Save, make, understand money


Financial services failing to connect with younger generation, finds survey

Cherry Reynard
Written By:
Cherry Reynard

UK millennials – those born after 1980 – are twice as likely to turn to their parents for financial advice (48 per cent) than to their bank (24 per cent) or other sources, according to new research by BNY Mellon and the Saïd Business School, University of Oxford.

The study – ‘The Generation Game: Savings for the New Millennial’ – showed the financial services industry is still failing to connect with younger people. 58% of UK millennials believe they have not seen products targeted at people like them.

Millennials want products that demonstrate clearly that they are being rewarded for tying up their money. This is not simply a question of the medium of communication – less than 1 per cent of millennials globally want financial services providers to connect with them through social media.

The study looked at the saving priorities, attitudes to retirement planning, and expectations around different types of financial institutions of millennials across seven key markets – the UK, Australia, Brazil, China, Japan, the Netherlands and the US.

The study found that UK participants save 12 per cent of their income, compared to the average of 24 per cent across all the countries surveyed. 59 per cent of UK millennials expect to have access the same sources of retirement income as their parents, compared to just 16 per cent in Japan and 84 per cent in Australia.

UK millennials expect to retire at 65 – three years before the projected UK retirement age of 68 expected to apply by the mid-2040s – and live to 85 years of age.

“This study of millennials by millennials reveals the disconnect that the financial services industry has with this generation,” said Janet Smart, Undergraduate Course Director at Saïd Business School. “The challenge for insurers is to find new ways to engage millennials, so as to improve their level of financial understanding and build their commitment to retirement planning.”

Shayantan Rahman, studying Economics and Management at Saïd Business School, who is student lead for the research, added: “What struck me is that while millennials are generally comfortable about being targeted by consumer brands through social media, they do not want financial services providers using these channels to contact them. Rather than being the solution for helping insurers engage with millennials, many told us they think it makes them look ‘silly’, ‘pally’ or ‘creepy’.”

The techniques insurers use to engage with baby-boomers do not always work with millennials, so if insurers are serious about connecting with this group, new thinking is needed.

“Insurers and other financial services providers need to reach out to millennials in different ways”, said Paul Traynor, International Insurance Industry Lead at BNY Mellon. “In the short term, insurers should identify millennials as a distinct target for marketing activity and find avenues to better equip parents to advise their children. In the long term insurers need to think of innovative ways of working with policy makers to move away from a single purpose tax-incentivised retirement pot toward a tax-incentivised savings pot that allows for a certain number of lifetime drawdowns.”