Punter Southall Wealth
Intergenerational Wealth Transfer: changing investment preferences
One outcome of COVID-19 has been a monumental change in our consumer behaviour, as this, just like so much else of what we do, has moved online. But will this change last over the long term? One key question we’ve been asking ourselves is whether this period has accelerated the growing trend of “conscious” consumers, where climate change, the environment and social issues are as important, possibly even more in many cases, than cost and convenience.
As our consumer preferences change, this also has knock-on effect on the investment industry. As an increasing number of investors are applying their values and world view to their investment portfolios. This means that they will not just be focused on investment returns, but will want to be confident that the companies in which they invest have a good track record in matters such as reducing their carbon footprint, having a positive impact on society and the ethical treatment of their employees.
Generally speaking, many consumers are already making choices that reflect their awareness of the impact of these issues but, importantly, “conscious consumption” is most conspicuous among younger generations.
Over the next decade or so we will see a huge volume of wealth passed on through inheritance. It’s therefore crucial that wealth managers recognise the important role they have to play in tackling the environmental and social challenges facing us today, and support the values and needs of those who stand to benefit from this wealth transfer.
At Punter Southall Wealth we pride ourselves in providing solutions that we believe align closely to the values of these beneficiaries. Our solutions reflect the growing understanding amongst next generation investors that their capital can be used to influence corporate behaviour; to have an ethical impact; and to accelerate the transition from a depletive to a more sustainable economy.
Our solutions have what we call the “dual objective” – matching investors’ requirement for attractive investment returns with their desire for their money to have a positive impact.
In the past, Socially Responsible Investment was exclusively about constraint. Portfolios were designated as Ethical and the investable universe was dramatically reduced through a screening process designed to exclude specific ‘sin’ stocks or sectors. This often meant having to own only investments that the screening allowed, not necessarily what you wanted to own.
Now, however, a proliferation of impact, engagement and sustainability-oriented funds has given us a much more vivid palette with which to paint and affords us the ability to generate performance while benefitting society. We can now place the emphasis on positive inclusion, not negative exclusion. It’s an approach that naturally deselects sectors that don’t have a beneficial impact, while also enabling us to manage risk by building highly diversified portfolios – a much more effective way of helping our clients meet the dual objective than was possible before.
Mike Myers, Head of SRI
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