The largest generational cohort, understanding millennials and their preferences should be a priority. How can financial institutions enhance their appeal?
Encouraging millennials to be innovative within organisations is key. One major pension fund in Australia has a graduate scheme which purposefully ring-fences millennials from legacy businesses, encouraging them to come up with ideas unconstrained by the traditional operating model. This has yielded huge successes, including the development of an industry-leading app that is now seen as a benchmark of excellence. This app is not exclusive to millennials, but has won praise across all age demographics. Compared to traditional product development processes, such innovations often come to fruition more quickly and are deployed in a more cost-effective way.
The move to ESGWhat sort of products should be marketed towards millennials? Strategies tilting towards an environmental, social, governance (ESG) agenda are popular among younger investors, who are looking for positive impact returns. These investors recognise that responsible investing and return generation go hand-in-hand. An increasing number of organisations, including Theam, a specialty asset management subsidiary of BNP Paribas Investment Partners, have recognised this trend, and are launching ETFs that provide investors with exposure to baskets of securities and indices with low-carbon footprints.
A growing recognition of investors and managers alike is that ESG enhances risk management, and supports the ambitions of long-term, sustainable investments, in delivering superior risk-reward outcomes. BNP Paribas Securities Services, the first global custodian to be a UN PRI (Principles for Responsible Investment) signatory, launched a comprehensive ESG Risk Analytics solution in 2016. It was tested with a leading institutional investor - UniSuper - to provide detailed analytics at the company level and promoting a flexible, intuitive understanding of ESG risks in investor portfolios and benchmarks.
UniSuper uses ESG Risk Analytics for identifying risks in a portfolio, as well as, engaging with managers to understand how they are managing their ESG risks. UniSuper feels that this level of ESG integration helps them focus on quality investments, and also drives engagement moving forward. It provides UniSuper with an opportunity to help the company improve its practices, and ultimately become a more sustainable long-term investment.