Millennials encourage their wealthy family to switch to sustainable investing
A new series of studies* from Barclays Private Bank on the intergenerational transmission of wealth shows that younger generations have made wealthy families aware of ESG investing.
This has led to a refocusing of family orientation on sustainable assets and is now common ground between the different generations for wealth planning despite the differences in
terms of priorities and risk appetite.
According to the study called The Challenges and Opportunities of Intergenerational Wealth Transfer conducted by global business intelligence service Savanta, two-thirds (68%) of wealthy seniors say their children have played a key role in the family when it comes to ethical and responsible investment issues.
As a result, sustainable investing now appeals to more wealthy people of all ages and generations, bringing families together around common goals in
responsible investment and financial return.
Across all generations, one out of ten people say that having a positive impact on the environment is a top personal goal, and more than a third (37%) strongly agree that they henceforth care for the importance of responsible investment, which demonstrates the ability of ESG themes to integrate into the general heritage objectives of all generations and to unite families around the preservation of their financial future.
In addition, in each of the age groups studied, around four out of five people attach some importance to responsible investing, meaning 81% of people under 40’s , 77% of the 41-60’s and
86% of the ones over 60’s.
Changes in the attitude of families are changing portfolio allocations. This shift in attitude has profoundly altered the way wealthy families invest, with nearly four out of five (78%) now expressing their ethical values in their investments.
This development is the strongest in the United Kingdom (83%) and the Middle East (82%). India, more behind, nevertheless shows 62% consideration of ethical values, a sign that there is global enthusiasm
Among those who do not yet invest in this way, 22% of individuals in the older generations want to know more about their sustainable investment options, and 19% want to know more about investments specifically aimed at a positive social and environmental impact, a sign that the trend is expected to increase.
Finding sustainable common ground in succession planning
Sustainable investing can offer intergenerational common ground, while other issues such as risk appetite always give rise to differences between different generations.
61% of family members indicate that intergenerational differences in risk appetite affect the direction they collectively take in investing.
Wealthy families report that very different value systems (57%), the impact of social media (47%) and different levels of education (40%) are also factors that contribute to
intergenerational differences in outlook and priorities, which therefore impact wealth management and succession planning.
As a result of these factors, half of Millennials report feeling that their overall financial goals and targets are not understood by the rest of the family.
Philanthropy is another area where the younger generations are stepping in by using family wealth to positively influence the world, but unlike sustainable investing, charitable donations tends to be the preserve of seniors, showing that every slice age finds different ways to contribute to society.
People over 60’s (38%) are more likely than those under 40’s (20%) to express their enthusiasm for philanthropy, but in the majority of the families (74%), seniors entrust the responsibility of
management of philanthropic activities to their children.
« Our study shows how the younger generations, who have been involved for a long time in sustainable investing, create a real dynamic within families to change the vision of theirDamian Payiatakis, Head of Sustainable and Impact Investing, Barclays Private Bank
elders. In addition, most talk of sustainable investing focuses on the benefits for the portfolio, alongside the benefits for people and the planet. We can now see their potential gain from the fact that it refocuses the family on common values and supports the intergenerational inheritance transmission.
Facing heads of families who are thinking about succession planning and investing beyond their own lives, the theme of our interviews has broadened to address how investing
sustainability can secure the future of their children, strengthen their desire to inherit the family heritage and provide common ground for family discussions on heritage. »
Study conducted by Savanta on behalf of Barclays Private Bank in Q2 2020 interviewing 402 wealthy families with assets of at least GBP 5 million, conducting in-depth interviews with 20 wealthy families, as well as their bankers and intermediaries , and based on independent behavioral analysis. Respondents live in Germany, Saudi Arabia,
United Arab Emirates, France, Hong Kong, India, Italy, Qatar, United Kingdom, Singapore and Switzerland.
Age groups of participants: 25 to 40 years old (151 people); From 41 to 60 years old (158 people); 61 years and over (93 people)
Article / Source: Barclays Private Bank