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Young money: How millennials engage with wealth managers

From impact investing to technology, young investors’ allocation appetite to how they are engaging with advisers everything is changing. Eric Benedict, head of Morgan Stanley Private Wealth Management, tells CampdenFO some of the major trends he’s spotting among his clients

From impact investing to technology, young investors’ allocation appetite to how they are engaging with advisers everything is changing. Eric Benedict, head of Morgan Stanley Private Wealth Management, tells CampdenFO some of the major trends he’s spotting among his clients

C. What are some of the interesting new areas and themes for younger investors to research and consider investing in?

EB. There have been some notable themes emerging among our younger clients. We are seeing steadily growing interest in impact investments and green investments, and even stronger interest in direct investments, private equity, hedge funds, and other alternatives. Typically, our next gen investors are looking to these alternatives as a supplement to more traditional stock and bond portfolios. Assessing these investments calls for specialised expertise. Younger investors should work closely with their advisers to understand the opportunities and determine whether they are a good fit for their objectives. As they explore a broader range of investment vehicles, it’s important to understand the risks and potential rewards of each, and the roles they play in creating a well-diversified portfolio.

C. Many in the next generation have strong interest in impact investing or investing in green technologies, but little experience. What is the best way to start?

EB. Probably the best way to start is by determining what kind of impact you want to make. Is it enough to simply avoid investing in companies that don’t share your values? Do you want to have exposure to sectors that are aligned with your social goals, or are you looking to make a more specific impact? Once you have established these priorities, you must then identify the opportunities that simultaneously support both your social and investment objectives. In 2012, Morgan Stanley Wealth Management launched the Investing with Impact platform to assist in that effort. Investing with Impact provides a framework for categorising and evaluating the type of societal impact an investment product may be expected to offer. This enables investors to have access to a range of investment vehicles, all of which have been evaluated for their financial integrity and return potential as well as societal impact.

C. What are some of the interesting innovations due to be released to help investors manage their assets online?

EB. Developing our online and mobile capabilities has been one of our top priorities over the past several years. Those efforts have led to the new Morgan Stanley Mobile App, which was launched in the spring. The app supports anytime/anywhere access to a client’s total relationship with Morgan Stanley, both investment management and cash management, through a single interface. We are working towards a tailored online experience, where our clients can receive the most relevant news and research, and ourprivate wealth advisers can deliver highly customised reports. Delivering an optimal solution to our Private Wealth Management clients is critically important. They are accustomed to a high touch service model, and many have substantial assets at multiple institutions. So, we are building in features that support aggregation and collaboration. We are moving towards a model where our digital tools will provide a holistic view of account information for assets held within Morgan Stanley and at other firms and a robust suite of tools to enable effective collaboration between a client’s entire advisory team.

C. What’s the best piece of advice you can give to someone who is about to take over managing his or her family’s wealth?

EB. Understand the weight of the task at hand, but stay calm. Managing significant family wealth is a formidable responsibility, and it can all feel a bit overwhelming at first. Give yourself time to understand how your family’s current wealth management plans are structured and what challenges you are facing. In time, you will want to make adjustments to address your goals and preferences, but there is rarely a need to rush these decisions. Next, surround yourself with advisers you trust. Whether you decide to continue working with your parents advisory team or form one of your own, make sure that you work with attorneys, accountants and private wealth advisers who specialise in the complex challenges facing ultra-high net worth families. Sit down with them to review your tax, trust and estate plan, your investment strategies, and other key aspects of your wealth management plan and don’t hesitate to ask questions about anything you don’t fully understand.

C. Do you think philanthropy has a higher profile these days or are we just seeing a shift in the way different generations engage with philanthropy?

EB. We are seeing some clear changes in approach. The younger generations tend to view philanthropy as a more integrated component of their family’s overall wealth management strategy. Many want their financial investments to have a positive social impact and want their philanthropic investments to produce a measurable return on investment. They tend to place greater demands on the non-profi organisations they support to generate transparent reports that indicate clear progress towards well-defined goals. Many younger philanthropists want a handson experience, where they can see for themselves the impact they are making. Because of this, we are seeing more support of small organisations with donations of time and effort, not just money.

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