SHORT-CIRCUITING THE FINANCIAL SERVICES STATUS QUO

WHO’S CAUGHT THE MILLENNIAL BUG?

#MILLENNIALBUG

New entrants have disrupted the status quo, leveraging a powerful combination of enhanced technology, enduring distrust and a new-found voice as platforms like Instagram, Twitter and Facebook become embedded within our social structures.

Against such a backdrop there is one generation that has become synonymous with this transition. It is an audience that needs no introduction, with the “millennial debate” already wide-ranging and pervasive.

And rightly so – millennials account for a quarter of the UK population. They represent the next generation of high-earners and consumers and have felt the winds of economic, social, political, cultural, environmental and technological change more harshly than any other.

We should want to know what makes them tick and for businesses, understanding them is critical for growth.

Yet too often the debate that surrounds this audience is reductive and over-simplified. It is more Snapchat than Shakespeare, built on short-hand assumption rather than an appreciation of the wider plot.

It is from this belief that the concept of our report was born.

We wanted to develop a richer understanding of the beliefs, ambitions and behaviours of this demographic in order to stress test some of the prevailing assumptions and examine the implications for our clients.

As an international communications consultancy, clients come to us for a variety of reasons. From creative brand building campaigns, to issues management, to supporting their corporate activity – our role is broad, varied and fast moving.

To deliver real impact, this work involves navigating a complex stakeholder landscape in which data and insight are a vital compass.

For both established incumbents and industry disruptors, opening a meaningful and authentic dialogue with customers is fundamental to build trust, drive behaviours and shift perceptions. In a world where uncertainty is an ever-present, this has never been more important, and we’re delighted to share our thinking with you.

NICK WOODS HEAD OF F INANCIAL SERVICES

THE COMMUNICATIONS CHALLENGES FACING THE FINANCIAL SERVICES SECTOR ARE VAST. TEN YEARS ON FROM THE GLOBAL FINANCIAL CRISIS AND MANY BUSINESSES ARE STILL TRYING TO REBUILD THEIR REPUTATIONS.

IN THIS REPORT, WE DEFINE THE FOLLOWING AGE GROUPS AS:

MILLENNIALS

GEN X

BABY BOOMERS

Adults aged 18-371

This encompasses early millennials (18-24), mid-millennials (25-31) and late millennials (32-37). There is no one set definition of millennials, though the Oxford dictionary refers to this group as ‘people reaching young adulthood in the early 21st century’.

Adults aged 38-532

Adults aged 54-733

Our consumer research surveyed 2,077 general consumers, including 1,093 who fall into the millennial age bracket, all of whom are either students, employed or currently seeking employment and all of whom are responsible for their own financial decisions.

1 Born between 1980 – 2000, as per Goldman Sachs Global Investment Research2 Born between 1965 – 1980, as per Pew Research Centre definition3 Born between 1945 – 1965, as per YouGov

WHO’S CAUGHT THE MILLENNIAL BUG?SYMPTOMS INCLUDE:

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2

3

Loss of hope that each generation will enjoy better prospects in life than the one before

Belief that traditional ways of doing business and serving customers are incompatible with the wants, needs and expectations of millennials

Obsession with seeing the world through the eyes of 18-37-year-olds

A LITTLE OVER 18 YEARS AGO, THE WORLD WAS COUNTING DOWN TO THE DAWN OF A NEW ERA WITH BAITED BREATH.

Hopes for the 21st century were tempered by fears that a fatal flaw in 20th century coding would cause widespread chaos and disruption at 00:00 on 01/01/2000. Clocks would stop, planes would fall from the sky and the party would be over with a bang.

As it transpired, the millennium bug was a false alarm of epic proportions. But it would be a mistake to assume the status quo was therefore safe. No-one knew it at the time – but something far more powerful and contagious was stirring.

Fast-forward to today and the children of the 1980s and 1990s have now come of age. The life experiences of millennials are already far removed from those of their parents and the generation in-between. Many social norms have been rewritten during their youth, through an era defined by the build-up to and fallout from the 2007/8 financial crisis.

Ten years on, with rock bottom interest rates and sky-high education costs among some of the aftershocks, uncertainty and insecurity cast a shadow across new horizons that have emerged from the proliferation of technology. Among the downbeat conclusions of a 2016 report entitled The Millennial Bug from the Resolution Foundation and Intergenerational Commission were the suggestions that:

• There is widespread pessimism about young people’s lives compared to those of their parents

• Housing, jobs and retirement living standards are the areas of greatest concern

• Housing and jobs market failures are the key causes of this situation, with relatively little blame placed on the behaviour of current or previous generations

The media has certainly caught the millennial bug with a vengeance: use of the word ‘millennial’ has more than doubled in the past two years alonei, with varying degrees of empathy and occasional cynicism. One recurring part of this generation’s narrative is the supposed shift in consumer expectations that it embodies: as millennials find life is more demanding of them, so it is often said they have become more demanding of the businesses and institutions that exist to serve public needs.

What does all this mean for financial services? For better or worse, the sector synonymous with the onset of the financial crisis remains at the heart of people’s daily existence: as they earn, spend, save, invest, buy, borrow or protect the things they cherish most in life. This fundamental question forms the focus of this report, as we set out to consider the impact of the millennial uprising on this cornerstone of consumer life and the UK economy.

Our findings benchmark millennials’ actions and attitudes to financial services against their elders, to assess whether this generation really

is so different in its views. Have the trials of their formative years cultivated a ‘spend now, save later’ approach? Do millennials feel low on opportunity but high on morals and ethics when choosing financial products and services? As digital natives, do they buy into fintech brands – or does the hype look like their generation’s dot.com bubble?

Looking ahead, we explore whether the millennial bug will force financial services firms to reprogram as people demand more from the businesses they transact with. Will this bug bring down the establishment, or prove to be just another millennium myth? And what of older generations’ views and behaviours? Together, baby boomers and Gen X outnumber millennials by more than 10 million peopleii. They too have lived through boom and bust – repeatedly – and their views (not to mention their spending power) cannot be overlooked.

By identifying where the real synergies and divides exist across these generational lines, we uncover valuable insights into how financial services businesses and brands can resonate in this new world order. Our findings have implications for the way they listen and relate to, communicate with and ultimately secure the business of a new breed of 21st century consumer, both now and in the future.

#MILLENNIALBUG

OUR RESEARCH UNCOVERED MANY FASCINATING INSIGHTS INTO MILLENNIALS’ FINANCIAL ASPIRATIONS AND CHALLENGES, PROVIDER PREFERENCES, OPINIONS ON THE FUTURE OF FINANCIAL SERVICES AND THEIR OWN FINANCIAL EDUCATION AND CAPABILITIES.

