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  • A Spectrem Group White Paper

    Socially Responsible Investing

    1

  • A Spectrem Group White Paper

    Socially Responsible Investing

    2

    This report provides a summary of respondents’ views of new investment opportunities to assist financial institutions in developing these products as well as assisting existing financial advisors in retaining and growing their businesses. Those who participated had between $100K and $25MM net worth, not including primary residence (NIPR).

    The surveys were completed by the person primarily responsible for making the day–to–day financial decisions within the household. In total 3,070 persons responded to the survey.

    Spectrem conducted this survey through an online panel that is generally representative of the affluent investors throughout the United States. However, some age–based weighting of the data was performed to insure a more representative sample.

    Net Worth, NIPR, includes all assets except primary residence, less all liabilities. We examine three distinct segments:

    • Mass Affluent - $100,000 - $999,999 (1,266) • Millionaire - $1,000,000 - $4,999,999 (1,264) • Ultra High Net Worth (UHNW) - $5,000,000 - $25,000,000 (540)

    Five age segments are compared throughout the report:

    • ≤ 35 (92) • 36 - 44 (146) • 45–54 (362) • 55–64 (1,275) • 65 and above (1,196)

    Comparisons of male and females are also included in the report:

    • Males (1,943) • Females (1,127)

    © 2016 Spectrem Group

  • A Spectrem Group White Paper

    Socially Responsible Investing

    3

    Socially responsible investing is the practice of investing in products and services which show or promise a corporation has a desire to have a positive impact on environmental, social and human rights issues. Investing in companies with socially responsible profiles serves to make the investor feel good about what they are doing with their investable funds, and ostensibly encourages corporations to promote their own efforts in socially responsible efforts.

    Socially responsible investing is becoming increasingly popular, although it remains mostly a purview of younger investors and those with lower net worth.

    There are definitely investors who have no interest in socially responsible investing, but advisors need to be prepared to discuss such investments with those investors who want their money to have an impact on the environment or significant social issues.

    © 2016 Spectrem Group

  • A Spectrem Group White Paper

    Socially Responsible Investing

    4

    Socially responsible investing remains a mystery to some investors. Placing their familiarity with socially responsible Investing on a 0-to-100 scale, familiarity came up at 46.75. Investors in the 36-44 age group had the highest rating for their familiarity at 49.17, and the oldest investors (65 and over) listed their familiarity at 46.61.

    © 2016 Spectrem Group

    Very familiar Not at all familiar

    Familiarity With Investment Terms (On a Scale of 0 to 100)

    35.76

    47.42

    43.12

    35.18

    49.17

    39.32

    31.17

    47.74

    32.92

    28.30

    46.27

    31.66

    27.67

    46.61

    29.33

    Impact Investing Socially Responsible Investing Microfinance

    ≤ 35 36-44 45-54 55-64 ≥ 65

    28.94 46.75

    Socially Responsible InvestingImpact Investing

    Microfinance

    By Age

    31.61

  • A Spectrem Group White Paper

    Socially Responsible Investing

    5

    © 2016 Spectrem Group

    Familiarity with socially responsible investing rises as wealth rises. Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, familiarity was at 55.11. Familiarity among Mass Affluent investors with a net worth between $100,000 and $1 million was at 42.24.

    25.66

    42.24

    26.1329.14

    47.69

    32.8036.20

    55.11

    41.64

    Impact Investing Socially Responsible Investing Microfinance

    $100K - $999K $1MM - $4.9MM $5MM - $25MM

    By Wealth

    At the same time, investors under the age of 36 place the significance of socially responsible investing at 51.68 on a 100-point scale, well over the 36 rating which came from investors over the age of 64.

    Male investors report a greater familiarity with socially responsible investing than women, 49.27 to 42.37.

    31.22

    49.27

    33.64

    25.02

    42.37

    28.11

    Impact Investing Socially Responsible Investing Microfinance

    Male Female

    By Gender

    Wealth and age are predictors of knowledge about socially responsible investments.

