ESG investing shift for younger investors

Young investors are increasingly considering environmental, social and corporate governance (ESG) factors when making decisions.

New research has found that 63% of 18 to 34-year-olds said they would select a fund manager based on its ESG approach.

The research from Montfort Communications’ asset management practice in conjunction withBoring Money, the retail investment blog and website, also found that only 17% of over-55s would consider the same.

According to the research, 78% of these younger investors said ESG considerations affect their investment choices. Only 67% of 35 to 54-year-olds considered ESG factors, and 32% of the over-55s.

In addition, it appears that younger investors are considering different sources of information when making their investment decisions.

For 18 to 34-year-olds, friends and family were the most important source of information, with38% citing this source.

37% of younger investors turned to YouTube, slightly ahead of financial advisers at 36%.

In the 35 to 54-year-old age range, 39% of investors turned to investment platforms, 33% to financial advisers, and 31% to investment information websites, including Morningstar and Trustnet.

For the over-55s, 34% said they did not need or get information on ESG investments. Others turned to national newspapers, with 27% citing this source. 28% said they used financial advisers, and 26% turned to investment platforms.

The research also found that women have stronger ESG convictions than men, with 53% of women investors selecting a fund manager based on their approach to ESG. Only 37% said they considered this.

Women were also more likely to think about ESG when making investment choices, with 69% of women investors saying part or all of their portfolio considered ESG factors, compared with 53%of men.

Nick Bastin, Senior Consultant at Montfort, said:

“This survey shows that ESG forms a critical part of the decision-making process for younger demographics. To reach them, asset managers need to go beyond traditional channels, but the reward for doing so is clear. These long term potential revenue streams represent a massive opportunity that asset managers ignore at their peril.”

Holly Mackay, Founder and CEO of Boring Money, said:

“Two of the key factors which will reshape the make-up of who holds the wealth in coming years are intergenerational transfers and the increase of older women acting as primary financial decision-makers, through independent wealth, divorce or bereavement. Both younger people and women increasingly want to include ESG factors in their decisions. Those asset managers who not only embrace this but articulate and evidence it will stand to gain from these structural shifts.”

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