Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 225

Will millennials change the investment landscape?

Millennials recently became the largest demographic cohort, and now 29% of the Australian population was born between 1980 and 2000. By 2030, they will represent the largest source of income and consumer spending, earning two out of every three dollars in Australia. While much has been written about how the shift in spending patterns will change the retail landscape (online over brick and mortar and experiences over materialism) relatively little research has focused on the changes to investing and asset management. Over the next two decades millennials will not only become the largest earners but are also set to inherit significant wealth, further increasing their importance to the investment industry.

Tech savvy and socially responsible

Much of the focus on the investments of millennials has to date revolved around the growth of passive/ETF investing (according to Commsec, millennials now account for 25% of ETF trades) and the use of ‘robo-advice’. Both have largely been driven by lower minimum investments and perceived low fees, making them attractive entry level propositions. While these trends are likely to continue, millennial investors are also likely to move into more traditional investment products as they build wealth over their lifetimes. Indeed, we are already beginning to see this, with Commsec finding that 50% of all new customers are under 35 years of age while millennial customers have increased by 51% over the last five years and now represent 28% of all active members.

With 87% of millennials believing that business success should be measured by more than just financial performance, one of the largest changes is likely to be the continued growth in responsible, sustainable or ‘impact’ investing. Growth in these strategies is accelerating in Australia, with rise in funds invested in ‘core responsible investments’ from $11.9 billion in 2006 to $64.9 billion in 2016 and reaching 4.5% of total assets, as shown below. Market share remained under 2% for the majority of the last decade, but have surged in the last few years.

Core responsible investment strategies as a percentage of assets under management


Source: RIAA, Responsible Investment Benchmark Report 2017 Australia.

With 85% of millennials interested in or currently using social impact investments, this trend is likely to accelerate further as they make up a larger proportion of the market. Additionally, 85% of millennials now consider investment decisions as a way to express their values. Financial investments will become more aligned with social, political and environmental factors.

At CFSGAM, we recently conducted a survey of our own staff (30% of whom are millennials) on the extent of their individual beliefs on responsible investment. The survey found that:

  • 80% of staff believe considering ESG issues leads to more complete analyses and better-informed investment decisions.
  • 85% supported the view that asset owners should, as part of their duties, consider both the direct and indirect ESG impacts of their investments.
  • 75% believed that the risks and opportunities associated with ESG factors are not being captured in market values.

This tells us that millennials are ahead of the curve when thinking about the impact and implications of responsible investment strategies. Further, they are more likely to favour responsible investment strategies and are also more likely to believe that investing responsibly does not negatively impact performance. Indeed, there is strong evidence that utilising ESG factors improves performance, with a recent BofAML Report finding that they could have helped investors avoid 90% of bankruptcies.

The funds management industry will need to adapt and responsible investing will become increasingly mainstream and less of a niche or nice to have addition to traditional offerings.

 

Harry Moore is Head of Business Development for Australia and New Zealand at Colonial First State Global Asset Management, a sponsor of Cuffelinks.

 

  •   2 November 2017
  • 5
  •      
  •   
5 Comments
Frank
November 02, 2017

Why are people born in 1980 called ‘millennials’?

Chris
November 02, 2017

“set to inherit significant wealth, further increasing their importance to the investment industry.”

Really ? Sorry, but as a Gen-X (born late-70s), I don’t expect or demand that my parents (one of them already being in a nursing home) will have anything to leave me (as one of four kids), in that the only thing they own are some cash, premium bonds and the house (which is nothing special).

They will likely need that money to look after themselves and any aged care requirements.

If they do leave me any money, it’s a good surprise, but I’d go and pay my mortgage off, then put my daughter through school / university, and if there was anything left after that (unlikely), then look at investing it.

Chris
November 02, 2017

And as a side note to the financial planning industry, the time to get involved and interested in millennial clients (and anyone else who isn’t a boomer like themselves, by the way) is BEFORE they grow their wealth, not when you think they might just suddenly inherit a whole lot (which is not a given and probably the exception, rather than the rule).