KEY FINDINGS INCLUDE:

• Financial independence is the most important life milestone cited by over two in five (43%) millennials

• Becoming debt-free is ranked by millennials as more important than buying a first home (37% vs. 31%)

• The majority (57%) of millennials view being in full-time employment as an objective that would make them feel financially successful in the next five years, while 49% point to having a financial safety-net

• A small proportion of millennials are using challenger brands to manage their finances, with 78% preferring high-street brands for daily banking

• Almost two fifths (37%) of millennials believe providers that don’t keep up with technological change will not exist by 2028

• Millennials are more likely to refuse to use a financial services company if they don’t offer customer support and a mobile app – but still value physical branches

• Though 80% say they have good financial knowledge, the majority of millennials are not very confident when it comes to more complex issues like investing

• The majority (85%) of millennials would like to improve their financial knowledge, with financial services providers the most popular choice to provide this education

• Just one in three (33%) millennials are prepared to take risks with their money, though they are more comfortable betting on sports than investing in the stock market

• Social media holds little sway on millennials’ view of financial success with just 8% in agreement

CHAPTER 1PLANNING FOR TOMORROW

OR LIVING FOR TODAY?

1

2

3

Financial independence is the most important life milestone cited by over two in five (43%) millennials

Becoming debt-free is ranked by millennials as more important than buying a first home (37% vs. 31%)

The majority (57%) of millennials view being in full-time employment as an objective that would make them feel financially successful in the next five years, while 49% point to having a financial safety net

MILLENNIALS ONLY THINK ABOUT THE FINANCIAL HERE AND NOW

Our research suggests millennials prioritise becoming financially independent, driving down debt and achieving stable employment.

MILLENNIALS DON’T CARE ABOUT SAVING

Half of millennials associate financial success with having money saved for a rainy day.

MILLENNIALS ARE ALL THE SAME

Life experiences and expectations vary between early, mid- and late millennial age groups, with those in their early 30’s facing a complexity crunch of life-changing financial and personal decisions.

MILLENNIAL MYTHS DEBUNKED

In the first half of 2018 alone separate research has highlighted: • how younger generations failing to manage on their own are increasingly reliant on the ‘Bank of Mum & Dad’iii for financial support • that millennials are splashing out more than ever on weddingsiv • why millennials should be more cost-conscious and drop their love affair with European city breaksv

Millennials are also frequently accused of short-termism, prioritising going on holiday instead of savingvi and failing to take on-board advice about saving for retirementvii. Yet to what extent is this assumption a fair assessment of reality and how much credence should communicators give to it?

THE FINANCIAL BEHAVIOURS OF MILLENNIALS ARE SUBJECT TO INTENSE PUBLIC SCRUTINY, WITH THE ASSUMPTION THAT MILLENNIALS ARE UNABLE TO PLAN FOR THE FUTURE OFTEN AMPLIFIED BY PERCEPTIONS HELD BY OLDER GENERATIONS.

WHEN CONSIDERING WHICH FINANCIAL EVENTS ARE MOST IMPORTANT TO MILLENNIALS, A CLEAR PICTURE EMERGES OF A GENERATION THAT PUTS FINANCIAL HEALTH AHEAD OF COMMITTING TO SPENDING ON FINANCIAL LIFE EVENTS.

Becoming financially independent is the most important life milestone cited by over two in five (43%) millennials, with millennials more likely to view this as important compared to Gen X (37%) and baby boomers (35%). This goal is most important among early millennials aged 18-24 (50%) but remains a prominent concern for late millennials aged 32-37 (43%), suggesting financial independence isn’t always achieved by the time people reach their thirties.

The Bank of England and Financial Conduct Authority (FCA) have been vocal in their concerns over growing levels of household debtviii. It appears many consumers share this concern, as becoming debt-free is an objective shared across all generations, with millennials (37%) only slightly surpassed by Gen X (42%) in viewing it as most important. Millennials’ focus on debt is well placed given FCA data shows adults aged 25-34 have the highest level of over-indebtedness of any age group and the greatest ownership of high-cost loans (alongside 35-44s)ix.When taken together, these findings illustrate that the millennial generation is consciously in tune with the financial challenges they face and is more serious than the stereotype would suggest when it comes to understanding the importance of financial stability.

GIVEN INCREASES IN THE AVERAGE AGE FOR FIRST TIME HOME OWNERSHIP IN THE UK, IT IS UNSURPRISING THAT MILLENNIALS (31%) ARE ALMOST TWICE AS LIKELY AS GEN X (13%) TO LIST BUYING THEIR FIRST HOME AS ONE OF THEIR MOST IMPORTANT LIFE MILESTONES – MAKING THIS THE THIRD MOST IMPORTANT MILESTONE FOR MILLENNIALS OVERALL.

Strikingly however, millennials are almost three times less likely to view being able to retire (11%) as one of their most important life milestones versus buying their first home (31%). Late millennials aged 32-37 do place slightly more importance on this milestone (15%) but retiring remains fairly low on their list of most important life milestones. In an indication of the gap in outlook between generations, Gen X (30%) are significantly more likely than millennials to value the importance of being able to retire, rising to almost half (49%) of baby boomers. People are increasingly retiring later in life, with the state pension age rising to 67 by 2028x.While it is understandable being able to retire is more of a focus for older generations, the extent to which millennials are less engaged in the long-term should be a concern for financial services providers.

However, it is evident from the research that millennials’ short-termism towards retirement planning is not simply down to an inability to consider events far in the future but necessitated by more immediate financial concerns, such as buying a property, which generations before them did not face to the same intensity.Our research highlights that almost six in 10 millennials (57%) are yet to reach the milestone of buying their first home but intend to – almost three times higher than that of Gen X (21%). This includes 37% of late millennials aged 32-37.

MEDIA REPORTS HAVE CONSISTENTLY SUGGESTED THAT MILLENNIALS, WORN DOWN BY THE AFFORDABILITY CHALLENGES OF JOINING THE PROPERTY LADDER, HAVE GIVEN UP COMPLETELY ON SAVING FOR A HOUSE AND ARE INSTEAD INCREASINGLY SPENDING ON HOLIDAYSXI. BUT OUR FINDINGS SUGGEST MILLENNIALS ARE IN FACT THE LEAST LIKELY TO PRIORITISE TRAVELLING – JUST 22% OF MILLENNIALS RANK THIS AS ONE OF THEIR MOST IMPORTANT LIFE MILESTONES COMPARED TO 23% OF GEN X AND A THIRD (33%) OF BABY BOOMERS.

TABLE 1: WHICH LIFE MILESTONES ARE MOST IMPORTANT?(Respondents chose up to 3)

MILESTONE

BECOMING FINANCIALLY INDEPENDENT

BECOMING DEBT FREE

GOING TRAVELLING

BUYING YOUR FIRST HOME

BEING ABLE TO RETIRE

GETTING MARRIED

MY CHILDREN BECOMING FINANCIALLY INDEPENDENT

BUYING YOUR ‘FOREVER’ HOME

HAVING YOUR FIRST CHILD

ALL ADULTS

40%

38%

24%

23%

22%

20%

19%

17%

17%

MILLENNIALS

43%

37%

22%

31%

11%

27%

15%

21%

23%

GEN X

37%

42%

23%

13%

30%

12%

25%

15%

10%

BABY BOOMERS

35%

34%

33%

7%

49%

7%

27%

7%

6%

IN A FURTHER INDICATION OF MILLENNIALS’ NEED TO PLAN FOR THE SHORTER TERM, OUR RESEARCH SHOWS THAT OF THOSE MILLENNIALS WHO HAVE NOT YET REACHED A MILESTONE THEY INTEND TO ACHIEVE, THE OVERWHELMING AGE BRACKET AT WHICH THEY BELIEVE THIS WILL HAPPEN IS IN THEIR 30S.

