Millennials, the generation born between 1981 and 1996, are frequently characterized for causing waves in society and differentiating themselves from older generations. With a population of 80 million millennials spanning across the United States, millennials are pathing a non-traditional route when it comes to investing, demonstrating their strong desire to incorporate social change into their personal and professional lives. This demographic is a critical driver to the emergence of impact investing. Bolstered by their imminent transfer of wealth, firms and companies are paying attention.

What is impact investing? Impact investing is a subset of Socially Responsible Investments (SRI), a category of investments that strives to make positive environmental and social impacts. This asset class offers measurable social and/or environmental benefits for the investor while maintaining the potential for attractive returns. Specifically, impact investments prioritize the measurable societal and environmental returns over the financial returns. A set of metrics known as the Impact Reporting and Investment Standards help measure the social, environmental, and financial performance of the investment.

The popularity of impact investments and online investment platforms is growing amongst millennials, and wealth management firms need to adapt to these changing investment behaviors.