UK millennials are twice as likely to turn to their parents for financial advice than banks or financial advisers, and find financial services providers’ social media campaigns ‘creepy’.
Parents are the first port of call for 48 per cent of young adults when it comes to financial advice, double the next most popular source of information, their bank, the preferred source for 24 per cent, according to new research by BNY Mellon and a team of undergraduates from Saïd Business School, University of Oxford.
The study, entitled ‘The Generation Game: Savings for the New Millennial’, suggests reasons why financial services providers such as life insurers, banks and asset managers are failing to connect with millennials. It looks at the saving priorities, attitudes to retirement planning, and expectations around different types of financial institutions of individuals born after 1980 across seven countries – the UK, Australia, Brazil, China, Japan, the Netherlands and the US. The research found that while millennials often have similar attitudes to saving for retirement, there can be huge variations from nation to nation. While 59 per cent of UK millennials expect to access the same sources of retirement income as their parents, just 16 per cent do in Japan, while in Australia the figure is 84 per cent.
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 then live to 85 years of age.
The research found 58 per cent of UK millennials believe they have not seen products targeted at people like them.
Interviewees said they want products that demonstrate clearly that they are being rewarded for tying up their money, yet 54 per cent of UK millennials aren’t aware of the tax efficiencies pension savings offer.
Less than 1 per cent of millennials said they financial services providers to connect with them through social media.
Saïd Business School undergraduate course director Janet Smart says: “This study of millennials by millennials reveals the disconnect that the financial services industry has with this generation.
“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.”
Student lead for the research Shayantan Rahman, who is studying economics and management at Saïd Business School says: “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’.”
BNY Mellon international insurance industry lead Paul Traynor says: “Insurers and other financial services providers need to reach out to millennials in different ways.
“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.”