Wealth management firms must better cater to young investors’ social beliefs: study

view original post

Wealth management firms need to better cater to environment and social-minded investors to tap into a younger market that is about to boom, according to the market research company J.D. Power.

© Provided by The Canadian Press

“We are at the tipping point of a massive generational wealth transfer,” said Mike Foy, senior director and head of wealth intelligence at J.D. Power, in a statement.

Load Error

“Investors in Canada—especially younger ones—increasingly want their investments to align with not only their financial goals but also their values. Wealth management firms and advisors have a critical role to play in helping them do this, and they can’t afford to wait for clients to ask them about it.”

J.D. Power said wealth management firms need to act quickly to offer environmental, social and corporate governance (ESG) investing to capture the incoming market. 

A recent survey by the company found young investors are twice as likely to increase their investments if they’re confident their wealth management firm is committed to ESG investing.

The survey found that investment firms have lots of room for improvement, with only 36 per cent of investors saying their needs are being completely met.

Forty-six per cent of investors under 40 also said they either have doubts about their firm’s commitment to ESG or don’t know about it, with older investors polling at a similar level.

The J.D. Power study took place from December 2020 through February 2021, and was based on responses from more than 3,500 people who make some or all of their investment decisions through a financial adviser.

The company noted that investors under 40 are increasingly looking to interact with their financial advisers online. 

The study also noticed the immense impact of the COVID-19 pandemic on personal finance decisions, with 40 per cent of respondents saying they’re worse off now than the previous year.

This report by The Canadian Press was first published May 6, 2021.

The Canadian Press