LOMBARD, Ill.—A new study indicates that FIs are making a mistake if they view—and serve—Millennials as a homogenous generation.
Raddon Financial Group’s Has the American Dream for Millennials Been Shattered? study shows the Millennial generation is less homogeneous than prior generations.
“Millennials are comprised of diverse subgroups based on education, employment situations, earnings capacities, financial product usage and existing debt burdens,” said Pat Bator, Raddon senior research analyst. “Consequently, financial institutions cannot deal with this generation using any standard rule of thumb, but rather, will need to utilize personalization and customization to better serve the individual needs of younger consumers.”
Younger consumers have many of the same social imprints and personal and financial goals as their parents and grandparents, according to Raddon.
“The ‘American Dream’ is still relevant with them, but they are less likely to embrace it as prior generations. In reality, younger consumers’ view of the opportunities available to them is evolving – and technology is the driving force behind their changing views,” said Bator.
Millennials may face greater adversities – poor job prospects, excessive debt and lack of suitable savings and investing habits – than their predecessors, noted Bator.
“As a result, this generation may lack the resources to support consumption in the early lifecycle stage,” he said.
With older generations focused on personal wealth accumulation to ensure their consumption later in life, financial institutions must recognize Millennials will be the financial services industry’s future life blood on the asset side of the balance sheet, concluded Bator.
“Financial institutions should give serious consideration to serving this market in any manner they can, so they can eventually leverage the opportunities presented by aging Millennials,” he said.