Women and Millennials Leading the Charge in SRI ~ FA Magazine

CaptureOriginally published in FA Magazine: http://www.fa-mag.com/news/women-and-millennials-driving-the-bottom-line-of-triple-bottom-line-investing-26224.html?section=40
By Betsy Moszeter

With a growing portfolio of research on the topic, it’s no longer a surprise that women and millennials are leading the charge and investing their retirement accounts and other assets in sustainable strategies.

Both women and millennials tend to make holistic decisions with their assets. Whether it’s the time they spend volunteering, the money they spend on purchases or the money they invest for retirement – they are values-based decision makers across all categories.

As consumers and investors, they are leading the explosive growth in sustainable and impact investing, which the Forum for Sustainable and Responsible Management (U.S. SIF) reports has grown from $3.74 Trillion (2012) to $6.57 Trillion (2014) in the U.S., or one out of every six dollars under professional management. An increase of 76% in growth of assets in such a short period of time is impressive, and should be seen as a business opportunity for all financial advisors!

Women and millennial’s values-aligned purchasing habits will likely accelerate the rate at which impact investing in the public markets grows in the near future, with between $30 Trillion, as reported by consulting firm Accenture, and $59 Trillion, according to researchers in Boston College’s Center on Wealth and Philanthropy, in wealth transferring in the coming decades.  While the exact timeline being discussed and the dollars involved varies between studies, they all agree that the greatest wealth transfer in U.S. history will leave monetary power largely in the hands of millennials and women.  Importantly, women are estimated to hold 2/3 of all U.S. wealth by 2030.

Unfortunately, many financial advisors are missing the mark when it comes to understanding the rapidly growing sustainable and impact investing marketplace.  First Affirmative Financial Network’s 2014 annual advisor survey found that less than half of advisors had offered an SRI option now or in the past to their clients. In addition, 58% of the surveyed financial professionals that haven’t offered SRI options to their clients say they have never considered doing so.  The number one reason cited was lack of information about available products, and general lack of familiarity with SRI.

Ignore this growing market at your peril!  As vast sums of money change hands to the next generation of investors, advisors need to be prepared to have the conversations with them that they value, and provide them with the sustainable investment vehicles that they require.

As clients and prospects increase demand for sustainable investing vehicles, here are four ways advisors can shift into sustainable and impact investing:

  1. Educate thyself: An increasing number of annual conferences are beginning to offer plenary and breakout sessions on sustainable, impact investing strategies in public markets. The list is extensive, and includes: The FPA Retreat, the FPA NexGen Gathering, Women in Insurance and Financial Services (WIFS), and FA Magazine’s Inside Alternatives.  In addition, the number of conferences that focus on impact investing in public markets is growing exponentially.  You could google a few keywords to create your own list, or save some time with pre-canned lists like this one: http://www.greenmoneyjournal.com/calendar/
  2. Resources: The Forum for Sustainable and Responsible Investment (US SIF) is among the organizations creating a myriad of tools to help bring advisors up the learning curve. On their website you can find “SRI basics” tutorials, online and in-person courses, and guides to everything from “Investing to Advance Women” to “Investing to Curb Climate Change.”  US SIF also has free links throughout their website to dozens of other resources on a wide variety of topics that could really help a financial advisor distinguish themselves as a knowledge leader.
  3. Walk the talk: Learn about investments that your clients are and will increasingly be interested in. Morningstar now scores funds on ESG factors, and the information is publicly available for free.  In addition, free website that tell you what’s in your mutual fund, like Fossil Free Funds, are coming online often.
  4. Learn from your peers: It’s amazing what you can learn by being open to asking trusted peers what they are doing to provide clients with strong sustainable investment options. Chat up folks you learn at industry conferences, ask questions when participating in webinars, and keep your ears open to hear what others are doing to adapt to ever-evolving client needs.

There is a near unlimited opportunity for financial advisors to grow their business if they take time to understand the needs of a rapidly growing segment of wealthy clients who want their investment assets to participate in the transition to a sustainable economy while meeting their personal financial goals.  Those financial advisors who learn about available products, and learn how to talk to these clients about their options will undoubtedly be the advisors who sleep at night, not worrying about losing clients in the great wealth transfer.

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