Millennials. They've surpassed baby boomers as the largest generation in American history. A plurality of them live with their parents. They're more diverse, yet less religious. They make less money, and hold more debt.
And in the next couple of decades, more than $30 trillion dollars in assets is expected to change hands in the so-called “intergenerational transfer of wealth,” with much of that new wealth flowing to Millennials.
This week's Returns on Investment podcast takes on the sometimes breathless anticipation that today's 20- and 30-somethings are a force that may usher in a new, more inclusive, capitalism.
Evidence seems to suggest that the new wealth holders will be sympathetic to the impact investment thesis. Surveys show as many as 90 percent of millennials say their investments should try and make a positive impact on society, compared with 74 percent of other generations. Two-thirds of millennials see investment as a way of expressing their social, political, and environmental values, double the percentage of baby boomers who feel the same way.
Over the past few years, some of the largest financial services companies, including BlackRock and Morgan Stanley, have begun to absorb or roll out their own impact investment offerings.
ImpactAlpha podcast regular Imogen Rose-Smith, a senior writer for Institutional Investor, suggests at least some of those initiatives are driven by fear that the kids will ditch their parents' wealth advisors. “When people inherit wealth they tend to replace their investment advisor with a different advisor,” Rose-Smith says. Impact investing is “a way of engaging the next generation of inherited wealth.”
Whether Millennials change capitalism itself remains to be seen. For now, few millennials hold significant amounts of wealth to invest. Can the social and environmental issues we face today wait for the Greatest Generation, the Boomers and even Generation X to transfer their wealth? Or might there be an “intergenerational transfer of urgency” to facilitate transformative change today?
Is That Impact?
This week's podcast also initiates a new feature: Is That Impact? As Donald Trump heads to the United Kingdom to visit his golf resorts, the Returns on Investment roundtable takes up the question of whether the proposed seawall at Trump's golf resort at Ireland counts as an impact investment. Yes, Donald Trump wants to build a wall!
Listen to the new Returns on Investment podcast for our take.