Our research chimes with broader Office for National Statistics (ONS) data on marriages and births that highlight a longer-term trend of people reaching life events later in their 30sxii. The results show that millennials intend to get married (31), have their first child (32) and buy their first home (33) one after the other in consecutive years – meaning they face the difficult challenge of taking on life’s big events not only over a compressed time period but for the very first time.

While there is no one explanation behind why millennials are reaching key milestones later, this generation grew up during the 2007-8 financial crisis and have therefore faced a number of external economic challenges such as rising house prices and have suffered heavily from falling real wagesxiii. When coupled with increases in tuition fees, and the knock-on impact of further squeezes on disposable income, the idea of settling down younger in life has likely become economically unrealistic for more people.Those in their 30s are therefore a vital target audience for marketers and communicators given the huge number of financial decisions they will likely take in a short period of time. When engaging with millennials, businesses should consider those in their 20s and 30s as nuanced subsets with differences in their immediate financial needs and wants.

MILESTONE

GETTING MARRIED

HAVING YOUR FIRST CHILD

BUYING YOUR FIRST HOME

BECOMING FINANCIALLY INDEPENDENT

GOING TRAVELLING

BUYING YOUR ‘FOREVER’ HOME

BECOMING DEBT FREE

MY CHILDREN BECOMING FINANCIALLY INDEPENDENT

BEING ABLE TO RETIRE

AGE

31

32

33

34

35

38

39

46

54

% INTEND TO BUT NOT YET

REACHED

49%

41%

57%

38%

43%

74%

65%

68%

90%

TABLE 2: AGE (MEAN) AT WHICH MILLENNIALS INTEND TO REACH SPECIFIC MILESTONES NOT YET REACHED

IN A POTENTIAL FURTHER NOD TO THE EXPERIENCE MILLENNIALS HAD IN THE AFTERMATH OF THE FINANCIAL CRISIS AND THE RISE IN PARTICIPATION IN THE ‘GIG ECONOMY’, MILLENNIALS CITE BEING IN FULL-TIME EMPLOYMENT (57%) AS THE MOST POPULAR ACHIEVEMENT IN THE NEXT FIVE YEARS THAT WOULD MAKE THEM FEEL FINANCIALLY SUCCESSFUL. SUCH JOB SECURITY IS LESS IMPORTANT TO GEN X (41%) AND BABY BOOMERS (28%) WITH HAVING MONEY PUT ASIDE FOR A RAINY DAY THE MOST POPULAR AIM FOR BOTH (48% & 51% RESPECTIVELY).

While having money set aside for a rainy day (49%) is also important to millennials it is less of a priority when compared to ensuring job security, highlighting the extent to which a regular income is not something to be taken for granted. Mid-millennials aged 25-31 are most likely to cite having money saved for a rainy day as an achievement that would make them feel financially successful (54%), perhaps as they are starting to look ahead to life events such as getting married and buying a house.

Millennials are also slightly more likely to view paying off non-student debt (32%) as something which would make them feel financially successful in the next five years when compared to Gen X (30%) and baby boomers (19%), highlighting an understanding that high levels of personal debt are unsustainable in the long-term.

TABLE 3: WHAT WOULD MAKE PEOPLE FEEL FINANCIALLY SUCCESSFUL IN THE NEXT FIVE YEARS?

MILESTONE

HAVING MONEY SET ASIDE FOR RAINY DAY

BEING IN FULL TIME EMPLOYMENT

COMPLETE FINANCIAL FREEDOM, E.G. ABLE TO SPEND ON WHATEVER YOU WANT

HOMEOWNER (MORTGAGE PAID OFF)

CREDIT CARD / OTHER NON-STUDENT DEBT PAID OFF

ADEQUATE PENSION POT

HOMEOWNER (WITH A MORTGAGE)

NO LONGER FINANCIALLY DEPENDENT ON FAMILY MEMBERS

ALL ADULTS

49%

48%

44%

29%

29%

28%

18%

17%

MILLENNIALS

49%

57%

46%

25%

32%

22%

26%

25%

GEN X

48%

41%

41%

36%

30%

33%

10%

9%

BABY BOOMERS

51%

28%

43%

29%

19%

47%

3%

2%

The millennial generation is more engaged in the financial challenges they face than stereotypes suggest. Messaging that aims to demonstrate empathy and an understanding of their desire to achieve financial independence and reduce debt levels should resonate effectively.

Short-termism exists: however, this is not due to a failure to care about events far in the future but is instead necessitated by more immediate and legitimate financial concerns such as getting a foot on the property ladder. Despite the need to save for the long-term, when engaging with millennials businesses need to demonstrate an understanding of the competing priorities this audience faces.

The expectations and life experiences of millennials in their 20s and 30s are worlds apart. Instead of treating millennials as one homogenous target audience, businesses should consider those in their 20s and 30s as distinct subsets.

The complexity crunch that millennials face as they enter their early 30s also provides a significant opportunity for financial services firms. During this period millennials are typically making life-changing financial and personal decisions over a short period of time. Businesses must ensure they are positioning themselves as a partner of choice, playing an active role in helping their customers navigate this extremely exciting but daunting period of their financial lives.

“It is a mistake to overly generalise to such a broad segment of the population – or subscribe to unhelpful myths or stereotypes. Millennials are not one group, but they are deeply influenced by their specific life stage (be that moving on from the parental home in their early twenties or beginning a family of their own in their thirties) and their relationship with family and friends. In fact perhaps because young people are living with parents longer, family can play a particularly influential role in their life. Despite stereotypes that millennials are getting into debt for avocado on toast, we find that, having matured through the decade since the financial crisis, millennials have an uneasy relationship with credit. This is tension with the fact many are carrying significant debts following their studies or to simply manage their bills day-to-day – and this debt is a shadow over the financial landscape and aspirations for the future” - Dr Carol McNaughton Nicholls, Director of Truth at Instinctif Partners.

COMMUNICATIONS CONSIDERATIONS

TRUTH*: CHAPTER 1 INSIGHT

*Truth is Instinctif Partners’ Insight & Research practice

CHAPTER 2GENERATION TECH?

