Kids today…changing the investment world!
We were inspired by a recent “open letter” written by Liesel Pritzker Simmons, a young Millennial who was sick and tired of hearing the oldsters bemoaning her generation’s listless ways. She reminds the financial industry that the great wealth transfer that left baby boomers better off than any previous generation is about to bestow even larger estates on her generation, to the tune of $30 trillion in North America alone, and points to a report from Impact Assets titled, The Millennial Perspective: Understanding Preferences of the New Asset Owners.
But Liesel has her own bugle to sound and we found her core themes to be music to our ears:
- Stop talking about trade-offs. Like many in my generation, I want to do good and do well; I want profit with purpose. We don’t have to settle for one or the other. I know Milton Friedman didn’t think it was possible. Spoiler alert: Milton Friedman is not our idol.
- We want to create value, real value. I want my investments to help improve livelihoods for communities. I want to help improve the land we live on. I want to help reduce waste or carbon emissions. Sustainable, long-term financial return can only be generated by improving social or environmental value, not extracting it.
- We have to broaden our definition of risk. Investors like me are not satisfied with the traditional definition of risk – standard deviation and variability of returns. I think that is way too narrow. Hopefully, we will still be alive in 50 years, and that smog-filled, diabetes-riddled world we are creating sounds awfully expensive to me, regardless of how much my portfolio outperformed its benchmarks in Q3 2014. When we decide not to price in the negative impacts of our investments today, we are creating more risk (that someone will have to pay for) down the road.
And most importantly, let’s finally acknowledge that every investment we make has an impact on the world around us. Let’s make it a good one!
A broader definition of wealth, looking beyond limited views of risk, embracing the effects our choices have on the world—that sounds to us like another resilient investor in the making!