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Why think about tomorrow when you can live for today?
Not every young person is enamoured with the term YOLO, judging by straw polls of my friends in recent years, but it is nonetheless readily associated with the younger generation. It’s this prevailing sentiment that makes it so hard to market pensions, savings, insurance and other financial products to young people, who apparently can’t look past the end of their beer glass, let alone towards middle age, or retirement. As for protecting against the loss of income or serious illness? Neither seems such a pernicious threat when youngsters can routinely survive the most biblical of benders.
Yet waves of research, and the financial industry’s own plucky initiatives, suggest the financial industry are sticking with the young demographic. It seems that we are not only accustomed to saving – we positively champion it.
Surprisingly, we are even more diligent than babyboomers, who should know really better given their proclivity to stash away their fortunes in promising assets such as homes.
Firstly, there is a new report from online savings provider GE Capital Direct which found that 18-24 year olds save nearly a third of their income, the highest out of any age group.
They are closely followed by 25-34 year olds who save at least a fifth (22%) of their salary each month. Compare that to so-called Gen-Xers, aged between 45-54 years old, who save a tenth (12%) of their monthly income. However, the research shows that young people are inclined to use their savings for aspirational experiences, even though they are keen to get on the property ladder.
Secondly, I attended an event this week which explored why young people are apathetic about income protection, critical protection and other insurance products which give you a safety net should you get ill or lose your job.
Payment protection insurance has given this type of product a very bad name, but I have to say that the industry’s short-sighted approach to generating more sales has been just as much of a thorn in their side.
Don’t get me wrong – protection can be a thoroughly worthwhile product, particularly if you have dependants. It can be even be worth considering if you’re single and can’t fall back on friends and family should the worst happen.
But I was dismayed to hear that most people, surveyed for the 2014 Protection Syndicate report, said they received zero contact or additional benefits from their insurer since taking out a protection product. When customers did hear from their provider, they reported cold calls from salespeople peddling a new product or pushing for premium renewal. That is just not good enough.
But this applies right across the board, from insurers to banks. Trust in the sector has reached its lowest ever ebb, and it will take a full blown charm offensive to win back consumers. That means offering tangible benefits today, rather than the promise of security tomorrow.
Right now, young people are minded to squirrel their funds away in short term cash accounts rather than place faith in more complicated financial products, with a little set aside for pensions if they get to a more comfortable financial scenario.
The problem with all this is that the financial industry is still geared towards selling a limited range of products, many of them rooted in far-off life stages, and that’s where the connection with young people unravels. We are price-conscious, discerning and aspirational. We recognise the limitations on our ability to live an asset-rich, superficially prosperous life, especially since the downturn took hold. But it does not stop us from trying to retain our dignity, our sense of identity and status, through discerning choices about where we shop, store our money and access our primary sources of information. In other words, we expect a more dynamic, flexible and service-based financial industry.
And we’re just not getting it.
No wonder many of us are adopting the ‘carpe diem’ adage, albeit in a new guise….