The bank that once took deposits from Albert Einstein is keeping its offerings fresh by investing in a two-year old firm pitching social impact investments to millennials.
Ladenburg Thalmann Financial Services, whose lineage stretches back 143 years, is giving undisclosed financial backing to Newday Financial Technologies, owner of platform allowing customers to invest with as little as $5. Miami-based Ladenburg said the backing supports its effort to buy into early-stage companies that can boost its own services, that range from insurance to stock brokering.
Newday, based in San Francisco, is targeting millennials with portfolios based on the U.N.’s sustainable development goals, including ocean health, animal welfare and gender equality.
Ladenburg’s investment comes as social impact funds attract growing pots of money. Environmental, social and governance investing rose 15% to $52 billion during the first half of 2019, according to Fitch Ratings research reported by the Financial Times.
“The price point is low enough that it lends millennials the opportunity to experience the learning curve involved in investing without risking large sums of money,” Solomon Ali, a financing strategist in North Carolina, told Karma.
Millennials are particularly interested in putting their money into investments that will improve the world, not just return a profit. A study of charitable donors conducted by Fidelity Charitable found that 77% of millennials and 72% of Generation X had made some form of social impact investment. That compared to just 30% of baby boomers.
- “Newday is a good investment because its ‘value based’ investment platform is one that is very attractive to millennials who already seek impact scenarios in employment and shopping,” Ali said.
- Some 4,300 advisers across Ladenburg’s independent broker-dealers will have access to the Newday investing platform. “It’s key that there is a great deal of support from Newday and the app must be amazing because that is where all of the interaction will take place,” Ali said. “Newday will be a trusted vehicle for them to channel this new wealth to impact investments,” said Ali.
- Traditional financial services firms are embracing sustainable investing, also known as impact investing. In July, Fidelity Investments and Dynasty Financial Partners were part of a $13 million round of funding in Ethic, an asset manager that uses technology to improve access to sustainable investing.
- Karma Takeaway: As millenials gain more knowledge and wealth, look for more old guard firms like Ladenburg Thalman to be on the hunt for companies like Newday to broaden their customer base. They may land the next Einstein as a customer.