As the world changes around them, what are young people doing about financial products? Much is written about the millennial generation and how (along with Gen Z) they earn and own less than their very fortunate baby boomer parents and grandparents. Some statistics, chosen from a sea of similar numbers and sources, highlight the pressures on people in their 20s and 30s:
- earnings are lower than in 2008,
- average age of a UK first time buyer is 32, 35, 38 (depending who you read) rising to 41 by 2026 apparently
- average age of becoming a mother is 34
- tenants in 2013-4 paid on average 47% of their income on rent
- roughly 40% of millennials have student debt
- millennials are cautious about investing, since the financial crash
Financial pressure from all sides. What are they doing about life insurance, company or stakeholder pensions, investment portfolios – in fact all the things that previous generations could count on for a comfortable retirement. Surely there’s no money left.
The picture most often painted is of a dismal financial future – working longer for a smaller pension, in an uncertain and insecure social and political climate, on a planet that previous generations have all but destroyed.
But as in so many domains they are not giving up, they are doing it differently – uber rather than car ownership, travel/music/experience rather than possessions, crowd sourcing/funding rather than being at the mercy of a bank.
How is this difference going to translate into financial services. We know that many feel more secure with online financial relationships than face to face – online investment companies such as Nutmeg have an average customer age of 32, online companies like Equity Crowdfunding, Crowdcube, Funding Circle and Business Angel investment are all born of the need for alternative, tax efficient and innovative new types of financial services. However, clearly only for those with money … how do the pension and financial services companies deliver for the bulk of the population that doesn’t have thousands to put in riskier alternative ventures.
Crowd funded pensions? Boycotting university to avoid student debt? Invest in their children’s education rather than save for retirement in the hope that their little darlings will bankroll them when older? Go and live off grid in the deepest countryside? or just hope that state provision doesn’t fizzle out?