GLOBAL - Pension providers are ignoring the financial interests of Generation ‘Y' who will be essential to tomorrow's business profitability and survival, according to a study by KPMG.

Speaking at Fund Forum International in Monaco earlier this week, Bernard Salt, partner at KPMG Australia, presented findings - in a report entitled Beyond the baby boomers: the rise of Generation Y - suggesting financial services firms are doing little to meet the information and investment needs, as well as the employment desires, of people born since 1976 because they do not consider them important to their businesses.

Of the 20 senior financial services executives questioned around the world, 78% said they had not engaged with Generation Y over the last two years but 50% intend to do so over the next five years.

However, evidence compiled by KPMG indicates financial services industries across the world need to turn their attentions to Generation Y customers, instead of focusing all of its business at today's wealthy ‘baby boomers', because global household economic wealth is now at its peak so the future market and capital will, as a result, contract over the coming decades with working populations.

Financial services argued they are not planning their businesses beyond a three-year horizon because firms tend to be required to focus on the immediacy of financial analysts' short-term expectations than long-term business strategy.

Yet potential ‘Gen Y' clients are more likely to be influenced by the economic conditions they have experienced, as there are regional differentiations between the responses of people in different countries. Customers in Frankfurt and Tokyo, for example, are likely to be more conservative because they have experienced some deflation and economic uncertainty, suggested Salt.

Those young people who do want to invest want mutual funds and equities, according to comments delivered by executives to KPMG, whereas evidence from focus groups conducted in Frankfurt, London, New York, Sydney and Tokyo suggests most young people are not interested in saving without an explanation, are not prepared to be told how they should save and have little knowledge of how they should save for the long-term, continued Salt.

"The industry thinks Generation Y wants mutual funds and equities, but we found they were equally naïve about ‘financial mumbo jumbo'. Generation Y are highly tribal, and they recreate this tribe through their network of friends. Their friends, peers, workmates are important points of information but financial services firms are failing to tap into that," he added.

Generation ‘Y' individuals are described by KPMG as being of an indeterminate age but were generally born in the mid- to late-1970s, more likely to be a single child of "guilty" parents in "gently ascending prosperity" - guilty, according to KPMG, because both parents worked and felt it necessary to make up for this - and therefore likely to demand things now because they have no experience of downturn or a ‘hand me down' lifestyle.

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