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Millennials: Changing The Investment Conversation

By Justin Conway, Calvert Foundation

 

Justin Conway, Calvert Foundation

Calvert Foundation

Amidst all the talk about the trillions of dollars in wealth transfer and flood of stats coming-out about millennials, I thought I’d spend some time talking about what I see millennial investors doing as it relates to investing. I do so from my role at Calvert Foundation, working with investors, their financial advisors, their brokerage firms, and the entrepreneurs and organizations creating local solutions in their communities. I also do so as a millennial myself, if you allow for the term to refer to those born in the earliest quoted starting window of 1978 – 2000 as many do, and I’ll ride my borderline millennial status to use “we” throughout. While we have very diverse perspectives, I certainly identify with the studies that say millennials are more inclined to want their jobs, purchases, and investments to have a positive impact on the world. Here are some of the exciting things I already see millennials bringing to investing.

Millennials are Getting Involved in Investing Earlier

Many of us have recognized earlier on that how we spend and invest our money has an impact. Some see this as small, some recognize it as significant, but we’re more likely to have learned something along the way about finance and economics to at least know it’s important and be curious about it. We often question the sometimes traditionally held notion that investing is separate from other aspects of our lives and best handled by professionals without much involvement from us. Many of us are eager to learn about investing and what it can do for us personally and our communities.

I see this curiosity in millennials testing the waters, so to speak, with their money. We’re growing-up with websites like Kiva, Indiegogo, and Kickstarter, allowing us to put small amounts of money toward people and projects we are interested in, and in some cases are our friends’ ventures. That ability to conveniently engage financially is translating to how we invest as well – from choosing a bank, to looking for investment ideas and ultimately to investing. At Calvert Foundation, we see college students starting to invest $20 to $100 in support of issues they care about, and years later those same people investing more when they have more. It will be interesting to see if and how that trend continues.

Overall, I see more millennials thinking about aligning their money with their lives. At various points they are making time to learn about investing. Managing finances and investments has rapidly become more convenient, making it easier to stay up to speed on them, so much so that investing is becoming a more regular part of our lives. I think this holds true even if we don’t consider ourselves “investors” with the investments we’re making.

Millennials are Connecting with Friends and Family About Investing

Investing becomes more convenient in the technological and social sharing revolutions we are now part of. Millennials are more likely to be embracing these technologies, and as such are connected to more people than ever before. We see the networking opportunities leading to fossil fuel divestment campaigns and impact investment clubs at colleges, and more recent graduates looking to break into impact investment as a career path or focus of graduate study. The many connections might not always be the deepest of relationships, but we have significant networks in which to learn from and influence.

Beyond the large networks, one of the most exciting trends I see is millennials talking with their families about investing. This sometimes starts out rocky, but I’ve seen it create deeper connections across generations. More families are now talking about what matters to them individually and as a whole, bringing ideas to the table (literally), and discussing how their financial resources serve not only the financial needs of the family, but also higher callings and legacies they would like to leave.

Much has been said about millennials wanting a higher purpose in their careers, which I see as being similar to the significant number of baby boomers that are now looking to find more purpose in their lives. These opportunities for connecting on financial decisions present opportunities to bring families closer together and get investments more impact-aligned well before wealth transfers happen.

Millennials are Looking for More from Their Financial Advisors

Working with investors and financial advisors, I see millennials looking for relationships with their advisors. No, not necessarily to become good friends, but wanting financial partners that listen, take time to explain opportunities and answer questions, bounce ideas, and going on this financial journey together. In some ways, investors have always wanted this from their advisors, but I see millennials taking this up a notch. Just as we often have an aversion to labels (like “millennials”), we often don’t like off-the-shelf investment strategies. Many of us want to work collaboratively with our advisors to create both a trusting relationship and an investment approach tailored to our specific needs and interests.

Relationship building is important for advisors and their businesses too, especially because only a low percentage of inheritors keep their parents’ financial advisors. Additionally, we millennials have not been overly impressed by the stock market in our lifetime. We are looking for someone that can help us navigate stocks, as well as other options like real assets, which many of us are more interested in. One of the challenges advisors face is that whatever investment recommendations are made, we’re probably going to research them on our own and ask other trusted partners and advisors about what they think until we’re really comfortable with it.

