2017 suggests that advisors don’t have time on their side in planning for this transition. Eighty-four percent of high-net-worth women in the U.S. and Canada are already responsible for some or all of their family investment portfolios. Since 70% of widows leave their advisors after their spouses die, now is the time for advisors to build stronger relationships with female clients.

Advisors who plan to grow their businesses should consider what their balance sheets would look like if they lost 66% of their best clients. Two-thirds of adult children fire their parents’ advisors after they inherit. So there may be considerable future value in understanding the next generation’s sustainability-driven approach to long-term investing. This understanding can help advisors retain millennial clients and their inherited assets in coming years.