Millennials and the Investment Shift

Lately, it seems like millennials have been everywhere: in the news, peppered throughout pop culture, and a serious topic of debate among the investment and financial landscape.

So—who are the millennials and why do they matter?  What impact will their wealth and world views have on sustainable investing?

“Millennials” refers to the generation born between 1980 and 2000.  They are crucial to shaping the future of global investment landscape, as they are expected to compose more than 50% of the workforce by 2020.[1]  It is also estimated that over the next several years, they will be on the receiving end of a generational transfer of personal wealth of USD 59 million.[2]

So what can we expect them to do with that wealth?

We know that millennials have grown up in an economic recession and this has had an impact on both their trust in the economy (and investing in particular) and their loyalty to employers.

In a 2008 survey of millennials, [3] PWC found that, of those surveyed, 75% believed they would have two to five employers, whereas in 2011, that number dropped to 54% and more than 25% reported that they expect to have six employers or more, compare with only 10% who felt the same in 2008 – thereby revealing the nomadic traits of the workplace. This decrease in loyalty may also spread to financial institutions. In a 2015 survey, LinkedIn and Ipsos found that 57% of millennials would be open to try financial offerings from non-financial brands.[4]

In a 2011 survey of millennials, PWC found that, of those surveyed, 54% expected to have two to five employers in their lifetime, whereas, in 2008, 75% believed they would have two to five employers.  In the 2011 survey, more than 25% reported that they expect to have six employers or more, compared with only 10 % who felt the same in 2008—this reveals the nomadic traits of the new generation in the workplace.

Both PWC and LinkedIn also found that millennials care deeply about their personal values and morals.  This is crucial to the future of sustainable investing.  Millennials, who value their moral compasses so highly, will also care deeply about where their money goes.  Sustainable investing is the perfect solution to address many of those concerns. It is incredibly important for financial providers to recognize these concerns, particularly as millennials have signaled an openness toward non-traditional financial offerings.

In the current passive investment space, market participants can choose from a wide range of indices that relate to personal values, including human capital, climate change mitigation, long-termism, faith based, and social responsibility.  Looking toward the future, millennials could be expected to be key drivers of sustainable investment.

[1] https://www.pwc.com/m1/en/services/consulting/documents/millennials-at-work.pdf

[2] https://www.bc.edu/content/dam/files/research_sites/cwp/pdf/A%20Golden%20Age%20of%20Philanthropy%20Still%20Bekons.pdf

[3] http://www.pwc.com/gx/en/issues/talent/future-of-work/download.html

[4] https://business.linkedin.com/content/dam/business/marketing-solutions/global/en_US/campaigns/pdfs/affluent-millennial-research-whitepaper-eng-us.pdf

 

The posts on this blog are opinions, not advice. Please read our disclaimers.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>