Speaking at an adviser panel at the Responsible Investment Association Australasia (RIAA) investment conference, Kathryn Fitch-Daniels, certified financial planner at Ethinvest, observed that older clients could be setting up ethical or impact investment portfolios for their children to inherit.
“We’re seeing, with millennials, ESG will be the default. It will be the minimum standard they want, and they will be more on the sustainable or ethical spectrum — but I don’t think you can assume that all clients are interested in it,” she said.
“It might be from a stewardship point of view that [clients] want to set up portfolios their kids will want to continue to keep and not dump it when they inherit it.”
She referenced existing Praemium research that found only 12 per cent of clients would stick with their family adviser. This sombre figure, she said, emphasised the need for advisers to engage with their clients’ family tree.
“Advisers need to engage with not just their client, but the whole family, and try to engage with the younger clients early. While they may not have money to invest, you might be able to provide general advice or run webinars and sessions,” Ms Fitch-Daniels offered.
“It falls back on advisers if you want to have a sustainable business that’s going to go past 20 years. There’s a $3 trillion intergenerational wealth transfer that’s going to happen, you need to be actively trying to engage the next generation.”
According to Treysta Wealth Management senior adviser Adam Drinkwater, sustainability concerns held by older clients mostly stem from worries for their younger family members.
He recalled a conversation with a 70-year-old client who discussed her concerns for her grandchildren and the world they would live in.
“That completely drove choices [around responsible investment],” he said.
“I think a lot of people that aren’t millennials have a lot more experience, a lot more understanding. They have family linkages as well through grandkids and kids that they’re worried about, and they think this is a way they can impact change.”
A sense of personal responsibility also inspires some older Australians to pursue responsible investment, VivaEthical Financial Advice director and adviser Elizabeth Hatton suggested.
“The conversations I’ve had with millennials is that it is the default position, but thereafter, people with families, people who are older, seem to be really concerned with giving back to society. They see that as a personal responsibility,” Hutton said.
She added that millennials were smart and educated, but they often found the world of finance “completely bewildering”.
Hutton said: “Even if I’m not going to be providing them with personal financial advice, the information they generally want from me is — are there any green banks out there? Do [I] know any green mortgage brokers?
“They want that as a starting point and then they often will come back once they’ve moved past that stage. It’s [about] being attuned to what somebody’s values are and taking it from there.”
