There is an untapped demand for socially responsible investing, and investment advisors and other asset managers would do well to not only educate themselves on SRI, but do the “the heavy lifting” and help clients — especially millennials — to understand and guide them through the process, according to a new study by BNY Mellon Investment Management’s Newton Investment Management.
“The study makes a strong case for the importance of asset managers with expertise in the space helping connect the dots for investors between social interests and investment outcomes they’re looking for,” said Julian Lyne, chief commercial officer of Newton Investment Management.
The study of 1,023 investors 18 and older with at least $40,000 in investable assets examined attitudes and behaviors toward social investment, drivers of investor interest, and reasons that investors choose not to use SRI strategies.
One of the surprising findings of the study was the demographic differences between investors who use SRI and those who do not, Lyne told ThinkAdvisor. Age, rather than gender, was the key differential. Of those under 39, almost 70% were interested in ESG investing, a number that drops to 21% among investors over 50.
Another divergence was savings: 49% of households with savings between $500,000 and $1.5 million showed interest in SRI compared with just 38% of households with savings of less than $499,000.
Some other findings:
- What drove investment in ESG was “an awareness of investment options.” The study found that 45% of the U.S. investors “are likely to know what social investing is.” Sixty-six percent of overall respondents said that were at least “moderately interested” in SRI, and 20% stated they were “extremely interested.”
The takeaway, Lyne said, was that advisors and fund managers needed to “facilitate the conversation with end users … and define SRI. With education we’ll see change of interest.”