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A small proportion of millennials are using challenger brands to manage their finances, with 78% preferring high street brands for daily banking

Almost two fifths (37%) of millennials believe providers that don’t keep up with technological change will not exist by 2028

Millennials are more likely to refuse to use a financial services company if they don’t offer customer support and a mobile app – but still value physical branches

MILLENNIALS PREFER NEW ENTRANTS TO HIGH-STREET FINANCIAL SERVICES BRANDS

The large majority prefer high street brands for all types of financial transactions

MILLENNIALS DON’T VALUE FACE-TO-FACE INTERACTION WITH PROVIDERS AND ONLY USE TECH

Millennials are more likely than any other generation to refuse to use a provider if it doesn’t have a physical branch, despite forecasting the decline of branches over the next 10 years

MILLENNIAL MYTHS DEBUNKED

Consumer experience has been repeatedly revolutionised by the likes of smartphones, big data and improvements in IT security, and innovative minds are already looking ahead to cutting edge tech such as Artificial Intelligence (AI) and blockchain, supported by Government initiatives such as Open Banking. Millennials are commonly tipped as the number one proponents of the new wave of financial products and providers that are centred around technology. This generation is, after all, the largest user of social mediaxiv and the first to have been exposed to widespread use of computer technology from the beginning of their lives, earning them the moniker of ‘digital natives’. Many financial services companies are adapting their business models to cater for cutting edge tech, but just how receptive will different generations be?

THERE ARE FEW TOPICS OF CONVERSATION MORE PREVALENT IN THE FINANCIAL SERVICES SECTOR THAN THE IMPACT OF TECHNOLOGICAL CHANGE.

THE TERM ‘CHALLENGER BRAND’ IN FINANCIAL SERVICES IS ASSOCIATED WITH ORGANISATIONS CREATING A NEW WAY FOR THE CONSUMER TO ENGAGE WITH OR BENEFIT FROM THE SECTOR, OFTEN HARNESSING TECHNOLOGY TO MAKE SERVICES MORE EFFICIENT OR USER-FRIENDLY.

The likes of up-and-coming digital banks such as Monzo, Tandem, Revolut and Starling have all eschewed traditional branch networks, prioritising tech-led solutions that improve the end user’s experience with simple, digital platforms and mobile functionality.Despite the common assumption that millennials are likely to be most receptive to challenger brands given their supposed natural affinity to technology, our research suggests only a small proportion of millennials are using these platforms to manage their finances. In fact, the majority still prefer high street providers like Lloyds, Barclays and HSBC for everything from daily banking (78%) to general insurance (health/income) (59%). There is a slight increase in the proportion of millennials who prefer to use challenger brands for investing small sums of money (8%), rising to 11% of early millennials, though this is still far outweighed by the proportion who would use a well-known or high-street institution for this purpose (55%).

TYPE OF TRANSACTION

DAILY BANKING

MAKING LARGE TRANSACTIONS E.G. PAYING FOR A HOUSE DEPOSIT

BORROWING MONEY

INVESTING SMALL SUMS

INVESTING LARGE SUMS

RECEIVING FINANCIAL ADVICE

INSURING YOUR HOME

INSURING YOUR POSSESSIONS/CAR

INSURING YOURSELF (HEALTH/INCOME)

ALL ADULTS

4%

4%

5%

7%

3%

4%

4%

5%

4%

MILLENNIALS

5%

5%

6%

8%

4%

6%

5%

7%

5%

GEN X

3%

2%

4%

7%

2%

2%

3%

3%

3%

BABY BOOMERS

2%

2%

2%

4%

3%

1%

2%

3%

3%

Millennials don’t just have a choice to make when it comes to traditional or challenger financial services brands. Being responsible, ethical and environmentally friendly is a big concern for millennials, with many choosing to adapt their lifestyles to incorporate these values from the way they eat and drink to the way they shopxv. It would therefore be a logical conclusion to assume that this would be a clear concern for millennials when choosing a financial services provider. However, when it comes to financial services providers, responsible and ethical factors are not just important to millennials but are important behavioural drivers across generations. Nearly half (48%) of all adults say they are more likely to choose financial services companies that demonstrate a commitment to acting responsibly and ethically. Millennials are only slightly more likely to agree with this than Gen X (50% vs. 45%) and baby boomers (49%).

DESPITE THIS WEIGHTING OF PREFERENCE TOWARDS MORE ESTABLISHED INDUSTRY PLAYERS, AMONG THE SMALL PROPORTION OF MILLENNIALS WHO PREFER CHALLENGER BRANDS FOR CERTAIN TYPES OF TRANSACTIONS, THE MOST COMMON REASON IS THEY HAVE A BETTER PRODUCT OFFERING FOR PEOPLE OF THEIR AGE (45%).

This is supported by the view amongst millennials that challenger or digitally focused brands communicate better to their age group and provide better technology to help manage their finances (both 37%).Together these findings suggest that challenger brands would do well to persist in their efforts to reach potential millennial customers, with communications focusing on helping millennials to manage their money via products that benefit from technological innovation.

However, there is also a clear need for challenger brands to continue building trust amongst their potential millennial customer base. Despite the 2007-2008 financial crisis causing many people to question their trust in big-name financial institutions, only 15% of millennials who prefer challenger brands say it is because they are more trustworthy.

LOOKING AHEAD, IT IS HARD TO PICTURE THE FINANCIAL SERVICES SECTOR OF THE FUTURE WITHOUT THE PROLIFERATION OF DIGITAL SOLUTIONS AND OUTDATED PEN AND PAPER METHODS BECOMING A THING OF THE PAST.

As millennials are the next generation of savers, homebuyers, investors, business owners and retirement savers, understanding their expectations of the future of financial services is essential if organisations are to keep pace and continue winning business through optimised operating models. Our research demonstrates almost two fifths (39%) of millennials think most providers will operate completely online in ten years’ time, with just a small number of branches in operation. Interestingly, baby boomers are even more likely to be of this view (44%), perhaps because this age group have been most impacted by the recent spate of high street bank closuresxvi. Crucially, a similar proportion (37%) of millennials believe providers that don’t keep up with technological change will not exist by 2028.

The physical presence of financial institutions is perhaps the most prominent change to the sector that millennials are forecasting over the next 10 years. As consumers revert to online methods of contact with financial providers, the value of face-to-face interaction will decline with just one in five (19%) millennials predicting human contact will remain important to customers. While a similar proportion of Gen X agree (18%), baby boomers are far more likely to believe in the longevity of face-to-face contact (28%), demonstrating the tricky balancing act financial services organisations must play when targeting customers of different generations.

CUSTOMERS WILL BE ABLE TO SWITCH PROVIDERS MORE QUICKLY AND EASILY

MOST PROVIDERS WILL OPERATE COMPLETELY ONLINE WITH ONLY A SMALL NUMBER OF BRANCHES

PROVIDERS THAT DON’T KEEP UP WITH TECHNOLOGICAL CHANGE WILL NO LONGER EXIST

THERE WILL BE FAR MORE PROVIDERS TO CHOOSE FROM

CUSTOMERS WILL BE MORE EVENLY SPREAD BETWEEN TRADITIONAL AND NEWER PROVIDERS E.G. NO MORE ‘BIG FIVE’ BANKS

CUSTOMERS WILL HAVE MORE ACCESS TO THEIR PERSONAL INFORMATION

CUSTOMERS WILL STILL VALUE FACE-TO-FACE INTERACTION WITH THEIR PROVIDER

THE DIVIDING LINE BETWEEN FINANCIAL SERVICES FIRMS AND OTHER ONLINE BUSINESSES E.G. AMAZON, GOOGLE, FACEBOOK, WILL HAVE REDUCED OR DISAPPEARED.

