The investment world is fast evolving.  Ten years ago, structured finance and hedge funds were the rage.  Today, hedge funds are increasingly becoming mainstream, along with alternative strategies of private equity and real estate investments, while structured finance, with securitisation and instruments of mortgage-backed securities, has borne a taint of shame with the implosions in the global financial crisis of this decade past.

The GFC has changed the landscape and the mindset.  From regulators in capitals of the world to investors on the street, the attitudes towards financial institutions and financial products are markedly different from before.

The results – firstly, savvy investors are trending towards a greater emphasis of diversification across a full spectrum of asset classes, and the spectrum keeps getting stretched.  In an economic environment of low returns on traditional assets of stocks and bonds, coupled with inflation worries stemmed from prolonged quantitative easing in most key markets, investors continue to seek out new investments that could offer higher returns and lowest correlation.

However, beyond this approach which is still based on the age-old modern portfolio theory of diversification, investors are taking a more holistic look at their wealth management strategies.   As investors get increasingly well-educated and sophisticated, there is a continuing greater expectation for specialist knowledge and expertise that comes through in the financial services available and provided.   With this, there is a demand for higher level of customisation of products and services that meet investors’ unique needs and circumstances.   Investors today have a better idea of what they would like to have or see in their asset portfolio or returns, and many wish to play a more proactive and leading role in structuring investment solutions that appeal to their appetite, rather than just as passive recipients of advice and recommendations.

Yet, what is most exciting and positive is that more investors are looking to apply their investment capital towards social good.   According to the results from a survey conducted by Capgemini and RBC Wealth Asset Management in 2013, as high as 92% of around 4,500 high net worth individuals in 23 countries indicated that having social impact is important to them. For high net worth individuals under 40 years old, more than 75% view this as extremely important.

There is therefore demand, and significant growth potential, for investment and wealth management professionals to rise to meet such needs and challenges.

For example, investment banking giant Morgan Stanley is putting more focus now than ever before on its wealth management division.  The draw of wealth management opportunities has prompted financial institutions to shore up capability and team in the sector.    However, it isn’t an equation of simply transferring people and resources from the sell side to the buy side, as the wealth management team will need to do more than analysing and deciding which stocks or bonds to buy or to recommend to clients.   Such traditional advisory business is already fairly established for some time.  Some may actually be experiencing loss of assets as clients now seek different service experience or wider product offerings from alternative providers or platforms.

Instead, the shift presents two major approaches that should be explored – developing wealth management advisory tools and platform that would offer high net worth individuals and wealth management clients the ability and convenience to proactively engage with and manage their investments and portfolio, and, establishing capability and resources that would assist and provide client investors with the knowledge and means for making social impact with their investment capital.

Once upon a time, not too long ago, social responsibility investing may only take a backseat or invite a ridiculed look.  Today, it comes up more frequently and may increasingly become a key criteria or part of an investment portfolio.

BofA Merrill Lynch has launched a “Green Bond Index”, to track the performance of some US$32.3 billion in value of “green bonds” issued by some 29 quasi-governments and corporates, to-date, that fund climate or environmental sustainability projects.   “Green bonds” have seen multi-fold growth in 2013 and 2014, and is expected to continue growing in number of issuance and types of issuers.   Indices such as this afford investors the means of analysing and tracking the available opportunities and the financial risk-return profile of green investing.

According to Rockefeller Foundation, impact investing will continue to grow in Asia.   Assets-under-management in Asia Pacific are estimated to exceed US$16 trillion by 2020, and impact investing would likely and hopefully be a big part of that.