MILLENNIAL LABS Millennials and Money - Common...

Millennials and MoneyUnderstanding young

adults’ financial

experiences

Millennials and Money

M I L L E N N I A L L A B S

M i l l e n n i a l s a n d M o n e y

www.covi.org.uk/millennials-money

About Millennials and Money

The Millennials and Money project seeks to understand millennial money habits, behaviours and what younger generations need to become more financially resilient. Through extensive literature reviews, polling of 2000 adults, online focus groups and qualitative interviews, Common Vision (CoVi) has been examining what millennials want and need from personal banking products, financial providers, and the wider market in order to manage their money and make informed financial decisions, and how these attitudes differ from other generations.

See more online at www.covi.org.uk/millennials-money

Contents

Preface - Yvonne Fovargue MP 3

Foreword - Iona Bain 5

Author’s note - Caroline Macfarland 7

The speed read (Executive summary) 9

1. Introduction 15

2. Millennials and money: Perceptions vs. lived experiences

20

3. How the millennial life course affects financial behaviours

27

4. Responding to millennial experiences and expectations

35

5. Millennials and Money: The opportunities 55

References 65

Acknowledgements 71

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PrefaceYvonne Fovargue MP, Chair, All-Party

Parliamentary Group on Debt and Finance

Millennials get a bad press. Caricatured as self-absorbed, spoilt and over-sensitive, they are often seen by many – especially older - people as supremely entitled. But buying into these lazy stereotypes risks overlooking the many challenges faced by this generation of young adults.

Although struggling to save for a deposit on a house or dealing with constant debt are not unique to those born in the 1980s and early 1990s, the combination of financial difficulties experienced by millennials is quite unlike those experienced by previous generations. For example, my generation was not saddled with tens of thousands of pounds worth of student debt and with the expectation that it would take decades to pay off.

The world of work has changed too. Gone are the jobs for life; now we have a life of jobs, with many of them insecure, short-term and modestly paid. Not surprisingly, many millennials struggle to save, to get on the housing ladder and to start a family. Indeed, the image of the young man or woman living with their parents well into their thirties is a real one. If all this was not enough, millennials will be unable to retire until they are in their 70s, as pension dates are pushed back. They may live longer, but they will be expected to work longer too. Many will wonder - given squeezed incomes - how they will be able to save for their pensions at all.

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M i l l e n n i a l s a n d M o n e yW W W . C O V I . O R G . U K / M I L L E N N I A L S - M O N E Y

This report seeks to understand the myriad of financial issues facing this generation, how they deal day to day with money worries and - most crucially - what support they need to be more financially resilient in the future. I welcome Common Vision’s suggestions on how policymakers, the private sector and civil society to play their part in this – for example what the Government could do to address the savings deficit faced by young people.

We should remember that there are a number of positive opportunities. The millennial generation is far more digitally connected than we were. They are never unplugged, having grown up with mobile phones, tablets and the internet. This means they should be better placed to access financial services, as well as financial advice and assistance. Of course that digital information needs to be reliable and objective, but millennials are one step ahead of the game when it comes to connectivity.

As this report shows, we should stop dismissing millennials as ‘never having had it so good’ and concentrate more on addressing their particular financial circumstances and needs. After all, future generations will depend on us getting it right now.

ForewordIona Bain, Young Money Commentator

The financial crisis of 2008 indelibly shaped our generation’s outlook. The recession arrived just as we were leaving school, graduating from university and/ or starting in the world of work.

Suddenly, getting a stable job that paid enough to meet basic living and housing costs became difficult, if not impossible. Our generation would spend the next decade or so trying (and often failing) to keep our heads above water amid the tightest squeeze on wages and living standards in modern times.

I started the Young Money Blog as a struggling graduate myself, in the hope that learning about money might help me feel more in control of my situation. But I also wanted to challenge the media’s neglect (and frequent demonisation) of millennials. Moreover, I felt that the financial industry and regulators could serve young people far better than they did.

