How the Transfer of Wealth is Transforming Wall Street
by Lynne Ford, Executive Vice President, Calvert Investments
Three important trends are already changing the asset management industry, and are poised to become even more important in the coming years. First, based on their spending and earning power, women now represent a growth market bigger than those of China and India combined. This reality was identified by Kate Sayre and Michael Silverstein of the Boston Consulting Group in their article “The Female Economy.”
The second trend is the ever-increasing percentage of Millennials in the workforce—forty-six percent by the year 2020. What does that mean when you project ahead another decade or two after that? It means that this generation is going to hold important keys to the future. Yet most of us continue to manage our business models around boomers.
The third major trend is the increasing focus on sustainability. With events such as the Paris Climate Agreement and the Pope’s 2015 speech on the importance of protecting the environment, concerns about sustainability have become part of the mainstream conversation. Like the tidal changes of the Internet and social media, demands for global change and sustainability will only increase, and women and Millennials will likely drive this pressure.
Millennials have grown up recycling and hearing about solar panels and water conservation and carbon emissions. Theirs is a global world, and based on a focus group of Millennial Investors that Calvert conducted in 2015, their attitudes about investing are in tune with their values:
- They are nearly twice as likely to be familiar with “sustainable investing” — or what we’re now beginning to refer to as “responsible investing” — than other generations (57 percent vs. 29 percent)
- They are three times more likely to have discussed responsible investing with family and friends (39 percent vs. 12 percent)
- They are more than twice as likely to invest responsibly (70 percent vs. 31 percent)
Women are also leading the way to a focus on sustainability. Last year, Calvert Investments (www.calvert.com) conducted a study of 1,036 women aged 25 to 70 with household income over $75,000 that explored purchasing behavior, charitable giving, and responsible investing.
- Nearly all ranked “helping others” (95 percent) and “environmental responsibility” (90 percent) as important.
- At least some of the time, roughly 60 percent of the women based purchase decisions on how a company’s corporate behavior aligns with their personal values.
- Although many affluent women change purchasing behavior to support their values and donate significant sums to nonprofits, only four percent say they understand how to invest their dollars in a way that supports their values, and 70 percent have not heard of sustainable or responsible investing. However, 18 percent would invest in mutual funds that support their values and more than half (54 percent) want to invest in companies that have a high degree of corporate responsibility and ethical business practices.
- Half of affluent women with employer sponsored retirement plans are very or somewhat interested in being given a responsible investment choice.
As responsible investing becomes more widely known, there could be significant opportunity for financial advisors to get ahead of the curve by helping women align their values with their need for financial growth and stability.
Women and Millennials Have the Potential to Drive Responsible Investing
Women want to use their investment dollars to support their values in the same way they use their purchases to achieve that objective. As more women gain awareness of responsible investment strategies, the statistics above suggest they will direct their dollars toward responsible investment solutions. Our survey found significant differences between the Millennial and Baby Boom generations on responsible investing topics. While Millennial women are the most likely to say social and environmental causes and issues are very important and drive much of what they do (90 percent versus 81 percent for Generation X and 80 percent for Baby Boomers), Baby Boomer women are more likely to change purchasing behavior (28 percent) and show the strongest interest in sustainable and responsible investing (63 percent).
Calvert has been focused on responsible investing for more than 30 years. This includes proactively selecting responsible investments as well as using our clout as a significant institutional investor to drive change. In 2004, the Calvert Women’s Principles were established in partnership with the United Nations and were the first code of corporate conduct focused exclusively on empowering, advancing, and investing in women worldwide. The seven principles — available on the Calvert website — provide a roadmap of how a company should aspire to impact women, a tangible measuring stick for assessing progress, and a gauge on how a company affects women in the community through its products and its impact on women down the global supply chain.
And Responsible Investing Can Also Drive Financial Returns. Here is how…
Read Lynne Ford’s complete post on GreenMoney at this direct link- http://bit.ly/1q8kg3K
Cliff Feigenbaum, founder and managing editor
GreenMoney Journal and GreenMoney.com
KEYWORDS: Finance & Socially Responsible Investment, Business & Trade, women, Leadership, Finance, Investing, investors, sustainable investing, Politics, Hillary Clinton, Bernie Sanders, invest, Mutual Funds, Calvert Investments, Investment Trends, millennials, Wall Street, The Female Economy, changing workforce, pope, Values, Retirement Plans, ethical business, baby boomers, UN Global Compact, gender diversity, equality, financial professionals, cfp, advisors
SOURCE: GreenMoney Journal
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