Three Ages of Financial Consumer

UK financial services companies have new opportunities to market their products at both ends of the age spectrum, according to the first three in a new series of financial lifestyles reports from independent market analyst Datamonitor.

The reports, part of the series 'Consumer Insight for Financial Services' are entitled 'Teenage consumers', 'Financial services for young adults', and 'Targeting senior consumers'. Datamonitor will publish a full range of Consumer Insight for Financial Services reports from Spring 2004.

Younger teenagers are a very important acquisition target for banks selling current accounts, because the financial lifecycle now starts as early as age 12 when young people contract their first relationship with a bank. [The report uses the unusual definition of teenagers as 'those aged between 10 and 17']. According to co-author Gunter Seymus, banks need to recognise the changing aspirations of teenagers: 'Banks who get it right in this sense, such as Dexia in Belgium, promote accounts with funny, rebellious and cool messages and gadgetry. Clubs for children are an example of what not to do'.

The pensions gap is beginning to affect the consciousness of young adults, according to the second report. Retirement may seem a long way off but some 52% of 18-29 year olds are somewhat concerned that they will not have enough money to retire and 21% are very concerned. While over 29% claim they will use a pension policy for retirement savings, almost 23% of young adults intend to use property instead, and over 17% high-interest savings accounts. Naturally, at this age, many have no savings plans in place for retirement, and the report looks in detail at this opportunity for providers.

On the subject of senior consumers, the average disposable income of adults aged between 50 and 64 is set to increase to around EUR27,500 from EUR19,940 in the ten years to 2007, while the mean for those aged between 25 and 49 rises by less than ten per cent to EUR23,162. This means that about now, the 50-64s are becoming Europe's most affluent age category. This is 'not only because seniors spend less but the income of seniors tends to be fuelled by such factors as end-of-career income, empty nesthood, windfall inheritance and lower debt' says Seymus.

According to Datamonitor, the over-50s age bracket is seeing an inflow from a new generation which is culturally very different from and wealthier than any generation that have gone through the senior age bands before. Those who grew up in the 60s, the first consumer generation, will be more hedonistic, more technology savvy and more independently minded than those that went before them. Wealthy seniors are particularly targetable with extra services offered by insurers and banks, such as travel and leisure related services and will-execution.

There is also, however, a relatively large group which will see its income drop significantly in the later stages of life, necessitating a wide range of products and approaches from financial services providers. 'Increasing space is opening up for marketing borrowing products to over 50s consumers', says Seymus, 'but marketing departments of financial services companies need to reconsider how they segment over 50s and how they communicate with them'.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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