Financial service providers are failing to connect with millennials, according to research by BNY Mellon and the University of Oxford.
Put together by a team of undergraduates from the Said Business School, the study, The Generation Game: Savings for the New Millenial, looks as the saving priorities, attitudes to retirement planning and expectations around different types of financial institutions across seven key markets – Australia, Brazil, China, Japan, the Netherlands, the UK and the US.
Increased longevity and the erosion of state and employer retirement provision mean millennials will have to save more than their parents and over a longer period. The study also revealed that 49 percent of those surveyed said they did not know how pensions work.
Just 16 percent of millenials surveyed in Japan believe they will be able to access the same sources of retirement income as their parents, compared to 84 percent in Australia.
Further to the problem of millennials not understanding pensions, 84 percent in Brazil are not aware of the tax efficiencies pension savings offer, compared to 42 percent in the Netherlands.
The study revealed that 59 percent have not seen products targeted at their generation and want products that demonstrate clearly that they are being rewarded for tying up their money.
In a surprise result, less than 1 percent of millennials want financial services providers to connect with them through social media. Shayantan Rahman, student lead for the research, explained that participants said financial services providers trying to engage with millennials by using social media was “‘silly’, ‘pally’, or ‘creepy’”.
Janet Smart, undergraduate course director at the Said Business School, said: “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.”
Vincent Pacilio, global insurance industry lead at BNY Mellon, said: “Insurers and other financial services providers need to reach out to millennials in different ways.”
“In the short term, they should identify millennials as a distinct target for marketing activity and find avenues to better equip parents to advice 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.”
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