Millionaires are becoming increasingly aware and demanding of values-based investing
Younger millionaires are driving a sea-change in values-based investing. Advisors should be mentioning the approach to their clients to ensure they take advantage of the opportunity
Sustainability is becoming an ever more important element of investing. Applying a values-based filter to investment portfolios is not new, but the scale of demand and the pace of supply adaptation is ever increasing.
Through our MillionaireVue omnibus, we asked millionaires in the US and UK about their experiences of ethical and sustainable investing. In the US, about 1 in 3 have had no experience of ethical and sustainable investing, twice the proportion in the UK (16%).
In the US, 39% have seen adverts or read about ethical and sustainable investing, and over 1 in 4 (27%) say they currently invest in ethical and sustainable funds or have given this mandate to their adviser. This appears to be both investor and advisor-led.
Maybe unsurprisingly younger millionaires are driving the demand by asking their advisors – 40% of millionaires under 55 are currently investing in the ethical or sustainable funds. Whereas over 1 in 2 over 55’s has not engaged with the area at all.
Investment in ESG (environmental, social, and governance) funds is also linked to wealth and location. A full 36% of those based in the Pacific West are currently investing in these funds, compared to just 16% in the Midwest. And it is very high net worth individuals (VHNWIs), those who have >$5m investable assets, who are the trendsetters, with almost 1 in 2 placing their assets in such funds.
And where the conversations are being had, high net worth individuals (HNWIs) are more satisfied. Promoters of their investment providers are more likely to have had it mentioned to them by their advisor (35%), a much higher proportion than the fewer than 1 in 2 detractors (18%) who have had it mentioned to them. Proactive engagement from advisors on this issue is clearly a driving force in creating happy clients willing to speak positively about their relationship.
The future of sustainable investing looks bright, not least as HNW investors become more clued up about the nuances of the approach and the importance of engaging with highly polluting industries to encourage them to develop new technologies and alternatives.
And given the war in Ukraine, institutional and government funds are also likely to flood into the area as many, especially in Europe, are spurred to act faster to reduce reliance on Russian oil and gas. Increasingly they will find the wealthiest private investors as their allies in using their funds to prevent a climate disaster while making a profit.
Data source: Savanta’s MillionaireVue Omnibus, a representative survey of the UK and US millionaire population. N=491 conducted in the UK and n=311 conducted in the US in February 2022.
Savanta’s MillionaireVue is a quarterly omnibus with c. 500 HNWI’s in each of UK, US, and China. For more information please click here.
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