Investors have $13.6 trillion in impact investments, representing 22% of professionally managed assets globally, according to Amber Nystrom, founder and CEO of Trinity Nexus. and impact investing pioneer.
She referred to a 2014 McKinsey report that found assets in sustainable investments in the U.S. grew 486% between 1995 and 2012, compared to 376% growth in traditional assets.
“This is a huge market in terms of total dollars, in terms of fastest growth rate and also in terms of this being of interest to your highest potential clients, meaning women and millennials,” Nystrom said during a pre-conference session at Envestnet Advisor Summit on Wednesday.
Now is the critical time for advisors to get their clients into impact investing, she said, comparing advisors to surfers trying to catch a wave. “That wave has that perfect moment, where it’s mature enough, which is where we are in this market, but it hasn’t yet crested, so you still have an opportunity to assume that sweet spot.”
Women and millennials are key demographics for impact investing, Nystrom said, noting “women are the largest emerging market on the planet.” They already control $20 trillion, and over the next three decades, women and millennials will inherit $60 trillion, she said.
“That’s the largest economic wealth transfer in all of history. It’s going to 70% women across all generations,” according to Nystrom.
Millennials are the largest, wealthiest demographic, she added, and by 2020, one in three adults will be a millennial.
Impact investing is a “key bridge,” she said, because “this is an area where people want to have these relationships.”