In the 12 years following the last recession, it was taxpayers who had to bail out the banks at their lowest point in 2008, with the government still propping up the housing sector through schemes like Help to Buy. Yet young professionals who want to contribute to society have been let down at every turn by products and policies that have held them back rather than propelled them forward. The housing market has become an intractable mess. Exploitative debt products like payday loans have caused untold damage. Banks offer

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Author’s noteCaroline Macfarland, Director, Common Vision

Millennials and money: it’s a gloomy picture. Numerous media commentators, academics, think tanks, and policy experts have highlighted what seems to be a dismal state of affairs.

Millennials are poorer than their parents were at the same age, with stagnating wage levels, student debt, higher relative costs of living, fewer opportunities to get on the housing ladder, and poor pensions provisions all contributing to the prevailing analysis about our financial circumstances. Meanwhile, millennials are also stereotyped as the YOLO generation, frittering away what money we do have on avocado toast and Instagram-worthy holidays rather than being sensible with our finances and planning for our longer working lives and decent living standards when we eventually are able to retire.

Our economic prospects, both now and in the future, are very real concerns. But that’s not to say that there’s no room for a positive conversation and creative thinking about how millennials can use our abundance of personal agency to take control of our financial futures. This isn’t about “generational warfare” or seeking to prioritise the needs of one age cohort over another; it’s about looking at the experiences of young people today and thinking about what this means for the future. As with all of Common Vision’s work, the project ultimately seeks to revitalise public dialogue around what seem to be intractable issues, and turn collective social challenges into opportunities for long-term positive change.

The Millennials and Money project starts with the premise that we

no reward for saving - i.e. doing the right thing. Investing services and financial advice cater mostly to wealthier, older people. Proper financial education to prepare young people for our complex consumer economy remains a pipe dream.

And now, as the coronavirus crisis sweeps the Western world and presages another recession in most countries – including the UK – the younger generations are confronting yet another economic shock with profound consequences for their personal finances.

It is sadly ironic that this latest crisis has hit just as millennials were starting to recover from the last financial crash. But in this context of uncertainty, as we sail into a new financial storm which will have impacts on us all, it’s clear that now more than ever we need to think about how to better serve young workers and taxpayers today, who will go onto become the carers, business leaders and innovators of tomorrow.

Despite all this, and the new challenges we face, I am hopeful. Organisations like Common Vision are working hard to highlight both the hard facts and lived experience of young people when it comes to their personal finances today. This robust but empathetic report shows millennials like me have so much to give - but only if we’re given a fighting chance by the financial industry and government. Let’s hope the people that matter take heed of it.

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need to build a better understanding of the real experiences of millennials and money, seeking to understand money management habits, behaviours and what younger generations need to become more financially resilient.

We are grateful for the support of this research from the Current Account Switch Service (CASS), who as well as operating the switch service itself, is keen to ensure that the whole banking ecosystem works to ensure better financial provision for consumers both today and tomorrow. We hope this research will help CASS continue to deliver successfully in the future, especially for groups who might be less well served or less confident financially.

At the time of publishing this report, we are only just starting to see the effects of the global coronavirus crisis. As our society starts to make sense of the profound economic changes in store, it is ever more vital to think about how to enable an economic and cultural shift towards a future in which people are more financially literate, confident and empowered to make active financial decisions throughout their lives.

We invite policymakers, public leaders, industry professionals, and of course young people themselves to join the conversation around what the financial sector and others need to do to enable this shift. Ultimately, a well-functioning banking ecosystem is one which is responsive to different population segments and life stages, uses innovation and new technologies to respond to the preferences and priorities of existing and new customers, and which supports people of all ages to make well-informed financial choices which will help them navigate times of uncertainty, as well as times of opportunity.

The Millennials and Money project seeks to understand millennial money habits, behaviours, and what younger generations need to become more financially resilient. Our research has examined what millennials want and need in order to manage their money, make informed financial decisions, and balance current and future financial needs.

