Speaking at the InvestorDaily ESG Summit in Sydney on Thursday, Kathryn Fitch-Daniels, financial adviser at Ethinvest, said that understanding what millennial investors care about is key to thriving amid the intergenerational wealth transfer.
Ms Fitch-Daniels explained that often, millennials have a very different focus to their parents when it comes to investing.
“They’re values-motivated. They’re really particular with what they want their money to do and who they do business with,” she said.
“They’re delaying relationships, marriage and children, they’re living longer, a bit more free and as a result, they’re also likely to be changing jobs more. So, they’re focused on a passive income.”
Adding that younger generations are generally more interested in issues like climate change and broader ESG matters, Ms Fitch-Daniels explained that advisers will need to adjust the way they approach conversations as wealth is transferred.
“While [older clients] may not be open to ESG discussions, it might be worth finding out, depending on their estate plan, are their kids likely to retain this portfolio or are they going to want to sell it to then move to a more ESG-aligned portfolio?” she said.
Ms Fitch-Daniels also stressed that ESG is not just an afterthought for many younger investors, but rather a starting point.
“You can expect to discuss ethical investments, not just ESG,” she said.
“ESG will now be the new base level and that’s what this next generation is going to be expecting.”
Ms Fitch-Daniels suggested that working with current clients and their children is a way to ensure the inheritance continues to grow while also helping forge a relationship that can help retain the business.
“Agency is giving your kids an early inheritance, for example, where they can get the experience of investing the money, having a bit of say in how it’s invested,” she explained.
“That way the parents can see that the kids are not wasting what may have been inheritance down the track.
“Even if you’re at the extent of family offices or a big amount of money, the parents might be bringing their kids to get their input on portfolios and get them involved.”
Ms Fitch-Daniels added that advisers need to remember that while these are the “kids to your clients”, they are all fully grown adults with their own goals.
“What you want to do is engage with them and keep touching base because if you look after these people now, not financially from your perspective, but hopefully they will come back to you later for personal financial advice,” she said.
