Just Half of Wealth Advisers Say They Understand Impact Investing Well

Title: Impact Investing on the Rise: How Financial Advisers Are Adapting

Organization: Fidelity Charitable

Summary: Wealth advisers’ understanding of impact investing is not keeping up with millennial and Gen X interest in the practice, according to a new study commissioned by Fidelity Charitable.

Just 53 percent of advisers say they have a solid grasp of investing in companies and charities that make positive social or environmental contributions.

Research firm W5 conducted the survey of 250 financial advisers, accountants, and lawyers in March and April. That’s significantly less than the 77 percent of millennials and 72 percent of Gen Xers who say they have made an impact investment, according to a 2018 survey of 425 high-net-worth consumers.

Authors of the new report say there is a “link between philanthropy and impact investing,” citing a previous Fidelity Charitable report in which 79 percent of consumers who had made an impact investment said they believe philanthropy is “very important.”

This overlap could point to philanthropy as an entry point into conversations about impact investing, the authors suggest. More than half of advisers — 56 percent — said they would talk about impact investing with clients who were interested in charitable giving, but this share drops to 40 percent when it comes to clients who are considering multigenerational financial planning.

This could be significant as an estimated $9 trillion is expected to shift from baby boomers to their younger heirs in the next 10 years. Some of this wealth could go into impact investments, as a majority of wealthy millennials have already made at least one such investment Failing to discuss impact investing in conversations about wealth transfer “could be a missed opportunity,” the authors say.

Among the other findings:

• Advisers reported talking about impact investing with an average of just 41 percent of their clients.
• 51 percent of advisers said impact investing is a fad, while 49 percent expect the practice to continue.
• Those who manage higher assets are more likely to understand impact investing; 62 percent of advisers who manage assets of $100 million or more say they understand impact investing well.
• 66 percent of advisers under 40 years old are personally interested in impact investing, compared with 52 percent of those over age 40.

Emily Haynes has covered fundraising on social media, Giving USA’s annual report on giving trends, and how the ALS Association found success with the Ice Bucket Challenge. She recently wrote about wealthy families’ failure to talk with their children about philanthropy. Email Emily or follow her on Twitter .