This report draws on a range of research methods, including an interactive consultation and a series of online focus groups and semi-structured individual interviews with millennials across the UK, public polling using a weighted representative sample of 2,003 UK adults to compare and contrast views from different age groups, and an extensive literature and policy review.

What this report does not seek to do is promote the interests of one generation at the expense of others. Chapter One sets out why generational analysis is a useful lens for analysing how different life stages and transitions influence a young person’s immediate and longer-term approaches to money management, as well as the wider contextual factors and cohort effects that affect the financial and economic circumstances of millennials as a generation.

It is commonly cited that, as a generation, millennials face a number of negative economic and financial prospects. Millennials have seen their formative years overshadowed by economic collapse and entered the workforce at the height of the financial crisis. Their

The speed read...

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take-home pay has decreased in real terms compared to older generations, and many millennials are at greater risk of financial exclusion, recording lower lifetime earnings than their predecessors, with knock-on effects for their ability to save and accumulate assets. Our research set out to explore the extent to which our research participants personally identify with the challenges portrayed in academic analyses and the media and public debate, and whether these issues have direct implications on their money habits and behaviours. Chapter Two compares and contrasts themes prevalent in existing literature with the lived experiences of our research participants and how they described their everyday financial priorities and definitions of financial satisfaction.

On the whole, the inductive insights from our interviews and focus groups chimed with many of the general themes found across academic and policy studies. But there are important nuances. Media coverage of millennial money habits in particular often risk over-generalising or stereotyping behaviours and attitudes which are actually very rational in the current economic context. Popular commentary tends to be negative and is often viewed as fatalistic by a generation of millennials who are more educated, geographically mobile, and technologically connected than any previous generation. Whilst millennials are the most unsatisfied generation with their current financial circumstances, they are also more optimistic than other age groups about the future, perhaps reflecting a sense of personal agency that is realised in many other sectors and aspects of civic and economic life. A more detailed look at the life experiences of millennials, and the drivers and contextual factors which influence their preferences and decisions, can help financial providers and policymakers become more responsive to their needs and find ways to frame proactive financial behaviours in a more positive and aspirational light.

Chapter Three explores how the millennial life course affects financial behaviours. Millennial life transitions are on the large part experienced at later ages to previous generations and the average age of leaving education, first-time marriage, having a child, and purchasing a home have all increased over the last few decades, leading some commentators to describe millennials as experiencing ‘delayed adulthood’. They also inevitably take place in a different economic and social context, which means that norms, expectations, and measures of progress or achievement differ to previous generations. We look at four different stages: Dependency; Independency; Towards settlement; and Settlement and responsibility and the financial behaviours and needs of millennials as they progress through these stages. Each of these milestones present important points to build strong financial capability, provide tailored financial education, and nudge young adults to balance present day money management with supporting financial preparedness for later life.

Chapter Four looks at the extent to which millennial preferences and expectations of personal banking products differ to other age cohorts, and how financial providers, government, employers, and civil society can respond to their current and future needs. In many respects, millennials aren’t that different to other generations in terms of what they expect from banking products and services: Accessibility and convenience, timely and responsive communication, customer control, and trust and accountability are as important for millennials as other age groups. But there are key differences in their expectations of how these expectations are met.

More broadly, there are a number of behavioural trends and preferences found amongst the millennial cohort which present important opportunities for responsive services and policy design.

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• As digital-first customers, smart technology, and data-driven personalisation and predictions are fast becoming the minimum requirements for modern financial products and services. Although new banking entrants and FinTech platforms have emerged at pace, responding to these expectations is an opportunity for the banking ecosystem as a whole.

• In an age of information overload, millennials are often unsure where to find trustworthy sources of financial information and guidance. But there is nevertheless clear demand for reputable, impartial financial information, and untapped opportunities for financial providers, financial education services, government and regulators to provide personalised information and support useful peer learning and information exchange in a context where advice from parents and peers remain the most valued source of financial information and guidance amongst the millennial age cohort.

