More investors in the U.S. want to generate positive social or environmental impacts, as well as financial returns, with their assets, but a study out Wednesday morning by Fidelity Charitable shows that financial advisors haven’t caught up with their client’s wishes.
The Fidelity Charitable survey of 175 financial advisors found only 41% have talked with their clients about impact investing—a missed opportunity, given that 60% of investors surveyed by Fidelity Charitable last year said they had already made an impact investment. Moreover, more than 70% of affluent millennials and Gen-Xers have invested for impact.
While knowledge of impact investing by advisors appears to lag behind their clients, Sarah Gelfand, vice president for social impact programs at Fidelity Charitable, still is encouraged that just over half of the advisors surveyed know what impact investing is. Moreover, 62% of advisors surveyed who have more than $100 million under management believe they know the topic well. Anecdotally, “that’s a big change from 2009,” Gelfand says.
Fidelity Charitable is an independent nonprofit related to, but independent of, Fidelity Investments, with about $26.9 billion in donor-advised fund (DAF) accounts as of June 30, 2018, the latest audited data available.
DAFs are investment vehicles that can be set up by individuals with a tax-deductible, irrevocable grant. Over time, the assets in these vehicles are distributed to qualified charities.
But investors also have the option of directing their DAF assets to impact investments while they remain in the fund, and increasingly, millennial and Gen-X individuals in Fidelity Charitable’s DAF accounts are inclined to do so.
Impact investments in Fidelity Charitable’s DAF accounts rose 16% to $936 million at the end of last year from $806 million a year before. Today, the nonprofit has more than $1 billion in impact investment assets, Gelfand says. The nonprofit defines impact investing broadly to include both public and private investments intended to create a social or environmental good.