New studies and research
Two studies just published and one private research outline the benefits of professional advisors supporting their clients on their philanthropic journey and in assisting clients with and encouraging them in their ESG/impact investment.
There is a new generation of client base, rapidly growing through the Great Wealth Transfer, driven by millennials, Gen Z, and women of wealth (but not exclusive to them), these clients are demanding a different kind of service from their wealth stewards. For example:
- Fidelity Charitable Research: firms that offer charitable planning to their clients had 6X the median assets of those who do not offer charitable planning, 3X organic growth, and 1.3X new money; as well higher net promotor scores, higher trust levels
- Investing for Global Good A Power for Good 2022 (Camden Wealth Limited) research indicated for older generations there is a growing demand for and satisfaction in impact investing and that investors are seeking better services from wealth advisors.
- The implications of private Philanthropy Impact preliminary research of professional advisors (family offices, private banks, legal and tax services) and millennials, GEN Z, and women of wealth HNW/UHNWI are:
- The world is changing and with it the needs and expectations of wealth holders
- Wealth holders, particularly younger generations, are increasingly seeking to align their wealth with their values. They expect advisors to provide professional support in numerous, increasingly complex areas related to responsible investing and philanthropy
- The professional advisory industry is falling short of the expectations of emerging wealth holders. There are warnings that the on-going wealth transfer could be accompanied by the next generation changing advisors en masse.
- Key obstacles limiting the capacity of professional advisors to meet clients’ new expectations.
- Lack of clear strategy and services. Most advisors to HNWI/UHNWIs interviewed cannot clearly articulate how advice and services related to impact fit with their organisation’s strategy and commercial objectives. Many find it difficult to understand how to define a values-led offering and quantify its commercial value.
- Knowledge and credibility. Most advisors lack the knowledge and credibility to offer strategic advice in areas related to impact. The ‘impact’ industry – whether in relation to philanthropy or investment – is becoming more and more sophisticated and thus requires professionals with experience and technical expertise that is still rare among professional advisors to HNWI/UHWIs.
- Lack of leadership’s commitment. A generational gap also characterises the advisory industry: on the one hand, younger advisors are often more interested in developing professional impact-related services; on the other hand, some report the lack of strategic buy-in from their senior leadership or colleagues. Many of them seem convinced that the current focus on sustainability will fade over time or that it is characteristic of younger clients who will then become more ‘realistic’ as they grow older.
This thinking is having an influence throughout the global economy, with financial regulatory bodies recognising the need for the financial services sector to change their approach to these clients. This is posing a complex problem for many Financial Institutions, particularly those with a large and long-standing traditional client base, often of a certain ‘boomer’ generation. How can they future-proof their firms, whilst also meeting the needs and expectations of their traditional client base?