Impacting investing may have traditionally been the domain of institutional investors, but it is retail investors and individuals who are now driving growth, according to asset manager State Street Global Advisors (SSGA).
However, the head of SSGA’s SPDR ETFs business in Australia, Meaghan Victor, today told a media briefing in Sydney there is a gap in research on how much SMSF investors focus on this area in their portfolios.
“If I look at the research that’s provided to us that we subscribe to, the research at this stage is about asset allocation,” Victor said.
“It’s very much focused on the asset allocation and the underlying investments, so they’re investing in property or shares or cash or fixed income. So it doesn’t take it to the next level, so what products and what are they actually investing in and is there an objective-based overlay, which doesn’t exist today?”
She added given the growth in discussions around goals-based and objective-based investing, it is an area the firm needs to ask advisers about in their surveys.
“We just don’t have the visibility of what they’re investing in and I think that’s that next level down I was talking about. If they’re buying shares, what shares are they buying and what overlays? If they’re buying a managed fund or an ETF, what are they buying?” she said.
SSGA vice president and head of practice management for the global SPDR business Brie Williams said the firm is seeing significant impact not only from family offices but also individual investors who are looking at how investments can have an impact and thinking about “donating with directions”.
Williams said there are three factors propelling this wave of democratisation.
“There’s product development, which is adding efficiency, simplicity and flexibility, which in turn provides greater access and individualisation,” she said.
“The second area is technology. What technology is doing is it’s providing more transparency, but also in real time allows investors to see their true impact. And then thirdly through social media we have a greater sense of community, not only locally and regionally, but also globally.”
She suggested advisers should think about the alignment of a client’s personal goals with their tax circumstances and risk tolerance, as well as the management of longevity and the impact on broader financial goals, when engaging them in generosity planning.
“Charitable efforts tend to start small and they tend to grow over time. So to maintain that growth as an active process, that discovery process needs to be articulated with a long-term vision in mind,” she said.
“And then the motivations and staying on top of those recognising that they will evolve over time. They’re not static. And especially if this is a shared value in a family, there are multiple voices for the adviser to pay attention to. All voices matter.”