Meeting the Next Generation: Why Sustainability Matters to the Future of Financial Advice

Australia is on the brink of a significant wealth transfer. By 2050, an estimated $3.5 trillion will move from older Australians to younger generations – a shift that promises to reshape the landscape for financial advice.

Positioning an advice practice for this next generation of clients isn’t just about expertise in managing wealth. It’s about offering advice that considers their values. New research shows that younger investors are more likely to care about sustainability and to expect their adviser to understand how to integrate it into a broader financial strategy.

A Changing Investor Profile

Our Sustainable Investing Survey provides a clear picture of the next generation of sustainable investors. The survey shows that sustainable investors are, on average, eight years younger than their non-sustainable peers (45 vs. 53). They’re more likely to be engaged in long-term planning, more willing to ask questions, and more open to advice that considers both financial outcomes and broader societal or environmental impact.

What’s more, this younger cohort of sustainable investors aren’t just investing for the future – they’re inheriting it. With baby boomers projected to be passing on substantial wealth over the next 20-25 years, younger clients seeking financial advice are predicted to become a much larger cohort for advice practices over the next two decades.

The Next Wave Is Already Here

Alongside current sustainable investors is a significant group of "next wave" investors — those who have not yet invested sustainably but plan to. This group is engaged and motivated, but often unsure where to start. Nearly half (43%) of next wave investors say they don't know enough about sustainable investing to take action. 29% say they would make a move if they had guidance from a financial adviser.
Interestingly, these next wave investors are heavily represented in the 50-54 age bracket, where they outnumber non-sustainable investors. This presents a timely opportunity for advisers working with clients approaching retirement and rethinking their investment goals and priorities.

Sustainable Investor Expectations

These younger, sustainability-minded clients aren't just looking for products that align with their values. They want investment strategies that contribute to positive environmental and social outcomes, without compromising on performance.

The survey found that when selecting sustainable investment products, sustainable investors prioritise:

• Long-term performance
• The reputation of the provider
• Ease of access
• Transparency and sustainability ratings
• Fees

Advisers who can help clients understand which products are credible, how sustainability is embedded into the investment strategy, and how performance aligns with objectives are likely to have a competitive advantage with this cohort.

Staying Relevant as Wealth Shifts

Many advice practices are already seeing their client base age. In 2023, 62% of advised clients were over the age of 55, up from 56% in 2020 . Without a deliberate focus on younger clients, firms may find it difficult to sustain growth as older clients begin to pass on assets. Making sustainability a key part of a financial advice offer can serve as a bridge to younger investors. It opens up meaningful conversations about the future, enables advisers to connect on values as well as financial goals, and creates a shared vision for long-term planning.

Practices that build their knowledge and capability in sustainable investing are more likely to retain relationships across generations and continue attracting clients as their attitudes and expectations around investing evolve.

About the Research

The 2024 Sustainable Investing Report was commissioned by Investment Trends. The quantitative online survey was carried out in October 2024. The sample after data cleaning and validation was 1,010 investors.