NOT SURE

ALL ADULTS

39%

38%

34%

32%

31%

28%

20%

16%

21%

MILLENNIALS

39%

39%

37%

33%

32%

29%

19%

16%

18%

GEN X

37%

34%

29%

31%

33%

27%

18%

15%

23%

BABY BOOMERS

43%

44%

34%

28%

30%

28%

28%

16%

25%

DESPITE FORECASTING A BRANCHLESS FUTURE, JUST OVER A THIRD (34%) OF MILLENNIALS SAY THEY WOULD REFUSE TO USE A FINANCIAL SERVICES COMPANY IF THEY DIDN’T HAVE A PHYSICAL BRANCH, WITH MILLENNIALS SURPRISINGLY MORE CONCERNED ABOUT THIS THAN GEN X (29%) AND BABY BOOMERS (28%).

Intriguingly, early millennials aged 18-24 are more likely not to use a provider without physical branches than late millennials aged 32-37 (41% vs. 30%), suggesting the need for face-to-face interaction is linked with financial experience and confidence. However, millennials also demand a full-scale service from financial services providers; Instinctif Partner’s research shows a similar proportion of this generation would also refuse to use a provider without a fully functioning mobile app (31%) or online customer support (31%). Given only 8% of baby boomers would not use a financial services provider without a mobile app, and just 21% see online customer support as a necessity, there is a clear generational difference with millennials having higher expectations of a full range of multi-channel delivery options. Again, early millennials are most likely to say they would refuse to use a provider without online customer support (38%) or a fully functional app (35%), with the proportion in agreement declining by the time millennials reach their late thirties.

WOULD REFUSE TO USE A PROVIDER WITHOUT…

TELEPHONE SERVICES/CUSTOMER SUPPORT

PHYSICAL PRESENCE

ONLINE CUSTOMER SUPPORT

FULLY FUNCTIONAL MOBILE APP

SOCIAL MEDIA ACCOUNTS

ALL MILLENNIALS

36%

34%

31%

31%

8%

EARLY MILLENNIALS (18-24)

39%

41%

38%

35%

12%

MID-MILLENNIALS (25-31)

35%

33%

32%

33%

8%

LATE MILLENNIALS (32-37)

34%

30%

26%

27%

5%

The demand among millennials for apps and online support is not surprising given 66% depend heavily on technology when spending and 59% do so when saving money. However, only 36% of this generation depend heavily on technology when borrowing, while even fewer (27%) do so when investing. This is partly due to millennials being less likely to engage in these financial behaviours but could also point to areas where this generation prefer in-person support and advice.

THE HIGH EXPECTATIONS OF MILLENNIALS WHEN IT COMES TO INTERACTING WITH FINANCIAL SERVICES ORGANISATIONS IS CONSISTENT WITH THE HIGH LEVELS OF ENGAGEMENT THEY DEMONSTRATE. MORE THAN A FIFTH (22%) OF MILLENNIALS INTERACT WITH THEIR MAIN BANKING PROVIDER’S SERVICES EVERY DAY, BEATING BOTH GEN X (19%) AND BABY BOOMERS (14%) IN TERMS OF DAILY ENGAGEMENT.

Only 14% of millennials interact with their main banking provider’s services just once a week, compared to 18% of Gen X and more than a quarter (28%) of baby boomers. Given their comparatively higher interest in using their bank’s services every day, it is logical that millennials desire a quick and easy way of doing so, again highlighting the importance of web and app-based solutions.

FREQUENCY OF INTERACTIONS

EVERYDAY

4-6 DAYS A WEEK

2-3 DAYS A WEEK

ONCE A WEEK

ALL ADULTS

20%

16%

18%

17%

MILLENNIALS

22%

18%

19%

14%

GEN X

19%

15%

17%

18%

BABY BOOMERS

14%

10%

18%

28%

Challenger brands should not assume they will easily attract millennial customers just because they have a unique or digitally-driven proposition. There is still some way to go in persuading millennials to move away from traditional high street based providers. For marketers and communicators, tone of voice will be important in reaching a millennial audience, as well as emphasising how their product offering utilises technology to make regular use of their services easy and pain-free.

Conversely, high street or well-established financial services brands will need to adopt an agile approach and keep up with the technological offerings of their newer

competitors. Millennials have unique financial challenges so communicating the availability of tools to help them to manage their finances is crucial.

Financial services providers should also not assume millennials are happy to interact completely online – Instinctif Partner’s research shows this generation expect a full range of interaction options, including face-to-face support. If a physical presence is not part of a provider’s business model, they may wish to emphasise the range and convenience of alternative options available to relieve any concerns and provide customer support.

“Far too many brands have fallen into the trap of trying to create or utilise ‘clever technology’ but have fallen down when approaching technology as an end it itself, rather than a genuine means. As the research clearly shows, millennials are not interested in more tech-forward advancements because the technology itself is a draw, it is because of what it can enable – whether that is more efficient, convenient or empowered access to their finances, or whether digital-first solutions support a more eco-friendly financial lifestyle with a less paper or resource-heavy footprint.” - Anna Younger, Head of Innovation at Instinctif Partners

COMMUNICATIONS CONSIDERATIONS

INNOVATION*: CHAPTER 2 INSIGHT

*The Innovation team is responsible for harnessing the latest in new thinking, digital and technology developments

CHAPTER 3KNOWLEDGE IS KING?

EDUCATION & COMMUNICATION

1

2

3

4

Though 80% say they have good financial knowledge, the majority of millennials are not very confident when it comes to more complex issues like investing

The majority (85%) of millennials would like to improve their financial knowledge, with financial services providers the most popular choice to provide this education

Just one in three (33%) millennials are prepared to take risks with their money, though they are more comfortable betting on sports than investing in the stock market

Social media holds little sway on millennials’ view of financial success with just 8% in agreement

MILLENNIALS ARE NOT INTERESTED IN LEARNING ABOUT THEIR FINANCES

85% of 18-37s are interested in improving their financial knowledge, making this the generation most open to financial education.

MILLENNIALS ARE HAPPY TO ENGAGE IN RISKY FINANCIAL BEHAVIOUR

Millennials are risk adverse when it comes to their finances, though they are happier to take chances with small sums of money.

MILLENNIALS ARE HEAVILY INFLUENCED BY CELEBRITY FINANCIAL SUCCESS

Life experiences and expectations vary between early, mid- and late millennial age groups, with those in their early 30’s facing a complexity crunch of life-changing financial and personal decisions.

MILLENNIAL MYTHS DEBUNKED

HOW MUCH KNOWLEDGE WE HAVE DETERMINES HOW CONFIDENT WE ARE TO INTERACT WITH FINANCIAL SERVICES AND MAKE SOME OF THE BIGGEST DECISIONS WE ARE EXPECTED TO FACE IN LIFE, FROM BUYING A HOUSE TO SAVING FOR A PENSION. BUT DOES WHAT MILLENNIALS CLAIM TO KNOW MATCH HOW THEY ACTUALLY BEHAVE?

