Startups Target Millennials With Social-Investing Apps

For millennial investors, making a social impact is a top priority

More than any previous generation, millennials are likely to invest in companies that mesh with their social and political concerns—from clean energy to gender equality to water conservation. Some 77% of high-net-worth millennials currently own or are interested in so-called impact investments, according to a 2018 survey by Bank of America .

Now a wave of startups is rushing to capitalize on the trend by offering the mobile-first generation a host of new financial-tech products that cater to their social-investing preferences.

At the top of the offerings are smartphone applications that allow investors to choose portfolios that have themes representing different causes—often very focused causes, such as companies with ethical practices in their supply chain or a higher share of women in leadership compared with their peers. In some cases, people can also tweak their portfolios easily, dropping an offending stock with just a tap of the screen. And all of the transactions can be done without calling in a broker or adviser, usually for fees that are lower than those pros charge.

hough many of the apps are still getting off the ground, they are seeing rapid growth, and are expected to grow even more as socially conscious, digital-savvy millennials accumulate wealth, adding an expected $11.6 trillion in assets in the U.S. alone over the next decade, according to the Deloitte Center for Financial Services.

“It’s still an emerging discipline, and anything fintechs can do to help people better understand the impact of their investments is likely to be welcomed by the market,” says Tony Gaughan, U.K. head of investment management at Deloitte.