Environmental, social and governance (ESG) issues have become “Major priority” for millennials compared to their baby boom counterparts, new research has shown.
Younger investors, however, have doubts about their advisory firms’ commitment to responsible investing, according to the 2021 JD Power Full-Service U.S. Investor Satisfaction Study.
During the past year, a “Blatant divergence” in investment behaviors and preferences opened up between millennials and baby boomers, the survey showed.
The study found that among investors under 40 – known as millennials – who strongly agree that their consultancy firm is engaged in ESG efforts, 52% plan to increase their investment in this company, with that number falling to just 24% among investors over 40.
But 68% of millennials surveyed said they had doubts or didn’t know their company’s commitment to ESG.
Mike Foy, Senior Director of Wealth Intelligence at JD Power, said: “Investors under 40 change much faster in terms of wealth management preferences and priorities – and they look increasingly different from baby boomers.
“Not only has the pandemic dramatically accelerated their shift to a more digital engagement, but emerging issues such as ESG are also a top priority for them that is yet to be seen among baby boomers.”
Millennials are expected to inherit more than $ 68 trillion in wealth from their parents over the next decade, according to the JD Power report.
Foy added: “Wealth management service providers are wrong if they assume that emerging affluent investors will simply grow into baby boomers over time.”
The study found that investors under 40 preferred the unique fee-for-service and subscription models.
Among millennials surveyed, 74% would prefer to pay for full-service wealth management through a one-time fee-for-service model, while 73% supported a subscription model.
In contrast, among full-service investors aged 40 and over, 42% supported a fee-for-service model and 34% a subscription model.