Advisers' Influence on Client Satisfaction
Data from Australian Ethical's whitepaper reveals that 73% of advisers who incorporated responsible investing into their offering reported higher client satisfaction, compared to only 62% who did not. This shift reflects the changing values and objectives of the next generation of investors. With responsible investing as part of their value proposition, advisers also experienced a 75% increase in engagement with clients' children and/or beneficiaries.
Australian Ethical emphasizes that as Baby Boomers focus on wealth preservation and transfer, their children and beneficiaries inherit these assets with new objectives and distinct values. As a result, their investment preferences may differ from those of their parents.
The Rise of Ethical Investments among the Next Generation
Data released by the Responsible Investment Association of Australia (RIAA) highlights the increasing preference for ethically sound investments among the younger generations. Approximately 45% of Gen Z and 36% of Millennials plan to invest responsibly in the next 12 months, in contrast to only 15% of Baby Boomers.
However, the study found that only 41% of advisers actively encouraged clients to involve their children and/or beneficiaries in wealth transfer conversations. Leah Willis, Australian Ethical's Head of Client Relationships, emphasizes that advisers must be prepared to meet the needs of the next generation and engage in conversations about their different values and responsible investing preferences.
The "Great Wealth Transfer" and Ethical Investing
According to Australian Ethical, nearly two-thirds of surveyed advisers have clients who have already transferred or are in the process of transferring wealth to their children. The firm also notes that many wealth holders wish to initiate the transfer process while they are still alive, further emphasizing the importance of advisers' involvement in intergenerational wealth transfer.
The study indicates that consumers now expect financial advisers to possess knowledge about responsible investment options, ranking this expectation higher than investment returns. Australian Ethical stresses that understanding responsible investing can attract a younger client base and enhance overall client satisfaction. Advisers who incorporate ethical investment principles into their offerings are already reporting higher satisfaction among their clients.
Proactively engaging with beneficiaries and understanding their investment values and drivers is vital for advisers, as responsible investment principles become increasingly significant in attracting and serving younger clients.
The Next Generation of Wealth Transfer
The Productivity Commission's data estimates that approximately $3.5 trillion will be transferred from Baby Boomers to their children or beneficiaries over the next two decades. This ongoing process highlights the urgency for advisers to adjust their approaches and effectively engage with younger generations.
A total of 300 advisers participated in the whitepaper survey, conducted by CoreData.