What Does This Mean for Impact Investing

The good news is that the impact investment industry is developing in order to meet the current and upcoming demand from millennials and other investors. More strategies and products are being developed, and access to them is becoming more democratized. For financial professionals who’ve long sought options, not only are more coming, but the significant barriers to entry that impact investments face in gaining access to the financial services industry are more known, and therefore more innovative conversations are taking place on how to overcome them.

For Calvert Foundation, we’ve learned that people are much more inclined to learn about, discuss, and invest in the places and impact themes they are most interested in. A couple of years ago, Calvert Foundation launched its Women Investing in Women Initiative (WIN-WIN) (http://bit.ly/ULQFhm ) because we understood that investing in women was a smart investment for many reasons. We were hoping people would want to invest with a gender lens, and we were amazed at the response: with little fanfare and in a surprisingly short time, more than 800 investors helped us channel $20 million to organizations managed by and serving women around the world. From health clinics and supportive housing in the U.S., to helping more women gain access to clean cook stoves and farming skills around the world, investors were anxious to support women’s economic development. More than 83% of our WIN-WIN investors invested online, and more than 70% of those that have followed the campaign through social media are between the ages of 25-44…much lower in age than our traditional investor base.

From that experience, Calvert Foundation has shifted to focusing on other ways to actively engage investors in supporting community needs in the places they care about. We just helped launch local investment initiatives in Denver and the Twin Cities at www.OursToOwn.org , along with creating a new online investment platform at www.Vested.org  that allows people to invest $20 or more in support of these and other programs. We’ve begun matching our portfolio demand to what investors can support, so sectors like affordable housing, education, small business, and fair trade are available now. Newer initiatives around global health and engaging diaspora communities, along with other cities initiatives, are in the works. These options are also available to investors through their brokerage accounts. Through this work, Calvert Foundation hopes to shed light on the great work being done by local community organizations and bring helpful investment capital to them.

Beyond Calvert Foundation, more options are either here or coming, including options from TriLinc Global and ImpactAssets supporting entrepreneurial activity internationally, and all the crowdfunding opportunities that are opening-up domestically. I can now easily invest online in real estate in my Washington DC community through Fundrise and solar energy projects through multiple platforms, with many more innovative opportunities around the corner. Beyond the products and platforms, organizations like US SIF and the Global Impact Investing Network are creating the education, policies, and overall infrastructure necessary for impact investing to scale.

Changing Investment Conversations and Actions

I see millennials interest in investing and the efforts to democratize impact investing as an important intersection that will change investment conversations and actions. The strength in numbers and dollars from millennials that are more inclined to have a positive impact on the world, and the older generations they are influencing and being influenced by, will hopefully reframe investing to more actively consider the challenges our world faces. I see the newer questions and critiques of traditional approaches from more people, both young and old, as helping investment conversations to evolve to talk about risk, return, value, growth, etc. in more holistic ways that consider the positive and negative impacts of our decisions. We millennials are a diverse bunch and we’re not “saviors” by any stretch of the imagination, but the good news is that many more of us are not waiting to acquire wealth to influence how investing is done.

Article by Justin Conway, the Vice President of Investment Partnerships at Calvert Foundation ( www.calvertfoundation.org ), and President of Calvert Foundation’s wholly owned subsidiary and registered investment advisor, Community Investment Partners. He manages the firm’s financial services and distribution relationships, leads the investor relations and marketing team, and works closely with the investors and financial advisors that are at the forefront of using investment capital for social good.

Justin serves on the Board of US SIF, the membership association for financial professionals engaged in sustainable and responsible investing, as well as numerous other advisory boards and committees in the industry.

Previously Justin managed the Community Investment Program of the Social Investment Forum and Green America, and worked on human rights in both Asia and Central America. He received a Master’s in Applied Economics from Johns Hopkins University and a Bachelor’s in Sociology and Statistics from James Madison University.

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