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October 19, 2018 at 01:58 PM
Terms such as values-based, responsible, socially responsible and faith-based investing have gained increasing currency in recent years — and so has confusion and misunderstanding about what these strategies involve.
A survey released this week by Crossmark Global Investments, a provider of responsible investment solutions, found a strong correlation between an investor’s age and his or her familiarity with such terms.
The survey sample comprised 488 high-net-worth investors with investable assets of $250,000 to $5 million.
Only 40% of investors older than 60 were familiar with values-based investing, compared with 84% of millennials, and a mere 6% of senior investors knew what environmental, social and governance investing involved, versus 80% of millennials.
The survey also found that as investors grow older, their financial advisors speak with them less about these various forms of investing.
Only 25% of senior investors’ advisors were discussing options for portfolio construction around values-based investing, versus 85% of millennial investors’ advisors.
Perhaps not surprising, older investors were far less likely than younger ones to make values-based investing decisions. Among seniors, only 14% had values-based investments and none reported having ESG investments. By comparison, 47% of millennials said they had investments in values-based strategies, and 26% in ESG strategies.
As a result, Crossmark said in a statement, seniors still represent a vast pool of assets that has been mostly untapped in the values-based investment segment. How big?
The study cited a Deloitte Center for Financial Services report that U.S. investable financial assets will increase to $64 trillion by 2030. This means that if senior investors continue to control an estimated 53% of total investable assets, they will have an estimated $33.8 trillion in investable assets, Crossmark said. That translates into a huge market opportunity that is potentially being overlooked for different types of investing.
