Understanding what lies ahead in the next 30 years is crucial if we are to achieve a vision for a competitive Europe. The changing demands of savers, greater emphasis on sustainability, increased transparency and rapid technological advances should be carefully considered for the industry to remain relevant. For the clearest picture of how we might strengthen Europe in the global economy, it’s worth getting inside the head of a millennial.
By 2030, millennials will make up more than three-quarters of the global workforce. More importantly, they are also poised to receive more than $30 trillion of inheritable wealth, so understanding their behaviours, attitudes and beliefs, and how they differ from their predecessors, is key to how we shape the way investment management functions in the future. Funds that will thrive will be those that invest with a long-term perspective and take into account the financial needs and priorities of a new generation.
You can already sense the change. Just like any other industry, technology has raised the bar for client expectations, and will eventually transform all aspects of investments from risk management to back-office operations. On the consumer side, customers expect 24/7 real-time access through mobile and online channels, and many funds are changing the way they do business to suit millennial preferences.
As well as being tech-savvy, the younger generation is generally regarded as confident, ambitious and climate-conscious. The challenge is not that the idea of investing is overwhelming, it is much more about ethics. Young investors want to make a positive impact through their investment choices and this is increasing demand for sustainable and ethical investing. A recent survey found that younger people – those between 18 and 34 – are significantly more likely than those aged 65 and over to put money in sustainable investments. At the same time as acknowledging the concerns that millennials care about most, such as the environment, asset managers can help realise projects that provide real value to European citizens and provide an alternative form of finance other than banking that is so much needed in today’s world.
Cyprus is taking advantage of these trends, and significant investments have been made into developing technology, as well as vital resources, people and processes, boosted by a fully upgraded regulatory toolkit. Since we also know young people will change jobs more often and view entrepreneurship as a viable career option, the Cyprus Securities and Exchange Commission recently authorised the set-up of one European venture capital fund which is investing in innovative Cypriot start-ups. Elsewhere, the surge in new investment funds has helped to attract multinational companies to establish their headquarters in Cyprus, creating jobs. Considering that assets under management in Cyprus are projected to reach $20 billion in the next five years, the future of this sector looks promising.
This is a pivotal moment for the investment funds industry. There are tremendous opportunities for asset and fund managers to secure growth and help stimulate investment into Europe, working together with policymakers, to the benefit of European citizens and the economy. Just ask a millennial.
George Campanellas is Director General of Invest Cyprus and Vice-President of the Cyprus Investment Funds Association
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