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TheStreet Open House

Lower-Net-Worth Investors More Inclined to Make Positive Impact with Portfolio

NEW YORK (MainStreet)--For some investors, making money is equal to making a difference. Nearly half of all investors have become more interested in socially responsible investing over the past five years, according to a Spectrem Group study. And surprisingly, this benevolence is not emanating from the wealthiest of households but is most common among investors with an annual income under $100,000.

The research discovered that 40% of mass affluent investors (with a household net worth between $100,000 and $1 million) said that social responsibility was an important factor in investing, while only 31% of millionaires (with net worth between $1 million and $5 million) said it mattered. The wealthiest investors had the least interest in make-a-difference investing, with only 19% of ultra high net worth (between $5 million and $25 million) investors saying it was important.

And while the desire to provide a positive impact with their portfolios can come with an added expense, a similar study by the New York University Stern School of Business reports that 60% of consumers are actually willing to pay more for an investment product that is believed to have benefits for environmental or social concerns. The research found that consumers are willing to pay an extra 17% on average to buy a product that is believed to have some manner of positive social effect.

The NYU study looked at research from dozens of sources to determine what types of products would appeal to the desire in consumers to be socially responsible. It also compiled information from several sources to determine just how much more a consumer would be willing to pay for that socially responsible product.

"This is good news for marketers and retailers who work with socially responsible products -- particularly nondurable goods like paper towels," said NYU Professor Russ Winer, who headed the research. "Our study shows that retailers can obtain larger price premiums for frequently purchased, non-durable goods that are socially responsible than for durable products."

The study said consumers are more likely to pay a premium price for products that are beneficial to humans, such as companies that provide fair wages or good working conditions to employees, as opposed to those beneficial to animals or the environment.

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