• The housing crisis means that millennials are living longer in the rental market, with many more ‘priced out’ of home ownership than previous generations. This requires targeted financial support to help young renters build up their savings and become more financially resilient. Meanwhile, support is also needed for new millennial homeowners who continue to face financial security concerns alongside longer mortgage terms and paying off debt late into older adulthood and even retirement.

• The pensions gap comprises both a gap in provision, with many millennials under-saving for retirement and later life, and a stark knowledge gap regarding this deficit. To counter this, increased levels of automatic enrolment could be tailored to the life course, as could employer-led financial wellbeing and education

services. But a more strategic policy-driven approach from Government is also needed to address the savings deficit over the long-term.

• The rise of the portfolio career and the ‘gig economy’ is another trend which requires targeted solutions, especially in light of financial instability and under provision which could be experienced by freelancers and the self-employed. Financial innovations are emerging which provide tailored financial support for at-risk customers and those who may experience financial precariousness associated with variable income patterns. But further pensions policy reform which accounts for changing working patterns may be required to counteract intra-generational inequality.

• The ethical concerns of millennial consumers, who are often reported to be more inclined towards purpose-driven and socially responsible employment, product preferences, and consumer choices, will also be an increasing influence on financial products and services, particularly as the more well-off millennials accumulate wealth. As demand increases, there is also an increased role for regulators to ensure that investors have a clear understanding of sustainable and ethical products and that there is a common taxonomy to avoid ‘green washing’ and consumers investing in mislabelled products.

There is clear rationale for financial providers to become more responsive to the needs of millennials, and their preferences are likely to further disrupt the financial sector in years to come. These young adults are more likely than older groups to be in the market for a new banking service, and are increasingly expanding their product preferences. Beyond direct customer acquisition, focusing

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on the needs of millennials is also an opportunity for the financial sector to respond to the public trust deficit.

For other stakeholders, policymakers, and public leaders as well as the financial services industry, there is a wider responsibility to help millennials to take control of their finances now rather than put off financial planning for later life. Supporting financial wellbeing is likely to be a growing prerogative for employers, while enabling long-term financial resilience is one way to reduce the pressure on state resources.

Building financial resilience amongst the millennial generation has knock on benefits for other generations. With more young adults turning to their parents for financial support at various points of their lives, responding to these intergenerational interdependencies is another way to target financial innovations and policy interventions at this age group. And the attitudes and behaviours of a generation of young children today will be shaped by their millennial parents.

We hope the insights from this study will provide a source of robust and engaging thought leadership about an important group of consumers and citizens who are fast becoming the largest and most influential demographic group in the UK. Ultimately, a more rigorous understanding of the financial needs of millennials today will help ensure a financial ecosystem and a policy environment that is fit-for-the-future.

The Millennials and Money project set out to understand millennial expectations of personal banking products, financial providers, and the wider market, and the extent to which these preferences differ to other generations. Our research explored millennial money habits, and how different life stages and transitions influence a young person’s immediate and longer-term approaches to money management.

On commencing this research, our objectives were to:

• Develop new insights into young people’s values, opinions and preferences when it comes to money management and financial behaviours;

• Consider what these insights and perspectives mean for the broader policy and public narrative around consumer behaviour, market competition and financial resilience;

• Engage with industry leaders, policymakers, and civil society organisations around the views, needs, and preferences of younger customers and citizens;

• Inspire more young people to take an active interest in different options and ways to engage with financial services.

1. Introduction

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Why millennials?

The millennial generation, also known as “Generation Y”, is a definition used by market researchers and demographic analysts to define the cohort of people born or experiencing formative years just before the turn of the millennium. There are varying definitions, but at its broadest sense the term “millennials” refers to people born between the early 1980s and late 1990s, now aged around 20 to 39 years old. Millennials now represent the largest consumer group in the UK; around 12.5 million young adults.