  • A Spectrem Group White Paper

    Socially Responsible Investing

    6

    Younger investors have a significant portion of their investment portfolio pointed at socially responsible investments. Twenty-seven percent of investors under the age of 36 have at least 25 percent of their portfolio directed at socially responsible firms or products. Among investors over 54, 83 percent have less than 25 percent of their portfolio placed in socially responsible investments.

    47%

    36%

    12% 4% 1% 1%

    0% 1%-24% 25%-49% 50%-74% 75%-99% 100%

    Percentage of Portfolio in Socially Responsible Investments

    39%

    33%

    18%

    7%

    2%

    0%

    42%

    35%

    17%

    5%

    1%

    1%

    48%

    33%

    14%

    4%

    1%

    0%

    49%

    34%

    10%

    5%

    1%

    1%

    44%

    39%

    11%

    4%

    1%

    1%

    0%

    1% - 24%

    25% - 49%

    50% - 74%

    75% - 99%

    100% ≤ 35 36-44 45-54 55-64 ≥ 65

    By Age

  • A Spectrem Group White Paper

    Socially Responsible Investing

    7

    Investors with a smaller net worth have a greater percentage of their portfolio aimed at socially responsible investments. Among Mass Affluent investors, 20 percent have at least 25 percent of their portfolio in socially responsible investments. Among Ultra High Net Worth investors, only 14 have that percentage of their portfolio aimed at socially responsible firms or products.

    © 2016 Spectrem Group

    By Gender

    Percentage of Portfolio in Socially Responsible Investments

    48% 45% 48% 48%

    44%

    33% 38% 37% 36%

    35%

    12% 12%

    10% 10%

    14%

    5% 4% 3% 4% 5%

    2% 1% 1%

    1% 2% 1% 1% 1%

    $100K - $999K $1MM - $4.9MM $5MM - $25MM Male Female

    0% 1% - 24% 25% - 49% 50% - 74% 75% - 99% 100%

    By Wealth

  • A Spectrem Group White Paper

    Socially Responsible Investing

    8

    There are several motivations that would cause an investor to want to place their investments in the hands of companies that are socially responsible. Chief among them is to create a better world for their offspring (62 percent). Fifty-seven percent point to a desire to improve the environment (more true among older investors).

    62% 46% 48%

    57% 41% 7%

    Create a better world for children and grandchildren

    Investing in these companies will cause other companies to embrace social responsibility in their business practices

    Socially responsible investing will create a better world for the less fortunate

    Socially responsible investing will help improve the environment

    Socially responsible investing will penalize and send a message to those companies that create products that are harmful to people

    Other/None of the Above

    Main Interest for Socially Responsible Investing

  • A Spectrem Group White Paper

    Socially Responsible Investing

    9

    Obviously, a majority of investors do not consider socially responsible investing, and they also have several reasons for avoiding that target for investments. A majority say their investments are purely aimed at making a profit and their considerations are entirely financial (moreso males than females).

    57% 32% 10%

    20% 35% 6%

    My investment objectives are purely financial

    I feel most companies claiming “social responsibility” in their corporate behavior is nothing more than public relations.

    I believe social responsibility is not a corporate responsibility

    I believe corporations should do all they can to generate a profit and let individuals use their investment returns for providing social change

    I’ve never given much thought to social responsibility in my investing

    Other/None of the Above

    Reasons for Lack of Interest in Social Responsibility

  • A Spectrem Group White Paper

    Socially Responsible Investing

    10

    54%

    28%

    9% 14%

    39%

    7%

    57%

    32%

    9%

    21%

    34%

    5%

    65%

    39%

    14%

    31% 30%

    8%

    $100K - $999K $1MM - $4.9MM $5MM - $25MM

    61%

    35%

    19% 11%

    35%

    13%

    63%

    34%

    10% 12%

    28%

    9%

    57%

    33%

    10% 14%

    28%

    7%

    55%

    30%

    8%

    19%

    37%

    6%

    59%

    33%

    11%

    24%

    35%

    7%

    My investment objectives are purely

    financial

    I feel most c