Offering impact investment services is becoming increasingly important, as the next generation of HNW clients in Asia Pacific not only expect decent returns but also seek to make long-term social change.
Industry participants agree that intergenerational wealth transfer will be a big source of business over the next few years, and wealth managers across the globe are rejuvenating their customer servicing strategies in a bid to remain relevant to the next generation. Networking events, fancy digital propositions, and of course educational seminars targeted at these future clients while they are still in their teens are all a part of it.
Undeniably, how to appeal to the next generation of HNW clients has become the focal point of discussions across the globe. However, one area that is often overlooked is impact investments. These are broadly defined as economic, social, or environmental investments that aim to generate a return. Unlike socially responsible investing, which focuses on the avoidance of damage, impact investment goes a step further and actively seeks to make a positive impact. The concept is not new, having first gained the spotlight in 2007, but it has come a long way since. In fact, we have seen a shift from philanthropy to impact investment as more next-gens who are in charge of family funds are bringing a new set of values to the table.
According to our data, demand for impact investment is particularly pronounced in the Asia Pacific region. Yet it remains a neglected opportunity, as only a few wealth managers across the region offer this type of service. Clearly, building ties with the next generation is about more than adding digital channels but appealing to their investment principles as well. Offering customized impact investment services would provide wealth mangers the opportunity to form a bond with their clients and understand their values and ideals, which represents the basis for a fruitful long-term relationship. And that needs to be the core of the outreach to Asia’s next generation of HNW investors.
By Heike van den Hoevel, Senior Wealth Management Analyst