The world is undergoing the largest ever intergenerational wealth transfer in history, as baby boomers pass on their wealth to their children.

According to Blackrock, wealth is being passed on from the wealthiest generation ever – those baby boomers who were born around 1946 and 1964 – to the millennials who are presently around 25 to 40 years of age.

In Australia, it’s estimated that millennials would inherit approximately $3.5 trillion over the next two decades. This equates to around $320,000 for each average Australian.

It’s the kind of figure that could change the game for the financial industry, which is now starting to recognise the need to be prepared for not only the wealth transfer, but also new approaches to investment.

Morgan McGuire, Equities Trader at Sydney-head quartered Barclay Pearce Capital (BPC), believes that financial advisors need to accommodate this new breed of investors.

“It’s pretty significant when you look at it in those figures,” McGuire told Stockhead.

“Specifically, the financial industry will need to recognise and understand ESG, and the ethical investment framework that is developing globally and domestically.

“All of that will need to be really factored into the wealth transfer.”

 

A new breed of investors

McGuire also believes the era of rising cryptos and meme stocks that move at a tweet or social media post is well and truly over.

“Elon Musk puts out a tweet, and you see every bull swarming in on a crypto. We’ll probably see less of that going forward,” he said.

The broader stock market has also tanked this year, possibly ending what was the longest bull run in US history.

Since March 2009, the S&P 500 has risen by a massive 320%, but runaway inflation and rising interest rates have recalibrated valuations down by around 17% this year.

But McGuire says this huge bull run has created a new army of investors, one that has changed the investment landscape, perhaps forever.

He argues that the rise in cryptos and the hype involving meme stocks like Gamestop last year (2021) signalled a fundamental shift in the market.

“We saw an increase in market participation from those who may not have considered entering the market, who are now holding positions.”

“This gives way to investment opportunities in traditional markets to a whole new generation that may otherwise have not looked into market participation,” McGuire added.

 

ESG is what they want

Morgan also believes that ethical investment opportunities in companies who have solid ESG frameworks and policies is where the smart money will be in the future.

ESG (or environmental, social, and corporate governance) is an approach to evaluating the extent to which a corporation works on social goals that go beyond the role of existing purely for profits.

It’s also a way for companies to provide a positive contribution as a global citizen.

“There are growing obligations and expectations on companies to adhere to ESG principles, and at present it can be argued that most of the focus is the E in ESG,” McGuire said.

Despite criticisms like greenwashing, ESG is increasingly likely to be an investing approach used by millennials.

A study conducted by Morgan Stanley recently showed that 90% of millennials are interested in sustainable investing and want investment products that match their personal values.

“There’s also a turning point now with the new Labour government,” said McGuire.

“I think there’s a new excitement here in Australia, with the government now going to really focus on ESG, climate change and renewables, as opposed to just the landscape in terms of policies,” McGuire said.

“At Barclay Pearce, we recognise there is a huge shift towards ESG investment, and so we’re also shifting towards that in terms of the businesses that we support – whether it be capital raises or IPOs.”

 

Pre-IPO stock recommendations

McGuire believes that pre-IPO companies could be an area worth investing in for possible outsized returns.

It’s also a way to directly invest in private companies that are aligned with ESG principles.

McGuire notes that for investors, opportunities to access pre-IPO and IPO stocks is best to get guidance and support by going through service providers like Barclay Pearce Capital.

Some of the Pre-IPO & IPO companies that are aimed at ESG and Renewable Energy investments BPC recommends include:

 

Synergen Met

Synergen Met is an Australian based thermal plasma specialist which uses technology to create sustainable solutions to environmental problems.

McGuire says Synergen’s team is made of the best scientific minds with more than 150 years of collective experience working in the global mining, engineering, sustainability and renewable sectors.

 

Infinite Green Energy

Previously known as Infinite Blue Energy based in Perth, Infinite Green Energy (IGE) – is leading the transition to a net-zero emissions economy by developing projects in Australia, Italy, and New Zealand.

The company produces and delivers green hydrogen to domestic and export markets.

McGuire says that renewable energy derived green hydrogen is an emerging resource that will play an important role in decarbonising the world’s economy.

“In the future, hydrogen has significant potential to be utilised in power grids for transport, infrastructure, and industry,” he said.

“The Australian government and industry are currently going in the right direction, and with the right infrastructure, engineering, workforce training and guidance, we’ll see hydrogen becoming a big part of the Australian economy.”

 

H2X

H2X Global is an automotive and power unit company founded on sustainability.

The company is focused on the growing hydrogen fuel cell transport markets, which are emerging in the key regions of China, North America, Europe, North Asia, and Scandinavia.

H2X has established two key operating divisions to focus on the market opportunity of designing and delivering powertrain systems to heavy equipment and stationary power applications.

The company is also developing multiple light equipment vehicles using a proprietary H2X fuel cell and power train system.

These vehicles are set to enter the market in coming years as more hydrogen related transport infrastructure is established.

 

###

This article was developed in collaboration with Barclay Pearce Capital, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Read MoreESG

You might be interested in