New Rules for Engagement

New Rules for Engagement

The Generation Game: Savings for the New Millennial

September 2014


The life insurance industry is failing to connect with millennials at a time when they need the industry more than ever.  To gain a deeper understanding of what millennials really think, BNY Mellon commissioned a team of undergraduates from Oxford University's Saïd Business School to survey millennials about their saving priorities, their views on retirement planning, and their expectations of different types of financial institutions. 

Increased longevity and reduced state and employer provision mean millennials – those born after 1980 – will have to save more of their earnings than their parents, and do so over a longer period.  Despite this, the study found that few of this generation are saving for themselves. 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. "It is important for BNY Mellon, as a service provider to many of the world's insurers, to understand the challenges the industry faces. I hope you find this paper to be illuminating and thought-provoking. Particular thanks must go to the youthful band of millennials that made up the Oxford University research team." Paul Traynor, Head of Insurance International, BNY Mellon.

The key findings of the report include:

1. They Ask Mom and Dad for Advice

Millennials in developed countries are far more likely to seek advice on financial planning from their parents than from any other source, perceiving them as trusted and experienced in an unknown world.

'Rank these sources of financial advice, in order of which you would approach first'

hey Ask Mom and Dad for Advice

For millennials in emerging markets, where retirement products haven’t been widely available, their parents are perceived as less useful as they have less experience.

‘Rank these sources of financial advice, in order of which you would approach first’

Source/average ranking

Average ranking

* Data set of responses for Netherlands insufficient in size for inclusion

2. It's a Challenge to Connect the Future to the Present

Persuading people to put away money today to fund a retirement several decades away is arguably the biggest challenge faced by both pension providers and those shaping pensions policy. Research in the field of behavioral finance has demonstrated that human beings are hard-wired to prioritize a benefit they will enjoy in the near future to one in the distant future – the phenomenon known as hyperbolic discounting. Pension policy and marketing needs to find new ways to overcome this tendency.

Our research suggests that a new generation of pension products is needed, operating in conjunction with these existing methods, that can enable millennials to connect the present to the future. Millennials might respond better to a lifetime savings pot structure that offers some form of limited withdrawals or early access to part of the fund.

New types of savings products are essential to establishing the savings culture that will be so important to millennials’ long-term financial wellbeing. We recommend insurers investigate ways pension products can be structured to deliver limited early access to at least part of the funds held within them. For example, access could be linked to funding specific items of expenditure such as clearing student debt or a deposit for a home.

  • 73% of millennials would save more if they were rewarded in some way
  • 51% of millennials would be more inclined to save for the future if their money was not completely locked away
  • 59% of millennials believe they haven’t seen products targeted at people like them

3. There is an Urgent Need for Education

Our research found that around half of millennials do not believe they know how pensions work. This number increases to 61% amongst those under the age of 23. Millennials in Brazil, China and the US stand out as most uncertain about how pensions work, while Australian millennials are most informed.

Additionally, our research also found that millennials do not prioritize retirement saving. As well as being attracted towards spending on things they can enjoy today, they also face other calls on their finances, such as student loans and saving for a deposit to buy a home, that were less challenging for young adults 20 years or more ago.

Saving for retirement is a low priority for millennials

Saving for retirement

4. They are Skeptical of Social Media

While it is still important to have a social media presence, millennials do not want financial institutions to use this as a primary communication channel.

Less than 1% of millennials say they want contact with financial services providers through social media.

What form of contact do you want with financial services providers?

They are Skeptical of Social Media

5. Marketing Messages Need More Impact

The findings from the qualitative research suggest millennials think current marketing strategies adopted by financial services providers fail to hit the mark.

The research indicates that millennials want marketing to them to deliver the information they need in order to understand how they should be saving for their retirement. But they also say advertising campaigns need to be more impactful if they are to succeed.

Millennials understand they are on their own when it comes to funding their retirement – they do not understand why insurers are not prepared to be candid with them. When positioning themselves towards millennials, insurers have to walk a fine line between being perceived as boring whilst appearing credible, reliable and solid. At the same time they need to deliver marketing messages that are sufficiently hard-hitting to break through the media noise surrounding young adults.

New Strategies Required for Insurers

The financial services sector must re-engineer the more traditional approach to reaching new customers. This will involve the design of less complex products, education and resources and sales practices that effectively resonate with millennials’ buying behaviors. The financial services sector also has enormous amounts of data that can be mined to better target individuals with specific interests, demographic groups or far narrower individual profiles. However, as the survey points out, millennials are skeptical of and lack trust in the financial services sector, posing a unique set of challenges for the industry in its ability to design effective products, inform and educate the market and grow.

  • The low level of understanding by millennials of pension systems highlights the growing need for financial education.
  • Insurers should investigate ways pension products can be structured to deliver limited early access to funds and lobby governments to facilitate them.
  • Insurers should do more to explain the benefits of tax relief to millennials by explaining it as ‘free money’. Ongoing tax relief should be positioned as a reward for saving and used as such.
  • Financial institutions should handle social media campaigns with care and should avoid crossing a line of familiarity that millennials will find ‘creepy’.
  • Whilst the shift towards short-term rewards is endemic, financial institutions need to emphasize the long-term benefits of saving and the power of compound returns. The value of commencing pension contributions early, whilst recognizing the existence of other financial strains such as student debt, should be stressed.


Increased longevity and reduced state and employer provision mean millennials – those born after 1980 – will have to save more of their earnings than their parents, and do so over a longer period. Yet, as the findings of our research demonstrate, the techniques used by insurers to engage with baby-boomers do not always work with millennials. If insurers are serious about connecting with millennials, new thinking is needed.

Saïd Business School is one of the world’s leading and most entrepreneurial business schools. An integral part of the University of Oxford, the School embodies the academic rigor and forward thinking that has made Oxford a world leader in education. The School is dedicated to developing a new generation of business leaders and entrepreneurs and conducting research not only into the nature of business, but the connections between business and the wider world.

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