November 10, 2015

Generation lost: financial services providers given stark warning over need to engage with millennials

Over 40 percent of millennials surveyed say they receive no financial information from workplace or educational establishment


LONDON, Nov. 10, 2015 /PRNewswire/ -- Financial services providers were given a stark warning about their failure to engage with millennials in a new study by BNY Mellon and a team of students from Cambridge Judge Business School, University of Cambridge.

BNY Mellon, a global leader in investment management and investment services, worked with the Cambridge team to explore millennials' understanding of the financial choices available to them; their educational and product needs; and their attitudes to social finance. The report is entitled Generation Lost: Engaging Millennials with Retirement Saving.

The report surveyed millennials (those born between 1980 and the turn of the century) across six key markets - Australia, Brazil, Japan, the Netherlands, the UK and the US. The researchers engaged with a broad range of millennial populations: in emerging and emerged markets; in countries with a collective approach to retirement and those relying on a unit-linked system; and those with access to compulsory and voluntary pension schemes.

The researchers found that many millennials face a less comfortable retirement than their parents and their grandparents as a result of demographic, political and macro-economic trends. Yet many are unaware of the realities of the future that awaits them, according to the report. Their lack of understanding of financial matters appears to be as much a result of a lack of education and information than any lack of interest.

The survey found that 46 percent of millennials do not receive any information on financial matters through their workplace or educational establishment. Other key findings include:

– Over half (51 percent) of millennials estimate the size of the fund they will need for retirement by taking a "blind guess" rather than basing it on industry data, with a further 39 percent taking an "educated guess";

– Across all respondents, 77 percent want to be told the "stark reality" of their post-retirement finances. However, attitudes vary widely from country to country, only 48 percent of Brazilian millennials want to know the "stark reality", compared to 94 percent of Australians;

– Given the choice, millennials would allocate 42 percent of their portfolio to social finance products. However, across all respondents, 95 percent of millennials feel that pension funds and insurers provide limited, poor or no options for investing in social finance products; 

– Sixty-three percent would save more if their pension allowed multiple lifetime withdrawals.

"High student debt, low job security and low global growth mean millennials face a different set of financial challenges than the baby boomers and Generation X," said Paul Kelly, a graduate from Cambridge Judge Business School and joint-lead researcher for the study. "It is therefore crucial that financial services providers understand how they can empower millennials to save for their retirement." 

The report offers a number of potential avenues which would allow financial services providers such as life insurers, banks and asset managers to reach out to millennials in new ways. "The financial services industry needs to do more to promote financial education by partnering with grassroots financial education providers, engaging with schools and universities, and lobbying national governments for change," said Sadia Cuthbert, head of Business Development at Cambridge Judge Business School.  "Young people need regular engagement through multiple channels if they are to be equipped to deal with the challenges they face and provide for their own retirement."

"Without a new approach, we face a real risk that the millennial generation will become Generation Lost – lost both to the financial services industry and in terms of its own readiness for retirement," adds Paul Traynor, head of Insurance for EMEA, APAC & LatAm at BNY Mellon. "Millennials say they want more meaningful engagement with insurers and other financial services providers and to be told the truth about how poor they may be in retirement if they do not start saving early. They are ready to hear more confrontational, honest and realistic messages about the challenges they face in providing for their retirement." 

"Responsible investment should be more actively marketed to millennials," adds Sandra Carlisle, head of Responsible Investment at Newton Investment Management, a BNY Mellon investment boutique. "Just because millennials have little understanding of responsible investment now, it doesn't mean that they wouldn't invest in this way, given the opportunity. Financial services companies should develop and educate millennials on responsible investments and social finance, and make it easier for them to allocate a percentage of their retirement savings to this segment. An all or nothing approach will put some investors off."

A total of 1,253 millennials were surveyed between July and September 2015. To view the report, please click here. The new study follows on from last year's report, The Generation Game: saving for the new millennial, which provoked debate on four themes: parent power; connecting the future with the present; social media scepticism; and global challenges and local customs.

Notes to editors:

BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Sept. 30, 2015, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

BNY Mellon offers a wide range of social finance products and services that help mainstream investors meet their return/risk goals, while considering the environmental, social and governance (ESG) impact of their investments. Learn more about social finance at BNY Mellon at www.bnymellon.com/socialfinance

Cambridge Judge Business School, University of Cambridge
Cambridge Judge Business School leverages the power of academia for real world impact to transform individuals, organisations and society. Since 1990, Cambridge Judge has forged a reputation as a centre of rigorous thinking and high-impact transformative education, situated within one of the world's most prestigious research universities, and in the heart of the Cambridge Cluster, the most successful technology entrepreneurship cluster in Europe. The School works with every student and partner or client organisation at a deep level, identifying important problems and questions, challenging and coaching people to find answers, and creating new knowledge. www.jbs.cam.ac.uk/

Newton
Newton is a global investment management subsidiary of The Bank of New York Mellon Corporation. With assets under management of $68.4 billion (as at 30 September 2015), which may include assets managed by Newton's officers as dual officers or employees of The Bank of New York Mellon and assets of wrap fee accounts, Newton's group of affiliated companies provides investment products and services to a wide range of clients, including pension plans, endowments and foundations, corporations and (via BNY Mellon) individuals. News and other information about Newton is available at www.newton.co.uk/us-institutional/ and via Twitter: @NewtonIM

This press release is issued by The Bank of New York Mellon to members of the financial press and media.

All information and figures source BNY Mellon unless otherwise stated as of September 30, 2015.

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SOURCE BNY Mellon