The key for financial advisors in addressing the negative trend towards big business may be found less in correcting their younger client’s misplaced disfavor of capitalism and more in promoting the positive impact of investing on society.
Advisors may be sensing a new trend in the news. New studies show that Millenials or Gen Z are starting to disfavor on the concept of capitalism. How can advisors adjust their marketing, messaging, and communications to avoid the negative feelings about capitalism?
Recent studies show a steep drop in how people view the term capitalism over the last two or three years. In 2016, 56% of self-identified Democrats viewed the term “capitalism” positively. By 2019, that number had dropped 9% to 47%. In its place, those Democrats are viewing “socialism” more favorably. Importantly, younger Americans are showing an event steeper drop with 51% of those aged 18 to 29 favoring socialism (51%) over capitalism (45%). This drop in positivity towards capitalism is steeper than the Democrats by an additional 3 points, and in comparison with the same age group in 2010, a near 20 point drop.
The negativity about capitalism doesn’t necessarily translate into negativity about all business operations, however. Nearly every person surveyed in a recent Gallup poll had a positive view of small businesses and entrepreneurs. But that number dropped as the size of the business increased. Political analysts think this may show a drop in the view of capitalism overall. To be clear, the public favor among the Democrats and younger Americans towards socialism may not be your grandma’s variety of it. As a political science term of art, socialism usually refers to government ownership of manufacturing – which would depress the public markets for trade in stock or stock-based investment products. As used in American political news today, socialism may refer more to an increase in social safety nets and programs used in European countries like Sweden. In other words, folks favor the Swedish kind of socialism, less the Cuban kind. It’s worth noting that even some political candidates, like Bernie Sanders, can’t keep their socialism from their capitalism, as Sanders noted a preference for socialism a la Denmark, which, as defined by Denmark’s prime minister, is a market economy with considerable privatization of shared systems, like railroads and phone service.
If messaging around financial investment usually discusses investment products such as mutual funds, money market accounts, bonds, and other investments that rely on public markets, the disfavor around big business may lose some of your audience. It seems that discussing larger businesses’ performance could be treated with either less interest than in the past. It also stands to reason that the disfavor towards “capitalism” could trickle into a disfavor of investing.
The key for financial advisors may be found less in correcting their younger client’s miscommunicated interest in “socialism” or misplaced disfavor of capitalism and more in promoting the entrepreneurial aspects of investing. For example, since the rise of Socially Responsible Investments and funds that can direct investors towards more socially conscious businesses, more businesses have made socially responsible information available to the public. The trend in investment led to a trend in accountability. That positive impact would gain the interest of an audience interested in more social support.
The messaging method that may work to help sidemstep the negativity towards capitalism may be one of subtraction by addition. That same theory is often promoted by nutritionists like Allison Farrow, and holds that you can more easily decrease less helpful items by increasing the more helpful ones. For example, you’ll be able to cut back on coffee more easily by focusing on drinking more water than on bypassing the Starbucks. The same holds true for messaging and communications. By upping the amount of information and communications about SRI and impact investing, advisors can decrease the messaging about “big business” even though the topics are the same. In other words, by talking about the impact SRI investment has had, advisors decrease how much their clients (and employees) may be hearing about “capitalism.”
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