Young Lead in Retirement Saving, Sustainable Investing

By ASPPA Net Staff • August 18, 2017 • 0 Comments
“And a little child shall lead them,” one sometimes hears. And in the case of retirement saving and sustainable investing, that passage rings true, according to recent studies.

Ok, not exactly children. But certainly young; the Millennials are, after all, the newest segment of the population pouring into the professional world

Bankrate reports in its Financial Security Index that retirement saving is increasing — and for no segment of the population is that more true than for the Millennials. It says that overall, almost one quarter of U.S. adults say they are saving more for retirement. But the Millennnials outstrip all demographic groups, with 30% making such a report. Further good news: the next youngest group, those in Generation X, are close on their heels.

Bankrate attributes this to a variety of factors, including big-picture developments. It notes that the job market is strengthening, with unemployment at its lowest since the Great Recession. Also, “employers continue to add to their payrolls at a reasonable clip,” according to Bankrate, which adds that the stock market’s performance has helped as well. Auto-enrollment is another factor that has boosted saving rates.

“Working Americans are increasing their retirement savings more and more as the economic recovery continues, whether by saving the same percentage of higher earnings or a higher percentage of the same earnings,” said Bankrate Chief Financial Analyst Greg McBride in a press release.
These factors, says Bankrate, are helping Millennials “get a head start on retirement saving” as well as aiding older generations in buttressing their savings.

Sustainable Investing

For Millennials more than any other demographic group, says Morgan Stanley, those retirement savings are being built at least in part through sustainable investing — individuals customizing investments in a way that supports and helps achieve their social and environmental priorities. It’s a sufficiently strong trend to have caught Morgan Stanley’s attention. “For us at Morgan Stanley, it is abundantly clear that the solutions to global challenges can only achieve the required scale if they can attract a critical mass of private capital. To this end, we’ve established the Morgan Stanley Institute for Sustainable Investing to lead work across our firm, with our clients, and with academic institutions to help mobilize capital to sustainable enterprises, via global markets and the investors who drive them,” says Morgan Stanley Chairman and CEO James Gorman.

In February, Brunswick Insight conducted a 51-question online survey of 1,000 total active investors for Morgan Stanley’s Institute for Sustainable Investing. The survey, which tracked both how investors perceive sustainable investing and whether they are acting on that interest, showed that interest in the practice continues to grow — and especially among Millennnials.

It found that 75% of investors and 86% of Millennials are interested in sustainable investing. This appears to be a consistent showing from the 2015 study, which registered 71% and 84%, respectively. While these numbers are statistically similar, the level of interest among Millennials jumped 10 percentage points from 28% who were “very interested” in 2015 to 38% in 2017.

While the data shows strong interest in sustainable investing, the actual adoption rate still lags behind somewhat, although it is on the upswing. The results show the adoption of sustainability-minded investment decisions rose to 38% for overall investors in 2017, up from 32% in 2015.

A caveat, however — the report notes that despite their interest in sustainable investing, Millennials do evince some caution. Nearly 60% of respondents said they believe sustainable investing “necessarily involves a financial trade-off.” While the numbers are still low, more Millennials in 2017 believe it goes “against an investor’s responsibility to do anything other than maximize profits” than did in 2015; now, 15% strongly agreeing with this statement, up from 8% in the previous survey.