From profit to purpose: The next generation of investors

How does one invest in wellness and reinvent their quality of life? Tan Siew Meng, HSBC’s head of global private banking (Asia Pacific), has the answer

For many, the pandemic was a life-altering experience that presented an opportunity to rethink priorities and revisit what values matter the most. Younger generations especially, be they millennials or Gen Z, have had to face emotional burdens during the pandemic, combined with high rates of unemployment and interrupted education.

Improving quality of life to counter the negative impact of the pandemic is extremely important to younger generations, with 36 per cent of millennials planning to relocate at some point for a better quality of life. This is evidenced by the rise of the wellness industry, which is forecast to grow at an average rate of 9.9 per cent per year according to the Global Wellness Institute.

But what is wellness? Our own research reinforces and expands upon evidence that wellness is a function of physical, mental, and financial wellbeing, and that getting the balance right is key to enjoying a higher quality of life. Whilst financial health enables physical and mental health, it may be difficult to enjoy financial success without good physical or mental health. 

However, there is also an interesting fourth and fifth dimension at play. As well as improving physical, mental, and financial wellbeing, there are societal and environmental factors associated with quality of life. A survey we conducted found that the pandemic impacted behaviour related to giving back to society and helping the environment, with 23 per cent saying their societal contributions and support had changed, when comparing life pre-COVID-19 to their current lifestyle.

Investing in the wellness asset not just for personal self but also for society, is an emerging priority among the young

Sharing the wealth to enhance health

Investing in the wellness asset not just for personal self but also for society, is an emerging priority among the young. This was prevalent during the pandemic, where we witnessed an outpouring of generosity. Many next-generation entrepreneurs saw this as an opportunity to help change society for the better. For example, new health technology companies were founded by entrepreneurs looking to transform the way healthcare is delivered, with data-led, digital-first models which seek to bring personalised medical care to patients everywhere. With an increasingly ageing population, this type of innovative thinking is essential to ease pressure on healthcare systems and improve patient outcomes.

And this is just one example of the growing investment landscape in MedTech and expansion of provisions in healthcare which have become the norm following the pandemic. Priorities have shifted to creating a longer-lasting, healthier society, enacted by inventive entrepreneurs and businesses that can bring about positive impact. The diverse range of young entrepreneurs who are driving this change within society have a strong commitment to making a difference in the world, influenced by their steadfast values, purpose and ambition.

It is not just startup tech founders that are exploring new approaches to wealth that can help society in truly meaningful and impactful ways. Generational wealth is also playing a huge part and there are a growing number of young, wealthy people whose dedication to pursuing change stretches far beyond one-time donations to good causes. These types of individuals want to be fully embedded in the entire process and be an integral part of achieving social impact, rather than simply donating from the sidelines

Over the next few years, the younger generation will inherit trillions of dollars in wealth from their baby-boomer parents, gifting them significant philanthropic power, which they will look to delegate to worthy causes based on impact and results. The increase in younger generation HNWIs in Asia is also contributing to the surge in philanthropic activity in society, as these individuals are approaching investment in a new light, and leveraging it to create a lasting, positive impact. Not only that, but the younger generations are known for their idealism, inclusivity, and social progressivism which leads to a desire to establish greater equity for all, and a demand for purpose and accountability, opening opportunities for people of diverse and underrepresented backgrounds.

In terms of philanthropic activities and the next generation of entrepreneurs, our own survey of trustee clients globally produced some interesting results: 23 per cent of families said the next generation is actively involved in philanthropy, especially the next generation of second and third generation businesses (29 per cent).

Climate concerns are also a huge motivator for investment, especially in Asia

Investing in the future

It is not just societal issues that the younger generations are investing in. Climate concerns are a huge motivator, in Asia especially, young investors are increasingly looking to allocate capital to address ESG issues as they are given the opportunity to oversee and influence the allocation of capital.

This is another after-effect of the COVID-19 pandemic, which not only established the value of our own and others’ wellness, but also forced many to reassess what the future will look like in the years to come. Throw into the mix the increase in climate-induced disasters and it is a topic that is understandably on young people’s minds. Ethics have shifted and when it comes to investing. It is not just a matter of the highest possible profit, but also how to generate inherent value through investments that align with core beliefs. The next generation of investors are keen to support brands that try to positively impact the world and avoid companies with ESG risks exposure. Not only that, but our forthcoming research shows investing in ESG or other purpose driven products results in stronger mental and physical wellness than those who own traditional or alternative products.

The mindset of this next generation of entrepreneurs is focused on investing time and energy to become a domain expert in an area of interest, and building ecosystems comprising of technologists, researchers, policy advocates, storytellers, and community builders to tackle big challenges. As digital natives, they believe in the power of technology to bring positive change, with little to no reservations about using social media to raise awareness about issues. They will explore ways to accelerate deployment of potential solutions through all levers at their disposal such as their family business, family wealth or philanthropic capital.

The paradigm shift

Clearly, we are observing a major shift in priorities from what will soon become the most influential generation of wealth. This evolution can be harnessed as a tool for creating positive change in society and the environment. And I have to say, this has inspired me in my own life to recalibrate my views, and to consider wellness as an asset we can invest in various ways—for self-care, for others and for the future ahead.

HSBC Global Private Banking