Four in five (80%) millennials claim to have good financial knowledge and many are confident they are well-equipped to undertake a range of financial activities in the future from switching banking provider (83%) to buying a house (71%).Millennials’ confidence dips slightly compared to other generations when tasked with changing mortgage provider (55% vs. 67% of Gen X and 71% of baby boomers) or completing a self-employed tax return (47% vs. 54% and 63%), perhaps unsurprisingly as millennials are less likely to have been exposed to these kinds of financial tasks before. However, they are no less confident than others when it comes to saving money in a stocks and shares ISA (55% vs. 54% of all adults) and are slightly more confident they could invest in alternative forms of investment such as peer-to-peer and cryptocurrencies (28% vs. 22% of Gen X and 21% of baby boomers), though it is clear financial confidence dips when faced with more complex financial tasks.

IS MILLENNIALS’ CONFIDENCE IN SAVING FOR RETIREMENT MISPLACED?

Though 64% of millennials are confident in their ability to save for retirement, almost half (44%) say they do not have a pension, vs. 30% of Gen X and 27% of baby boomers. Given the introduction of auto-enrolment, it is likely that most employed people are now enrolled in a workplace pension, so this perception is likely to be partly due to poor financial knowledge. A minority will not have a pension because they are unemployed, do not qualify for a workplace pension or have opted out.

Overall, more than half (56%) of UK adults who say they have bad financial knowledge think they don’t have a pension, with this falling to 37% of those with good financial knowledge.

PERCENTAGE WHO WOULD BE CONFIDENT TO:

SWITCH BANKING PROVIDER

BUY A HOUSE

SAVE ENOUGH MONEY TO BE ABLE TO RETIRE

CHANGE MORTGAGE PROVIDER

SAVE MONEY INTO A STOCKS AND SHARES ISA

CHOOSE MY OWN PENSION INVESTMENTS

SUBMIT A SELF-EMPLOYED TAX RETURN

RUN MY OWN BUSINESS

INVEST IN TRADITIONAL INVESTMENTS E.G. STOCKS AND BONDS

INVEST IN ALTERNATIVE INVESTMENTS E.G. PEER-TO-PEER LENDERS, CRYPTOCURRENCIES

ALL ADULTS

83%

73%

64%

61%

54%

54%

51%

47%

40%

25%

MILLENNIALS

83%

71%

64%

55%

55%

53%

47%

47%

39%

28%

GEN X

83%

73%

63%

67%

53%

52%

54%

47%

40%

22%

BABY BOOMERS

86%

82%

68%

71%

57%

57%

63%

47%

43%

21%

DESPITE DESCRIBING THEMSELVES AS KNOWLEDGEABLE, MILLENNIALS DON’T WANT TO TAKE RISKS WHEN IT COMES TO THEIR FINANCES.

In fact, this is the area of their lives listed in which they are least willing to take risks, with only a third (33%) of millennials prepared to do so compared to 43% who are willing to take risks in their relationships and over half (57%) who are willing to do so at work. Almost three quarters of millennials (73%) would take risks in their free time (for example, by playing contact or extreme sports), notably higher than the 60% of Gen X and 42% of baby boomers who would do the same, suggesting millennial’s risk adverse approach to their finances is not necessarily replicated in other areas of their lives.

For millennials, the most popular view on taking risks with finances is “it’s fine as long as you only risk a small amount of money” (37%), a stance which is less popular among Gen X (28%) and baby boomers (29%). This is followed by “I would only risk money I wouldn’t mind losing” (32%) and “I don’t have enough money to take risks with” (31%). Despite the many financial challenges facing millennials, not having enough funds to take risks is more keenly felt by older age groups (33% of Gen X and 36% of baby boomers).

IT IS FINE AS LONG AS YOU ONLY RISK A SMALL AMOUNT OF MONEY

I WOULD ONLY RISK MONEY I WOULDN’T MIND LOSING

I DON’T HAVE ENOUGH MONEY TO TAKE RISKS WITH IT

I WOULDN’T WANT TO TAKE RISKS WITH MY MONEY WITHOUT A PROFESSIONAL HELPING ME

I WOULD RATHER BE COMPLETELY IN CONTROL IF I AM TAKING RISKS WITH MY MONEY

I DON’T HAVE THE NECESSARY FINANCIAL KNOWLEDGE OR UNDERSTANDING TO TAKE RISKS WITH MY MONEY

I HAVE NO VIEWS ON TAKING RISKS WITH MY MONEY

IT IS THE ONLY WAY OF GETTING AHEAD FINANCIALLY

THE FINANCIAL CRISIS TAUGHT ME NOT TO TAKE RISKS WITH MY MONEY

33%

34%

32%

20%

17%

17%

13%

8%

7%

37%

32%

31%

23%

19%

18%

11%

10%

6%

28%

34%

33%

18%

15%

16%

14%

7%

7%

29%

37%

36%

13%

15%

11%

14%

4%

12%

ALL ADULTS MILLENNIALS GEN XBABY

BOOMERS

Risking small amounts of money is the norm for millennials. They are much more likely to buy a lottery ticket (38%) or to place a bet on a sporting event (21%) than they are to invest it. In fact, millennials are three times more likely to play the lottery than they are to invest in a stocks and shares ISA (12%) or traditional investments (12%). Among those who do this, millennials say they spend an average of £41 per month when betting on sports games and £15 a month on the lottery. Though fewer millennials invest, when they do they are dedicating larger amounts of money – an average of £149 per month in stocks and shares ISAs and £145 in traditional investmentsxvii.

MILLENNIALS SHOW CONSIDERABLE DESIRE TO CONTINUE IMPROVING THEIR FINANCIAL KNOWLEDGE, WITH ONLY 8% SAYING THEY HAVE NO INTEREST IN THIS. OLDER AGE GROUPS ARE CONSIDERABLY MORE LIKELY TO HAVE NO INTEREST IN IMPROVING THEIR FINANCIAL SKILLS AND UNDERSTANDING, WITH 17% OF GEN X AND 25% OF BABY BOOMERS IN AGREEMENT.

Across the board, two fifths (40%) of all UK adults would like financial services firms to provide them with further financial education and guidance, making this the most popular choice over government (34%), themselves (32%), parents (19%), schools and universities (15%) and the media (15%). Millennials (45%) are most likely to believe financial services providers should help consumers improve their financial knowledge, versus 38% of Gen X and 31% of baby boomers.

Providing free financial education could provide financial services firms with a competitive advantage. One in 10 (13%) UK adults say they would switch provider if they offered free financial education training, rising to 17% of millennials and 22% of early millennials aged 18-24. Boosting financial education can be somewhat of a win-win scenario for financial services firms, creating a safer economy with less risk of poor decision making as well as enticing customers away from competitors.

