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Millennials and Generation Z are Poised to Shake Up the Investment World, Study Finds

Amy Brown headshotWords by Amy Brown
Investment & Markets
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The vast majority of Generation Z and millennial investors are engaged in socially responsible or impact investments, or plan to invest this way in the future, according to a recent study from Swell Investing. That comes as no surprise to me. As the parent of millennial and Gen Z daughters, I’ve seen firsthand how they are shaking up the status quo—and the investment world is no exception.

Sometimes called “post-millennials” or “iGen,” Generation Z—aged 18 to 24—make up more than a fifth of the U.S. population and are the most racially and ethnically diverse group in the nation’s history. They’re true digital natives who report being online “almost constantly,” according to a 2018 study by Pew Research Center.

Swell Investing found that 84 percent of Gen Z investors are either already invested in socially responsible or impact investments or plan to invest this way in the future. Nearly one in three Gen Z investors (31 percent) said they would be willing to allocate 50 percent or more of their investment portfolio to socially responsible or impact investments. One in four millennial investors would do the same. This is compared to only 18 percent of Gen X investors and 11 percent of Boomer investors, according to the study.

The study was conducted online by Harris Poll on behalf of Swell Investing—a socially responsible investment adviser incubated by Pacific Life—and gathered insights from more than 2,000 U.S. adults aged 18 and up, more than 1,400 of whom have investments.

Social impact matters most

My oldest daughter, Marielle Velander, 26, is a research manager with Reboot, a company in New York City that works to solve civic problems and help government, civil society and philanthropy to achieve their social missions. When she has money to invest, she told me, socially responsible investing is the only type of investment she would consider.

“At this point, any initiative that doesn't also have a wider social impact is not worth our time or money,” she said. “We need a bigger collective effort to address our shared problems around governance, both when it comes to minority representation and environmental degradation.”

Concern for environment top priority


That conviction is borne out by Swell's study—which found that politics, environmental concerns, and a sense of responsibility appear to drive the majority of Gen Zers and millennials toward socially responsible investing. Nearly three in four Gen Zers (72 percent) think that decisions made around investing can have a meaningful impact on climate change and the release of greenhouse gases.

“These factors would definitely drive my interest in terms of where I invest my money,” said Aneesa Khan, 23, delegation leader to the U.N. climate talks for the youth-led advocacy group SustainUS, who lives and works in Washington, D.C. “Climate change is not a problem of the future—it affects vulnerable families like mine on the coast of India with harrowing droughts and floods today.

"Scientists say we have 12 years until we reach the point of no return with climate change. I will make responsible investment decisions to protect frontline communities like women, people of color, indigenous people, and low-income families from having to bear a majority of the burden of a problem that they didn’t cause.”

Technology drives sense of responsibility


“The next generation of investors grew up with a smartphone in hand and instant access to news and information," said Dave Fanger, CEO and founder of Swell Investing. "Events that happen thousands of miles away can be seen immediately in the palm of their hands, and they’ve never known anything different. This access developed in them a sense of responsibility and empathy that carries over to their financial lives."

Khan had a similar insight. “I think that social media and the internet have made it easier for me to access what I need to make informed, smart decisions on where I put my money,” she told TriplePundit. “It helped me figure out that I want to put my money in a bank or retirement fund that doesn’t support the Dakota Access or Keystone XL pipelines, and I am sure that I will continue to make my decisions based on reasons like this.”

Committed to change


But as my daughter Marielle points out: “I would have had that sense of empathy regardless."

"Most of my passion for social impact has come from firsthand experiences of what political challenges and disregard for the environment are doing to our general well-being across the world, whether it is interviewing a young Brazilian woman of African descent seeking access to education and public services in her local community, or learning to adapt to water shortages while living with a family in Jordan. I would say travel and education opportunities have been the biggest factors in how I would invest my money.”

Motivation may vary, but the trend driving millennials and Gen Zers toward more socially responsible investing seems here to stay. “In the long run, we need to see a complete and just transition of our energy system away from fossil fuels," Khan said, "and I believe that one way is to take individual action by investing in a socially responsible manner."

Image credit: Pixabay