The intergenerational ‘wars’ at super rich families over sustainable investments

New working paper on UHNWIs from the Oxford’s Sustainable Finance Programme

A new working paper from the Sustainable Finance Programme at Oxford University has shed light on the intergenerational ‘wars’ within the families of the super rich when it comes to sustainable investments.

The study – Ultra High-Net-Worth Individuals (UHNWIs), Private Banks, and Sustainable Finance – released by Oxford’s Smith School of Enterprise and the Environment, relates the generational shift on sustainable investments that is taking place within the world of Ultra-High-Net Worth Individuals (UHNWIs) and the so far inadequate response of the private bankers who advise them.

The study says, for example, one “London-based son of a UHNWI, who was an UHNWI himself, told us that he eventually had to stop pushing for sustainable investment in his family trust in order to stay on speaking terms with his father”.

Another, older, UHNWI was quoted as saying: “Our family investment meetings are like small wars. All the young people want us to invest in social and philanthropic causes, while myself and my generation prefer to stick with the conventional portfolio that our banker recommends.

“So far we have only done very limited investment in anything like that. I must say I am surprised our children still speak to us given how mad they get about the investment portfolio!”

That chimes in with a recent finding from Morgan Stanley that ‘millennials’ (those reaching adulthood in the early part of this century) are leading the charge on sustainable investing.

The Oxford research found that those interviewed under 50 years of age had very positive views about investing in sustainable projects and companies, while a majority of those over 60 were often quite opposed to it.Private bankers were seen as providing an objective voice between family disputes; they are analogous, the report says, to investment consultants in the institutional space. But so far they have not generally responded to the challenge of advising their clients to invest sustainably.

The research asserts that the opportunities and barriers to sustainable finance amongst UHNWIs are very poorly understood.

“Our family investment meetings are like small wars.”

The paper was written by Ben Caldecott, Director of the Sustainable Finance Programme at the Smith School, and his colleagues Elizabeth Harnett and Duncan MacDonald-Korth.

It puts the global population of UHNWIs at 212,615 with a combined wealth of $30trn – greater than OECD pension fund assets. UHNWIs are defined as those with assets of more than $30m. The researchers did primary research with both UHNWIs and their private bankers/financial advisers.

The paper was funded by the KR Foundation and the HSBC Climate Change Centre of Excellence.

“This working paper makes a significant contribution to understanding UHNWIs and also to how they may or may not support the growth and development of sustainable finance,” the paper states.