FINANCIAL SERVICES PROVIDERS

GOVERNMENT AND/OR PUBLIC BODIES

MYSELF

MY PARENTS

MY SCHOOL/COLLEGE/UNIVERSITY

THE MEDIA

PEERS/FRIENDS

ALL MILLENNIALS

45%

37%

34%

26%

21%

14%

11%

EARLY MILLENNIALS

45%

37%

29%

40%

35%

14%

12%

MID-MILLENNIALS

46%

39%

34%

24%

20%

13%

12%

LATE MILLENNIALS

43%

35%

37%

18%

13%

15%

9%

IT IS A COMMON ASSUMPTION THAT YOUNGER GENERATIONS ARE CONSUMED BY THE PRESSURE PLACED UPON THEM BY SOCIAL MEDIA AND CELEBRITY CULTURE, AND WHILE THIS MAY BE TRUE FOR OTHER INDUSTRIES, FOR FINANCIAL SERVICES SOCIAL MEDIA APPEARS TO PLAY A FAIRLY MINOR ROLE.

Only 8% of millennials feel that social media influences their view of financial success the most, with the success and lifestyle of celebrities even less important (6%). Very few millennials place importance on financial services firms’ social media accounts, with just 8% of millennials refusing to use a provider if they didn’t have these in place.

Instead, millennials are predominantly influenced by their own goals and ambitions for the future (78%), followed by their partner’s or children’s needs or expectations (33%). One in ten (13%) however admit their view of financial success is impacted by the need to keep up with their friends or peers, rising considerably among early millennials aged 18-24 (18%).

MY OWN GOALS AND AMBITIONS FOR THE FUTURE

MY PARTNER’S/CHILDREN’S NEEDS AND EXPECTATIONS

NOTHING INFLUENCES MY VIEW

MY PARENT’S EXPECTATIONS

KEEPING UP WITH MY FRIENDS AND PEERS

THE PRESSURE OF SOCIAL MEDIA

THE SUCCESS AND LIFESTYLE OF CELEBRITIES

INFLUENCE FROM MAINSTREAM MEDIA

ALL ADULTS

71%

27%

17%

11%

10%

5%

4%

4%

MILLENNIALS

78%

33%

9%

16%

13%

8%

6%

5%

GEN X

65%

24%

24%

6%

7%

2%

1%

3%

BABY BOOMERS

58%

13%

34%

4%

3%

0%

1%

2%

Millennials are willing and eager to improve their financial knowledge, with younger age groups particularly likely to say they would switch to a provider that offered financial skills training. Firms looking to reach millennial customers should therefore consider providing and emphasising information in their marketing materials and other communications that can help build financial knowledge.

Though millennials are happy to take a flutter on a sports match, investing funds via stocks and shares ISAs or traditional/alternative investments is still viewed as too risky. Firms operating in the investment space therefore face the challenge of communicating the long-term benefits of investing and persuading

millennials it is a risk worth taking. Efforts to improve financial knowledge will help this message hit home – communications materials should be simple and fact-based, avoiding any jargon that might lead millennials to assume investing is too complicated.

Though there is a small element of ‘keeping up with the Joneses’ as some admit their view of financial success is impacted by their friends, overall millennials are far more driven by their own goals and aspirations. Financial services firms that can demonstrate they will support millennials every step of the way towards achieving their goals with tailor-made products and advice are likely to have more success in reaching this target audience.

“Like all new generations, millennials present their own public policy dilemmas for Government to deal with. Insecure employment, higher tuition fees, declining real wages and increasing housing costs are all part of a picture of financial instability for young people, and partly responsible for the lack of saving by the millennial generation.

“As Government and regulators continue to look at how to incentivise saving, there is space for financial institutions and disruptors alike to demonstrate their own solutions to these generational issues. As the rest of this report details, companies which can speak to this generation in their own language whilst also demonstrating they are trustworthy and secure will surely be best placed to capture the millennial generation.” - Sarah Fetherston-Dilke, Account Director at Instinctif Partners’ Public Policy practice

COMMUNICATIONS CONSIDERATIONS

PUBLIC POLICY: CHAPTER 3 INSIGHT

CONCLUSION

In many ways, our findings suggest that millennials – for all the hype – are not unlike the generations that came before them.

They seek financial security, particularly in the form of full-time employment, and aspire to financial independence, getting a foot on the property ladder and reducing their personal debt.

They largely opt for traditional or high street financial services providers, with the majority yet to have embraced challenger brands. They also value the presence of physical branches in addition to online services.

So far, so unusual.

This in itself is a key learning for the financial services industry. Millennials are not so radically different in their goals and principles that providers need to completely tear up the rule book before engaging with them, nor should they be considered ‘unreachable’.

We know however that as a generation, millennials have been heavily impacted by a period of economic upheaval combined with significant technological and social change. Beneath the surface, very real differences do exist.

A major example of this is the way millennials experience life milestones. While previous generations might expect to have got married, bought their first home and started a family during their twenties, millennials now typically spend this time finishing education, seeking employment and juggling paying rent or saving for a house with high living costs. Our findings suggest this is followed by an intense ‘crunch’ period in their early thirties with key life events such as marriage, homeownership and starting a family all taking place within subsequent years.

With most millennials yet to have reached these life milestones, financial services organisations offering products and services that can help ease the transition through this complex life stage are likely to experience more success with a millennial audience, as well as significant potential for business growth.

Part of helping millennials through this journey involves offering education to help improve financial skills. Our research shows millennials are more open than any other generation to bettering their financial knowledge, while all age groups feel financial services providers should be responsible for providing this guidance. Firms who make clear efforts to improve their customers’ financial understanding – and crucially do so in a way that is engaging for younger audiences – should use this wherever possible to create meaningful dialogue with their customers.

One of the aims of our research was to disprove millennial myths that do not hold true. However, one common theory – that millennials have “ballooning expectations” thanks to a strong emphasis on instant gratificationxviii – was proved to be somewhat correct, at least when it comes to financial services. Millennials expect a full-scale service from financial providers, with telephone, physical, online and app offerings all deemed to be important. It is this

higher set of expectations and demands that is causing a gradual reprogramming of the sector, as businesses fight to do more and offer more, often by harnessing the growing power of technology. As our respondents suggest, firms who cannot keep up will quickly become obsolete.

All these insights confirm that the millennial story is far more multi-dimensional than is often portrayed by the media. By facing unique challenges, this age group has developed particular expectations of products and services: expectations that will shape the way UK business sectors grow in the coming years.

Getting to grips with the real story behind this generation – not just the widely touted ‘millennial myths’ – is key for financial services firms to build an effective communications strategy. Creating a meaningful dialogue will improve trust in the sector and facilitate better provision of services to a generation that holds the key to business relevance and rewards.