Most planners I’ve talked to look down their nose and over their bifocals at my modest, sub-million net worth and think it’s not worth bothering about.

Otherwise, you just come across as a gold digger, who suddenly becomes interested in marrying an old (wo)man with a dodgy ticker who has just won the lottery. It’s pretty obvious.

Gen Y
November 04, 2017

Oh Chris, I'm sure they're interested. They'll surely sell you some life insurance...

Rick
November 06, 2017

Wow, "bifocals", seriously? You've just painted the picture of a Bank Manager circa 1972, pretty outdated, cynical stuff. I don't know who you've been talking to, but the advisers I know are all energetic, progressive, and forward looking - they're very happy working with less established clients. In fact, helping younger clients move decisively towards achieving their goals is the part of my job I actually enjoy the most. And btw if an adviser charges a flat, dollar based fee, how much accumulated wealth a client has is irrelevant from an adviser remuneration perspective.

Gen Y: Life insurance and estate planning is a serious part of the wealth building/wealth protection equation, and for an adviser to not discuss it with a client would be negligent in the extreme. Let's not have a shot about 'selling' life insurance?

 

Leave a Comment:

RELATED ARTICLES

Four reasons ESG investing continues to grow

Looking deeper than the home page of roboadvice

Sustainable, responsible or ethical – what’s the difference?

banner

Most viewed in recent weeks

Testamentary trusts post-budget: Estate planning, tax reform and the ‘death tax’ debate

Proposed Budget changes to taxation are casting new uncertainty over testamentary trusts, prompting closer scrutiny of estate planning structures and the real implications of reforms still taking shape.

High quality businesses are on sale

Beneath the dominance of the ASX's largest stocks, much of the market has been left behind. High-quality companies are now trading at levels rarely seen, offering opportunities for investors willing to look deeper.

Meg on SMSFs: The CGT changes don’t impact super but what about Div 296 tax decisions?

New CGT rules could tip the scales in the super vs non-super debate. For those facing the Division 296 tax, the case for withdrawing has gotten more complex. A "comparison rate" tool may help assess decisions.

The strange effect of the 30% minimum capital gains tax

The 30% minimum tax on capital gains sits at the heart of the budget's proposed reforms. Yet the mechanics reveal anomalies that introduce unexpected distortions that raise questions about its design.

Welcome to Firstlinks Edition 667 with weekend update

The downfall of the giant and three lessons for investors.

  • 18 June 2026

Ranking three common retirement strategies

The defining challenge of retirement isn't just about building wealth, it's about converting your lifetime savings into sustainable income. A holistic understanding of different strategies can improve long-term outcomes.

Latest Updates

Planning

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning. 

Lithium's latest drop and what it means for ASX investors

Lithium's latest sell-off has punished ASX miners as prices remain hostage to shifting expectations. The key challenge is navigating a market prone to extreme volatility despite a strong case for the long-term demand outlook.

Investment strategies

CGT reform and fund turnover: who really feels the impact?

The implications of CGT reform are far and wide. As the 50% discount gives way to inflation indexation, turnover and return profiles may become critical drivers of after-tax performance. Some strategies face a far greater hit. 

Superannuation

Super was built for a very different Australia

Our retirement system was built around assumptions that no longer hold. Lower homeownership, longer lifespans and changing expectations are exposing cracks that policymakers and super funds need to address. 

Retirement

Retirement in reality - 4 months in

Many people spend years planning financially for retirement but little time preparing for what comes next. Four months in, here are the surprising lessons i've learnt on finding purpose, social connection and healthy habits. 

Investment strategies

After the Budget, Australia needs its own definition of quality

As tax reforms reshape investment incentives, investors should rethink what quality investing means in the uniquely concentrated Australian market, where traditional frameworks may not translate as effectively.

Datacenters are the new shale oil

Why are tech giants pouring billions into datacentres when the economics look questionable? The most dangerous words in investing may be: "everyone else is doing it". Today's AI boom has striking parallels with the shale bust.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.