Invisible Brand

Financial Services marketers seeking to establish a new generation of customers among today's 18 - 34 year-olds may have their ingenuity stretched, but solutions do exist, argues Steve Chipperfield.

They suffer from job insecurity; they’re saddled with student loans of anything up to £20,000; and the first rung of the property ladder seems so far off the ground as to be out of sight (as an earlier generation might have put it.)

In a recent Guardian article Amy Jenkins, who devised BBC2’s This Life, commented that, whereas previous generations had always expected to do better than their parents, this one did not.

The think tank, Reform, goes further and dubs the 18 – 34’s ‘the iPod Generation’ – Insecure, Pressurised, Over-taxed and Debt-ridden.If this is the whole picture, then – apart from credit card companies, banks and loan sharks – who in the financial services arena could see any benefit in building a marketing strategy around such a group?

On a different track…
Columnist Giles Hattersley reacted somewhat contemptuously to Reform’s analysis, asserting that the main reason this generation could not afford property was their preoccupation with “partying, chasing dreams and drifting from career to career”. Citing a 27-year-old earning £22,000, who despaired of ever being able to save a deposit for a home, he pointed out that she had nevertheless spent £30,000 on drink, shoes, CDs and other non-essentials in just five years.

It is certainly true that, in a number of respects, this generation is more indulged than predecessors: they often have their first cars bought for them, and many continue to live at home, for free, well into their twenties.

Hattersley concluded his polemic by proposing an alternative iPod acronym: Infantile Posse of Over-Indulged Drunks.

Getting to grips with reality
My sub-head points not only to the need for reason and balance in the analysis but also to what is required of this target group if they are to establish long-term financial security.

Like it or not, their generation is less likely to catch the wave of property price inflation that gave such a comfortable ride to their parents’ generation. Like it or not, the ‘pensions crisis’ will have evolved from a longer term threat to a full-blown fact of life when their time to retire comes (more likely at 70+ than at 65). In the meantime they’ll feel the pain, through the tax system, of helping to support today’s ageing population through its retirement. And like it or not, student loan repayments will be whipped out of pay packets as soon as they earn £15,000 pa and for some time afterwards.

You can certainly understand our ‘iPods’ becoming so disillusioned they conclude that “it’s impossible to save”. But the fact remains that these very circumstances make long range financial planning for today’s 18 – 34s a greater priority than for preceding generations.

And before they get too down in the mouth over all this, let’s try to cheer them up with some of the plus factors. For a start, those inflated property values will, one day at least, be of benefit to them (ok, not on average until they’re 55) but it’s never too soon to suggest to the folks at home they might consider a little IHT planning.

And they may not have to wait that long, because it’s becoming increasingly common for retiring parents to trade down and set something aside from the proceeds for their children’s property deposits. (Unless, of course, you have the misfortune to have SKIing parents (who prefer Spending the Kids Inheritance.)

More to the point, any economist will tell you that bottom rung of the property
ladder cannot stay out of reach indefinitely – if there is no trade in properties at the ‘entry’ point, there will ultimately be no trade higher up the ladder either. Equilibrium must eventually reassert itself either through falling property values or rising incomes.
As for job insecurity – unemployment in the UK is close to an all time low. Is there really such a problem?

How to relate to a ‘selfish generation’
The description ‘selfish’ is not mine, but another reference to Amy Jenkins’ article on her ‘This Life’ TV series. She notes that ‘old fogey critics’ failed to
see the interest in following the views, activities and mores of such a ‘self-absorbed’ group. (Her response was that she was only interested in people who were interested in themselves.)

These observations offer us a powerful insight into how best we might do business with the iPod generation. Anyone as seriously interested in their own emotional and material well-being as this lot are said to be, is surely going to be highly receptive to overtures on achieving and sustaining such well-being. And that sounds like good news for financial services marketers – with one caveat. ‘This lot’, I would assert, are not going to be interested in financial products per se. They don’t know much about OEICs, equity bonds or term assurances and almost certainly don’t care very much for the sound of them – their early experiences of financial matters have made them somewhat allergic to traditional products and the way they are sold.

Is this a problem?
It needn’t be. On the contrary, it can be the cue to do business in a fresh and effective manner that is highly relevant to a generation reared on the attractions and supposed benefits of therapy and navel-gazing.

Life Coaching is now all the rage in the UK as well as in the States, where it began. ‘Values-based Financial Planning’ (essentially, life coaching plus financial planning custom-built to ensure you can afford your individual life aims) is now all the rage in California and beginning to spawn interest in the UK.

Of course the iPod generation have financial concerns. But it is the composition, not the weight, of these concerns that differentiates them from previous generations. What really matters to marketers is to recognise the significant cultural differences between the generations and to build a strategy that shows understanding of those concerns.

And, for today’s 18 – 34 generation, that means introducing ‘product solutions’ through empathy for the individual, not salesmanship for the masses.

That sounds a lot like Values-based Financial Planning.