Study Reveals HNW Attitudes About Sustainable Investing
Millions of investors these days are using the power of the purse to help bring positive changes to the world. Sustainable investments, as they are known, involve everything from buying stock in companies with diverse workforces to purchasing municipal bonds that build schools for disadvantaged kids, ensure safe drinking water, or promote public transportation.

But should such investments also produce solid returns to help investors meet their personal financial goals? For growing numbers of high-net-worth investors the answer is a solid “yes.”

Long-Term Performance Is a Top Priority

In fact, when OppenheimerFunds asked 500 high-net-worth (HNW) U.S. investors of all ages what mattered most to them about sustainable investing, long-term performance emerged alongside sustainability as the top answer (25%).1 That’s a far cry from the earlier days of socially responsible investing (SRI), when investing according to your personal values often meant settling for lower returns. Because SRI involved excluding potentially profitable companies whose products or practices you disapproved of, it was once accepted wisdom that there was a cost to caring—in the form of potentially lower returns.

Yet today, sustainable investing offers a much wider array of choices. For example, U.S. funds that use companies’ environmental, social and governance (ESG) records to evaluate investments now have $98 billion in assets under management, according to a 2018 Morningstar report. Instead of simply screening out companies they see as negative, sustainable investors, especially Millennials, are actively investing in sustainable “themes” such as clean technology, affordable housing, or disease eradication. And they look for companies with strong ESG records that can also perform well financially.

Mapping the Generations

The marriage of personal financial interest with concern for the public good is just one of the key findings in The Generations Project, our new OppenheimerFunds study conducted with the global research firm, CoreData. Amid the greatest transfer of wealth in history (an estimated $30 trillion in North America2), we’ve spent the last two years studying HNW Millennials—their views on investing and wealth, and their values.

For The Generations Project, we broadened the scope to capture insight from both younger and older Millennials, as well as Generation X, Baby Boomers, and the Silent Generation. We surveyed 500 investors and 500 advisors in the U.S. and another 900 investors and advisors in the U.K.3 We wanted to understand not just the values of each generation, but how those values intersect or diverge, and how the generations communicate (or fail to) on key issues—both within families and with financial advisors. We felt that the answers might shed light on how views of wealth and investing are changing the country, and reshaping the financial services industry.

We explored, for example, what financial issues cause families to have conflicts; how different generations view those conflicts—and the often wide disparities between what families say drives disagreements and what their advisors think drives family disagreements. We looked at some of the reasons behind the tendency of investors of all ages to focus overwhelmingly on U.S. investments, even in a global economy where much of the world’s growth comes from outside the U.S., and, how HNW investors are not prioritizing financial education for the next generation. I’ll be discussing these findings in more detail throughout the year, and I hope you’ll take a few moments to review our findings and download the study here.

Advisors May Be Missing Out on What Matters to Sustainable Investors

When it comes to sustainable investing, our survey found that while 29% of investors say they own such investments, preferences varied by each generation of surveyed investors. Younger Millennials (age 22-30), for example, were most interested in banks that finance projects with long-term benefits for communities or the environment. Older Millennials (age 30-36) and Baby Boomers, meanwhile, favor clean technology, while the Silents, the oldest generation, focus on issues such as water preservation, among a number of other sustainable investments.

While generational differences are to be expected, one surprising finding was the degree to which advisors are missing out on what investors expect of their sustainable investments. In fact, while 25% of investors say long-term returns are most important, just 10% of advisors thought investors felt that way. Many advisors are still thinking along the old SRI model, and risk understanding what is most valuable to investors.

We also found some potential trouble spots for investors themselves when it comes to understanding exactly what sustainable means. Even among those with sustainable investments, 32% weren’t clear about how much of their portfolios were devoted to those areas.

In other words, even as sustainable investing goes mainstream, its rapid evolution means that advisors and investors alike may have some catching up to do. Just as clearly, though, sustainable investing is here to stay, and that is ultimately good news for investors and for the world.

Dig in to our full report and the distinct generational findings here.

 
  1. ^Source: OppenheimerFunds, The Generations Project, 2018.
  2. ^Source: Accenture: The Greater Wealth Transfer, 2015.
  3. ^U.K. survey results will be published separately.