Millennials in Middle East are driving rich parents to invest responsibly - Barclays

Wealthy families now increasing allocations to sustainable assets, says Barclays report

  
Business man using calculator with computer laptop. Image used for illustrative purpose.

Business man using calculator with computer laptop. Image used for illustrative purpose.

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More high-net-worth individuals in the Middle East are increasingly looking to make positive contributions to the world and are now making a shift towards sustainable investing, thanks to the influence of their children, Barclays Private Bank said in a new study.

Sustainable investing, which is investing for both financial and social returns, has been gaining traction in recent years. Investors are no longer buying stocks, bonds or doing business for pure financial gain, they’re also conscious about how their actions or financial choices impact the society as a whole, so they take into account factors like environmental, social and governance (ESG) when making decisions.

A Barclays study found that among the older generations of affluent families in the region, 59 percent said the younger ones, or the millennials in their family, are “leading” them towards this responsible approach. About three in five (58 percent) of high net worth family members in the Middle East also indicated that responsible investing is important to them.

“Our research shows how the younger generations, who have been engaged longer with sustainable investing, are providing a vocal impetus within their families to shift the perspectives of older generations,” said Damian Payiatakis, head of sustainable and impact investing at Barclays Private Bank.

“As well, most of the narrative around sustainable investing focuses on the benefits for your portfolio alongside people and planet. Now, we can see its potential benefits for aligning your family around shared values and supporting

Across all the age groups surveyed, 58 percent agreed that responsible investing is now important to them. This, Barclays said, demonstrates the potential of ESG issues to align with overall wealth objectives across generations.

Generational wealth

Studying the attitudes of different generations within wealthy families is of prime importance, as conflicting views or personal goals can be a barrier to a smooth wealth succession. Barclays estimated that by 2030, the world’s wealthiest are due to transfer $15 trillion of private wealth to their heirs, the next generation of high net worth individuals (HNWI).

However, Barclays noted, family members don’t always find a common ground when it comes to money matters. Older generations may be wary of the risks their children may take, while younger generations can feel misunderstood by their parents or grandparents around how they plan to use the wealth that’s been passed on to them.

“Trust between generations is key to a good wealth transfer, but different risk profiles and aims can be a barrier,” Barclays said.

Positive findings

Barclays’ study showed that while they may have different views towards risk, family members in the region do have a common ground when it comes to ensuring their wealth have social and environmental impact.

“As a result, sustainable investing is now resonating with more high net worth individuals of all ages and generations, uniting families around shared goals of investing responsibly and making financial returns,” it added.

“This has led to increasing family allocations to sustainable assets and is acting as a common ground for the different generations in financial planning, despite competing priorities and different views towards risk,” it said.

The study also found that for around four in five of each of the studied age groups, investing responsibly is important to them to some extent, with 81 percent of under 40-year-olds, 77 percent of 41 to 60-year-olds and 86 percent of over 60-year-olds agreeing.

“This demonstrates that business leaders across the generations are deeply committed to adding value to the societies in which they live,” noted Rahim Daya, head of private banking at Barclays Middle East.

“While differing life outlooks and values may determine discrepancies in risk investment appetites across the generations, it is encouraging to see that impact investing is a movement that resonates with individuals of all ages,” Daya added.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

Cleofe.maceda@refinitiv.com

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© ZAWYA 2020

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