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Boomer Men Like Sustainable Investing, Too: Morningstar

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Contrary to conventional wisdom, women and millennials are not more interested in sustainable investing than men and baby boomers, and a supermajority of the U.S. population has at least a moderate interest in such investments.

These are the key findings of a new report from Morningstar, released on Earth Day, which turns 50 years old next year.

“It’s time to update the narrative that ESG is not mainstream,” according to the report, written by Senior Behavioral Scientist Ray Sin, Head of Decision Sciences Ryan Murphy and Behavioral Researcher Samantha Lamas. “Our research finds that most investors, across ages and genders, have clear preferences for ESG investment products.”

Using a new tool called My Sustainability Profile, the researchers found that 72% of a representative sample of 948 people expressed at least a moderate interest in sustainable investments.

After controlling for income, age, political ideology, religiosity, risk tolerance and other sociodemographic variables, they found little difference between the views of men and women concerning sustainable investments so long as they were not primarily concerned with returns. There was a slight gender divide regarding sustainable investments among respondents most motivated by returns because more men than women fell into that category.

The Morningstar study divided respondents into five categories concerning sustainability preferences: low interest (returns-driven), medium to low interest (returns-minded), medium interest (balanced), medium to high interest (sustainability-minded) and high interest (sustainability-driven), and weighted those scores by gender and by generation (millennials, Generation X and boomers).

Slightly more women than men in the categories from medium to high interest showed a stronger preference for sustainable investing, though those results were “statistically equivalent to men,” according to Morningstar.

The study also found no statistical differences among generations concerning preferences for sustainable investing after controlling for sociodemographic variables.

The study concludes that “there’s an untapped market for sustainable investing that advisors may be able to reach (and retain) by offering sustainable investment options.” It recommends that advisors not wait for clients to broach the topic of sustainable investing first or risk “losing out.”

Sin suggests two possible steps that advisors can take:

  • Conduct a Sustainability Gap Analysis, which involves a sustainability audit of existing investment lineups. If there are not any or enough sustainable investing options they can fill that gap if necessary. They should note that there are investments with medium to high sustainability ratings but don’t have an ESG mandate such as Vanguard’s Primecap fund (VPMCX).
  • Begin a dialogue with clients to assess what’s most important to them with respect to both financial and nonfinancial goals and craft a portfolio that can help meet all of those goals.

He said Morningstar expects to make its sustainable profile tool available to advisors “in the near future.”

— Check out 3 Sustainable Investing Questions Advisors Need to Be Able to Answer on ThinkAdvisor.


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