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ESG Newsletter published on July 6, 2017

The Millennial Investor

The classical understanding of investing is rooted in the idea that one allocates capital in a way that will maximize financial returns while minimizing risk. This risk-return optimization exercise has long been the central objective of investing, with some areas of disagreement on the most effective ways to achieve this ultimate outcome.

But times are changing. A growing number of individual and institutional investors are starting to pay attention to extra-financial factors associated with their investments. Whether through negative screens, integration of environmental, social and governance (ESG) factors or impact investing, investors are increasingly looking to align their investments with their values, quite often with the explicit goal of not sacrificing financial returns.

Within this landscape, one investor segment has emerged as particularly significant – millennials. These are individuals born between 1980 and 2000, who came of age at the turn of the millennium. Notably, at 2.3 billion strong globally as of 2015, millennials represent the largest generation in history.1 Millennials are also often characterized as “digital natives” who feel at ease in today’s highly connected world.

From the investment standpoint, millennials are notable for multiple reasons. First, millennials are expected to be on the receiving end of the largest intergenerational transfer of wealth in history, conservatively estimated at $41 trillion between 1998 and 2052.2 Second, millennials are currently transitioning into positions of greater influence, and the ability to understand their interests and priorities is more critical than ever. Third, and of most importance, millennials exhibit unique characteristics as investors that set them apart from prior generations.

So how should we think about the millennial investor? We believe there are three key characteristics that are likely to define the way millennials approach investing.

First, millennials feel highly accountable for making the world around them a better place. Due to their global interconnectedness, millennials are especially aware of and concerned about a number of key social and environmental issues. The 2017 Deloitte Millennial Survey of almost 8,000 millennials across 30 countries finds that 59 percent of millennials feel accountable for protecting the environment, while 53 percent feel accountable for driving social equality.3 Furthermore, other recent studies suggest that millennials generally believe that people like them can and should have an impact in addressing important global issues.

Second, millennials believe that business has a critical role to play in addressing the most pressing social and environmental problems. Deloitte data indicates that 74 percent of millennials think that multinational businesses have the potential to make a positive impact on the world, and 59 percent think that multinationals presently do so. For comparison, just 64 percent believe that charities and NGOs have this potential. It is also notable that millennials’ confidence in the role of business in society has been improving over time. As of 2017, 62 percent agree that business leaders are committed to helping improve society, compared to 53 percent having this belief in 2015.

Third, millennials are inquisitive and believe in transparency. They are nearly twice as likely as the average consumer to check product packaging for its content. Additionally, millennials are nearly twice as likely to purchase from a brand because of the company’s social and/or environmental impact.4 Not surprisingly, some of the most popular brands among millennials include those with a social mission, such as TOMS Shoes and Warby Parker, or those offering sustainable products. The fact that Amazon, an e-commerce platform with a strong millennial customer base, recently made a bid to acquire Whole Foods offers further evidence of this secular trend.

In the aggregate, millennials feel accountable for addressing what they view as the world’s most pressing issues but believe that business plays a critical role in driving positive impact. As such, they tend to favor companies that are transparent and exhibit genuine efforts to do well by doing good.

This mindset makes many millennial investors particularly interested in allocating their capital toward sustainable and impact investing strategies. Their belief in the importance of market-based solutions to the most pressing social and environmental challenges propels them to explore innovative investment solutions where they can achieve meaningful impact. The impact investing community has already seen inspiring leadership by a number of passionate millennial investors, and many more are likely to follow suit in the coming years.

We think this is very good news for the world. With their passion, ingenuity and willingness to challenge the status quo, millennials may be poised to catalyze an unprecedented level of dialogue and collaboration across the private and public sectors in search of ever-more sophisticated solutions that enable them to do well by doing good as employees, consumers, business leaders and investors. Their decisions and preferences will matter across every domain they touch, but perhaps most notably as they start deploying their own assets in new ways.

In doing so, millennials are likely to transform investing from a solely risk-return optimization exercise to a mechanism that seeks to maximize risk-adjusted return while also generating truly meaningful and scalable impact.


[1] World Bank, 2015.
[2] John J. Havens and Paul G. Schervish, “Why the $41 Trillion Wealth Transfer Estimate Is Still Valid: A Review of Challenges & Questions,” The Journal of Gift Planning, Vol. 7, January 2003, pp. 11-15, 47-50.
[3] “Apprehensive Millennials: Seeking Stability and Opportunity in an Uncertain World,” The 2017 Deloitte Millennial Survey.
[4] “Sustainable Signals: The Individual Investor Perspective,” Morgan Stanley, February 2015.


DISCLAIMER: The opinions and views expressed are those of Breckinridge Capital Advisors, Inc. They are current as of the date(s) indicated but are subject to change without notice. Any estimates, targets, and projections are based on Breckinridge research, analysis and assumptions. No assurances can be made that any such estimate, target or projection will be accurate; actual results may differ substantially.

Nothing contained herein should be construed or relied upon as financial, legal or tax advice. All investments involve risks, including the loss of principal. An investor should consult with their financial professional before making any investment decisions.

Some information has been taken directly from unaffiliated third party sources. Breckinridge believes such information is reliable, but does not guarantee its accuracy or completeness.

Any specific securities mentioned are for illustrative and example only. They do not necessarily represent actual investments in any client portfolio.