What You Need to Know
- Nearly a third of Morningstar.com users are under 35, and these are the investors who are going to drive future practice growth, CEO Kunal Kapoor says.
- Newer, younger investors are different from clients typically encountered a decade ago.
- Advisors can serve as navigators to this young generation by connecting their personal preferences to their portfolios.
Investors increasingly want to be rewarded for doing good in the world by investing in sustainable companies, and financial advisors can serve them by framing “sustainability as investability,” Morningstar CEO Kunal Kapoor said during the firm’s investment conference this week.
While flows have favored passive investing, changes are taking place with regard to the next generation of investors, he said, explaining that advisors can serve as navigators to this growing pool by connecting clients’ personal preferences to their portfolios, he said.
“The type of investor that we’re seeing on Morningstar.com has changed meaningfully,” Kapoor said, noting that 25- to 34-year-olds comprise 20% of the site’s users, tying them with those 65 and older for the highest share. In addition, Morningstar has seen meaningful growth in visits from investors 18 to 24 years old, who account for 10% of those drawn to the site, he said.
“This is not the regular-type investor we used to see five or 10 years ago. But it is also the type of investor that is going to power your practice in 10 years, in 15 years. And so we have to start laying the seeds together for what that means to help those types of investors,” Kapoor said. The “active personalization” concept can help advisors guide these clients, he said.
“Active personalization is the new active investing, and what it does is it blends traditional approaches with more modern ones to create a new way to help you serve your clients in a personalized, scalable fashion,” Kapoor said, referring to environmental, social and governance focused investing. He encouraged advisors to set politics aside and think about how their clients view risk and reward.