KEY STATS

POPULATION FAMILY LIFE

DEBT

HOUSING

• There are currently 17.4 million adults in the UK aged 18-37, representing a quarter (26%) of the total UK population. • This makes the millennial population larger than both Gen X (14.0 million people aged 38-53) and baby boomers (14.7 million people aged 54-73)Sources: ONS UK mid-year population estimates, MYE2

• The average age to get married is now 34 for men and 32 for women • The average age of marriage has been getting gradually older over the past 50 years:

• Timeline of higher education tuition fees: 1998: Tuition fees introduced for the first time, costing £1,000 2004: Universities are permitted to charge tuition fees of up to £3,000 2009: The tuition fee cap rises to £3,225 a year to take account of inflation 2010: Maximum tuition fees rise to £9,000, sparking large student protests

Source: ONS, Marriages in England and Wales, 2015 updated (latest available data)

• In 2016, 54% of all live births in England and Wales were to mothers aged 30 and over; 68% of fathers were aged 30 and over. The average age of a first-time mother was 29

• The average age of a first-time buyer is 30 • First-time buyer mortgage repayments represent almost a fifth (17%) of their gross household income • But four in ten millennials were/are renting at the age of 30, double the rate for Gen X and four times the number of baby boomers who did so at the same age • The Resolution Foundation estimates that up to a third of millennials face renting their entire lives • Generational falls in home ownership rates for younger generations have been larger in the UK than in the US, Australia or Spain, where home ownership is also a key area of concern for young people’s living standards prospectsSources: UK Finance, First-time buyer affordability in the UK, June 2018

The Resolution Foundation, Up to a third of millennials face renting from cradle to grave, April 2018 and Cross countries: international comparisons of intergenerational trends, February 2018

YEAR

201520051995198519751965

MEN

343330272524

WOMEN

323128242322

DEBT

WORKING LIFE

• A review of research by the Centre for Global Higher Education on the consequences of student loan debt suggests it tends to have a negative impact on people’s lives after university, from career choices, homeownership, mental health, finances and retirement • People aged 25 to 34 and 35 to 44 are most likely to use high-cost credit • The average level of unsecured debt levels for all UK adults is £3,320, rising to £4,960 when Student Loan Company debt is included • 18-24s owe £1,460 on average, rising to £8,750 when student loans are taken into account. According to the FCA, this group has the lowest level of financial resilience and is least confident in managing money

• Adults aged 25 to 34 have the highest level of over- indebtedness of any age group, with below average financial resilience, and the highest ownership of high-cost loans along with the next group up (35 to 44 years old) • 35 to 44 year olds are the most likely of any age group to hold an unsecured consumer credit product (86% versus 78% of all UK adults). They are also the most likely to have been overdrawn in the last year and most likely to have a high-cost loan, together with the 25 to 34 age group, and most likely to be revolving users of credit on a credit card. But their assessed financial resilience is higher: among the 45 to 54-year-old group, 1.5 million are over-indebted (18%, versus 21% of 35 to 44 year olds).

• Baby boomers enjoyed much higher incomes than their predecessors, but this progress has all but disappeared for Gen X and millennials. It is common for millennials who’ve reached their early 30s so far to have experienced little or no income improvement on Gen X

• Millennials tend to job-hop, with 43% of millennials planning to leave their current jobs within two years and only 28% planning to stay beyond five years, according to Deloitte • In contrast, 62% of those aged 65 and above say they do not think job hopping is acceptable

Sources: Centre for Global Higher Education, Graduate indebtedness: its perceived effects on behaviour and life choices – a literature review, June 2018

FCA, High-cost credit: what next? May 2018

Sources: The Resolution Foundation, Cross countries: international comparisons of intergenerational trends, February 2018

Deloitte, 2018 Deloitte Millennial Survey, May 2018. CV Library, Job hopping in the workplace – research report, July 2017

WE ARE INSTINCTIF

We are an award winning, rapidly growing international business communications consultancy. We combine strategic insight and deep sector expertise with an integrated approach spanning capital markets, corporate affairs, brand building, internal engagement and public policy.

We have extensive experience of advising financial services clients across a full spectrum of communication challenges; from B2B and B2C brand building, social media strategy and reputation management through to financial PR and transaction support.

We pride ourselves on our innovative, creative and integrated approach to deliver compelling campaigns, across traditional and digital channels.

Capital Markets

Content& Creative

Insight & ResearchEngagement

Corporate Public Policy

METHODOLOGY

All findings are based on independent research conducted among 2,077 general consumers aged 16 and above (of which 1,093 fall into the millennial age group of 18-37). Respondents were either students, employed or currently unemployed but seeking employment. All respondents were responsible for their own financial decisions. The research was conducted by Censuswide for Instinctif Partners in August 2018.

REFERENCES

i Based on analysis carried out using Factiva on the number of total UK media mentions of “millennial” between 01/01/2018 – 01/09/2018 and 01/01/2016 and 01/09/2016. Mentions increased from 2,171 to 5,830.

ii See key stats – population (p.X)

iii May 2018, ‘The Generosity of Bank of Mum & Dad’, Legal & General, https://www.legalandgeneral.com/retirement/retirement-news/2018/the-generosity-of-the-bank-of-mum-and-dad.html

iv ‘The 2018 Newlywed Report’, WeddingWire https://go.weddingwire.com/newlywed-report

v June 2018, ‘Why millennials should stop spending all their money on city breaks and stay in the UK’, Daily Telegraph https://www.telegraph.co.uk/travel/comment/why-millennials-should-ditch-city-breaks-and-stay-in-the-uk/

vi Financial Times, Best of Money: Why millennials go on holiday instead of saving, 2016

vii City AM, Millennials are not taking on board advice and failing to save for their retirement, 2017

viii As reported by FT Adviser, FCA sees ‘warning signs’ for UK debt, March 2018 and The Times, High street lenders rein in credit supply after Bank of England debt warnings, April 2018

ix FCA, High-cost credit: what’s next? May 2018 https://www.fca.org.uk/news/speeches/high-cost-credit-what-next

x Age UK, Changes to pension state age

xi Daily Express, Holidays over homes: Young people ditching property ladder for exotic breaks, Dec 2017

xii February 2018, ‘Marriages in England and Wales: 2015’ ONS https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/marriagecohabitationandcivilpartnerships/bulletins/marriagesinenglandandwalesprovisional/2015 and November 2017, ‘Birth by parents’ characteristics in England and Wales: 2016 ONS https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/bulletins/birthsbyparentscharacteristicsinenglandandwales/2016

xiii February 2018, ‘Cross Countries: international comparisons of intergenerational trends’, Resolution Foundation https://www.resolutionfoundation.org/publications/cross-countries-international-comparisons-of-intergenerational-trends/

xiv Business Insider, Social platforms are most popular among 18- to 29-year-olds, March 2018

xv Financial Times, Younger consumers drive shift to ethical products, December 2017

xvi Retail Gazette, Bank branches departing high streets at “alarming rate”, June 2018

xvii Calculations here exclude respondents who selected ‘prefer not to say’ from the mean.

xviii Forbes, Are millennials really that different from other generations? July 2017

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WE BELIEVE THAT UNDERSTANDING THE VALUES, AMBITIONS AND BEHAVIOURS OF YOUR AUDIENCE IS CRUCIAL TO DELIVERING A COMMUNICATIONS PROGRAMME WITH REAL IMPACT.

THAT’S WHY WE COMBINE SECTOR KNOWLEDGE WITH AUDIENCE-SPECIFIC INSIGHT TO DELIVER MULTI-CHANNEL CAMPAIGNS THAT SUPPORT OUR CLIENTS’ OBJECTIVES AND BUSINESS STRATEGIES.