There are of course many differences between millennials across the globe and within the UK. The life experiences of younger millennials (in their 20s) will inevitably differ with older millennials (in their 30s), not to mention the intra-generational differences in social-economic background, education, ethnicity, gender, and other personal characteristics of different millennials.

Generational analysis is nevertheless a useful tool in looking at social and economic issues. Firstly, presents a lens for analysing the key life transitions which the millennials are currently experiencing, and how different circumstances may affect their attitudes and behaviours in relation to spending, saving, and investing. There are a number of factors in the “transition to adulthood” which may influence a young person’s immediate and longer-term approaches to money management. Circumstances such as progressing through education and in the workplace, making ever-more informed choices about where to spend income, renting or buying a first home, and settling down with a partner or experiencing new parenthood all have implications for behavioural trends.

Secondly, while some of their behaviours will inevitably change

over the life cycle, examining generational trends amongst the millennial group may also help understand the cohort effects which are less likely to change over time. For example, the economic context of rising house prices, insecure employment, and student debt all contribute to the millennial experience in the present day, but also will likely have lasting knock-on effects on our financial circumstances in later life that are different to the experiences of older generations. Some social attitudes too, such as familiarity with technology, or our ethical expectations, may well inform millennial behaviours for years to come. Although millennials are often characterised as a generation who have grown up in an era of economic adversity, they have also benefited from the age of connectivity, rapid technological change, and with ever more opportunities for lifelong education and mobility than previous generations. This presents an optimistic starting point to consider the opportunities for improving the financial futures of an age cohort that will live longer than previous generations.

Later in this paper we also look at the generation after the millennials, “Generation Z” (broadly describing young people and children currently under-20), and how their current and future behaviours and circumstances may differ from the millennial generation.

It is worth noting that different studies use different definitions of the “millennial” demographic. Common Vision defines millennials as the age cohort born between 1981 and 2000, currently aged between 20 and 39. Other sources may use other definitions (for example the Pew Research Centre in the United States recently revised its definition of millennials to refer to people born between 1981 and 1996). Polling studies tend to use age segmentations of 18 to 24, and 25 to 34. We have primarily used research sources

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involving people between the ages of 18 and 35 in the last five years. Where we are referring to a specific age range we will make that clear.

Methodology

Over the course of 2019 Common Vision conducted an interactive consultation with millennials across the UK. We designed and disseminated a bespoke online chatbot for millennials which surveyed their priorities, concerns, and questions around their current financial circumstances and future expectations. This was followed by series of online focus groups and semi-structured individual interviews which collected further in-depth insights from over 30 participants. It is worth noting that the participants in our focus groups and interviews were self-selecting volunteers, but they nevertheless represented a broad range of social, economic, and geographical backgrounds. Although most were generally interested in discussing personal finance matters, there were varying levels of self-reported financial knowledge and confidence.

We also conducted public polling, carried out by Opinium Research. These used a sample of 2,003 UK adults from different age groups (weighted to reflect a nationally representative audience) in order to compare the differences between generations in their answers. In addition to our own research, we conducted a desk review which mapped academic and policy literature, and studies by financial providers, industry bodies, and market research agencies. This review focused on studies and analyses into the economic circumstances of millennial generation and how this differs to other generations, and young adults’ financial behaviours, attitudes and preferences.

Read our trends papers

Our Millennials and Money trends papers each focus on particular social and economic contextual factors that are influencing millennials’ attitudes towards, and engagement with, the financial system.

