'Phenomenal opportunity' as intergenerational wealth reshapes portfolios
The transfer of intergenerational wealth is likely to see a reshaping of investment portfolios in the future, according to BetaShares.
Speaking to Money Management, chief executive, Alex Vynokur, said portfolios in the hands of millennials would look different to how they had looked traditionally as this generation had different goals and needs.
“There is no doubt portfolios will change, we are already seeing evidence of that and it is starting conversations about how people want to see their money invested.
“Young people are investing in a different way to how their parents did. Previously, people were investing in Telstra or in Woolworths because those were the brands they knew but now we know a much wider range of companies globally and we think about the environment more.
“I am certain investments will change as this wealth transfer takes place. People won’t necessarily be divesting from Australian equities but at the same time, they will be opening up their minds and thinking about globalisation.”
He said the wealth transfer between baby boomers and millennials presented an opportunity for advisers to “get on the front foot” and start conversations with younger clients or children of existing clients.
This was particularly the case for investing responsibly or sustainably, which was a common request by younger investors, and Vynokur said he expected this was a view they would hold throughout their investing life.
“For advisers who may not have younger clients at the moment, we would urge them to look at ESG and how they can include it in portfolios as there is going to be a profound change in who controls the wealth in Australia.
“The wealth handover is going to shape our investment industry over the next decade. This is a phenomenal opportunity for advisers to get on the front foot and not be a passive participant.
“ESG used to be thought of as niche but evidence has shown ESG is here to stay, any investor who is thinking for the long term needs to bear in mind that the climate is changing.”
AUTHOR
Laura Dew
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
