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Young adults remain untapped market for financial advisors
Chicago (May 14, 2008)-Despite an uncertain economy and warnings about future shortfalls in Social Security funding, today's young adults are not stepping up to save for retirement. A recent report from Mintel reveals that over two-thirds (69%) of Generation Y* workers who can participate in a tax-deferred 401k retirement savings plan are not doing so.
"Today's young adults will likely need to rely more on individual savings for retirement than their older counterparts. But so far, they aren't preparing to do so," comments Susan Menke, Senior Analyst at Mintel.
Financial advisors could help Generation Y realize the importance of long-term savings. By encouraging young adults to make small monthly contributions to a retirement account, advisors can help them build a nest egg slowly but surely. "Plus," adds Menke, "focusing on retirement gives advisors an avenue into Gen Y. From there, they can partner with young adults, helping them create a financial plan that gets them through expected and unexpected life events."
However, most financial advisors aren't focused on Generation Y. Mintel found that teens and 20-somethings make up only 5% of financial advisors' client base. "Advisors still primarily target wealthier, older adults," explains Menke. "With less disposable income, Gen Y isn't seen as a lucrative clientele. But financial advisors are missing the opportunity to catch young adults now and keep them as they grow older and richer."
Mintel Comperemedia, which tracks trends in direct marketing, confirms that most direct mail campaigns for investment products are sent to older Americans. In 2007, adults aged 30 and under received only 2% of investment direct mail offers tracked by Mintel Comperemedia. In contrast, adults over age 60 got 41%.
Mintel Comperemedia does show some companies making an effort to target Gen Y. For instance, USAA promotes an IRA with no fees and a low minimum contribution to encourage younger adults to start saving so their money can grow over time. Likewise in direct mail, Bank of America targets tech-savvy youth by promoting an online integrated platform for its brokerage accounts. The bank also highlights its automatic investment plan for added convenience.
*Generation Y was born between 1977 and 1994. They are currently aged 14 to 31 years old and comprise 21% of the US population.
Mintel Comperemedia provides competitive intelligence for businesses looking to advance and improve their direct marketing strategy. Tracking direct marketing (including mail, email and print advertising) targeted at consumers, small businesses and insurance agents, Mintel Comperemedia offers a unique perspective on everything from banking trends to insurance trends to credit card statistics. For more than 38 years, Mintel has provided insight into key worldwide trends, leading the industry for consumer, product and media intelligence.
Joanna Peot
Public Relations Executive
312-628-7946
jpeot@mintel.com