A significant number of investors under 45 - including those receiving money from inheritance - want their investments to benefit society and not just themselves.
One in eight (12%) people under-45 who expect to receive an inheritance windfall say they intend to gift some of the money to a charity or a cause close to their hearts.
According to Sanlam UK’s ‘The Generation Game’ report some 5.1 million people are likely to receive an inheritance over £50,000. With the average value expected to be £233,000, millions of pounds are expected to be gifted to charity over the next 30 years, says Sanlam UK.
The report also found that this younger generation of investors were embracing other ethically based financial options such as socially responsible investing (SRI) (26%), impact investing (15%) and venture philanthropy (10%). The corresponding figures for the over-55s surveyed were SRI 20%, impacting investing 5% and venture philanthropy 6% respectively.
The findings also revealed that 88% of under-45s believe it is important that their wealth is not invested in something that conflicts with their beliefs, compared to 80% of over-55s.
Summary of the report’s findings:
Top ways in which people think they can put their money to good use for a positive social and environmental impact: | Under 45s | Over 55s |
Venture philanthropy | 10% | 6% |
Socially responsible investing | 26% | 20% |
Impact investing | 15% | 5% |
Putting your pension into an ethical fund | 20% | 16% |
Using shareholding in a company to try to influence its activities | 16% | 12% |
By not investing in a company whose business or conduct I disagree with | 23% | 23% |
By not buying products/services from companies who have a harmful effect on society or the environment | 26% | 28% |
Buying ethically-sourced goods | 27% | 21% |
Giving to Non-governmental organisations or charities that campaign on these issues | 22% | 19% |
Paying tax | 23% | 24% |
Source: Sanlam UK
Carl Drummond, senior wealth planner at Sanlam UK, said: “The findings of our survey highlight a trend that has been much discussed, the fact that younger generations increasingly want to use their wealth for good.
“But it’s not only so-called ‘Generation Impact’ who are attracted to more ethical ways of investing their money, those in the over-55 age group also indicate a strong awareness of how their money is invested – indeed, 28% reported that their wealth could be used for good by not investing in companies whose products or services have a harmful effect on society or the environment.
“This is a challenge for the industry. Defining what is and what isn’t ethical is a minefield but as our report shows, appetite for these types of products and services is not going to go away. As people of all ages become more connected with their money and have greater visibility around how it is invested, those advising them will need to balance how to meet their desired financial returns with their moral ideals.”