When I think about aligning values and money, I believe investors are drowning in information regarding social investments, but starving for direction, knowledge and clarity in opportunities and choices. Recently I was selected to participate in a one year fellowship, a “think-tank” for social impact, social ventures, and ESG investments. Through my research I learned that only a quarter of ultra-net-worth “family offices” are now putting money into social and environmental areas. But as younger generations take control of family wealth, there will be a significant increase in impact investing. Millennials will inherit up to $59 trillion between now and 2060 – the largest intergenerational wealth transfer in history according to the Center on Wealth and Philanthropy at Boston College. [Fast Company: 2017]
Since the 90’s, a small percentage of baby boomers have expressed their values in socially responsible investing. But the trend really gained ground over the last few years. According to the Foundation Center, over 50% of the existing USA-based family foundations have been established since 2000. In 2007, the term “impact investment” emerged — an approach that measures social and environmental performance with the same rigor as that applied to financial performance. [Forbes: 2014]
Enter the Millennials. U.S. Trust survey notes that 60% of millennial investors either own impact assets or have expressed interest in impact investing, versus 24% of baby boomers.
This can lead to tension when transitioning money and family values to the next generation. While the older generation may not be as familiar with new terms like “social entrepreneurship” and “social benefits”, millennials come into the conversation with positive energy and values grounded in facts and analysis. Mutual respect and open dialogue can be experienced on both sides of the table.
In fact, social entrepreneurs are looking at both their annual distributions (the “5 percent) and the endowed assets (the “95 percent”). I found research to support that millennials are twice as likely as other investors to seek out impact-type returns alongside financial returns.
Competence isn’t the exclusive privilege of those who have a lot of life experience. It can also show up in those just starting out in life. Smart boomers are giving the next generation freedom to explore and pursue their cutting edge ideas for the good of the family and beyond. They realize that the upstarts are in the field, out there working and seeing what’s going on around them.
For years, family offices have relied on Olson Wealth Group for governance, investment options and to facilitate multigenerational transitioning. We are proud to have the skills to bridge the generations by helping boomers share the history and “the way we do business” while respecting the talent and skill sets of the millennials. We invite you to share your thoughts with us. Call us anytime.
Olson Wealth Group is a full-service wealth management firm that leverage capital in all forms to support investors who wish to align their values with their investments to solve complex social and environmental problems. Specializing in hands-on experience and high-level oversight for smaller ($2-20M) family foundations, we provide training and guidance in fiduciary responsibility including cost management, asset class selection, and performance/allocation measurement.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.