• Banking in the age of the robot explores how digital banking developments are responding to younger people’s lifestyles and preferences, and asks what more can be done to use digital services to impact on long-term financial resilience, wellbeing, and inclusion of young customers and citizens.1

• Banking in the age of the 100 year old looks at if and how millennials are preparing financially for later life, the challenges and barriers to saving for the long term, and the untapped opportunities for support, tools and financial products which could help young adults to balance their more immediate financial goals with longer-term savings provisions.2

• Banking in the age of fake news investigates how the ‘information crisis’, seen through the rise of fake news, misinformation, and information overload, has affected the ways in which millennials consider financial information and act on these considerations.3

• Banking in the age of the renter looks at how the housing crisis has influenced millennial spending and savings behaviours, and how financial markets are responding with products and services for long-term renters, those seeking to purchase their first home, and new homeowners.4

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http://www.covi.org.uk/wp-content/uploads/2019/10/Millennials-and-Money-Banking-in-the-age-of-the-robot-FINAL2.pdf

http://covi.org.uk/dev4/wp-content/uploads/2019/11/Millennials-and-Money-Banking-in-the-age-of-the-100-year-old-FINAL.pdf

http://covi.org.uk/dev4/wp-content/uploads/2019/12/Millennials-and-Money-Banking-in-the-age-of-fake-news-FINAL.pdf

http://covi.org.uk/dev4/wp-content/uploads/2020/02/Millennials-and-Money-Banking-in-the-age-of-the-renter-FINAL.pdf


2. Millennials and money: Perceptions vs. lived experiencesThere is vast commentary about the financial challenges faced by the millennial generation. A generation whose formative years were overshadowed by economic collapse; world events including 9/11 and the financial crash in 2008 are said to have had a major impact on millennials’ economic circumstances as well as their predicted financial stability in later life. Various studies note that millennials have experienced a long term ‘scarring’ in the labour market by entering the workforce at the height of the financial crisis, while take-home pay has decreased in real terms compared to older generations, with knock-on effects for their ability to save and accumulate assets.

Our research set out to explore the extent to which our research participants personally identify with the challenges portrayed in academic analyses and the media and public debate, and whether these issues have direct implications on their money habits and behaviours. We tested common themes found through

a review of academic and policy literature, against the ways in which participants described their everyday financial priorities and definitions of financial satisfaction.

On the whole, the inductive insights from our interviews and focus groups chimed with many of the general themes found across academic and policy studies. But there are important nuances. Media coverage of millennial money habits in particular often risks over-generalising or stereotyping behaviours and attitudes which are actually very rational in the current economic context. Popular commentary tends to be negative and is often viewed as fatalistic by a generation of millennials who are more educated, geographically mobile, and technologically connected than any previous generation. Whilst millennials are the most unsatisfied generation with their current financial circumstances, they are also optimistic about the future, perhaps reflecting a sense of personal agency that is realised in many other sectors and aspects of civic and economic life. – Common Vision/ Opinium research11

67% of 18-34s are confident that their financial situation will not get worse in the next 5 years, compared to 57% of older age groups

61% of 18-34s are confident that their financial situation will not get worse in the next 20 years, compared to 38% of older age groups

57% of 18-34s are confident that their financial situation will remain the same or improve in the next 40 years, compared to 31% of older age groups

5years

20years

40years

33% of 18-24s are satisfied or very satisfied with their current financial situation

44% of 25-34s are satisfied or very satisfied with their current financial situation

…compared to 52% of older age groups

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”Millennials are less confident about their financial futures” The literature: Perhaps as a cumulative effect of these trends, there has been a lot of commentary about how the current financial security of millennials affects their outlooks, with various studies noting money worries and impacts on mental health and wellbeing. There is also some evidence of knock-on effects on family members of other generations – for example paying off student debt has been found to be a big source of worry for both young people and their parents.6

The lived experience: Our research and polling supported the notion that millennials are less financially satisfied than other generations. However, this is not necessarily a ‘permanent state of affairs’ given that many millennials, particularly those at the youngest end of the cohort, may be at an early stage of their working lives and adjusting to living independently. Indeed, despite having a lower level of satisfaction in their current financial situation, millennials tend to be more optimistic about the future than other generations. However, perceptions of financial satisfaction often did not account for a longer-term picture of financial resilience in later life. Many of our research participants reported low levels of financial literacy and confidence which hinders active decision-making and financial planning for the future.

Millennials and Money: Myths and realities“Millennials are more financially insecure than previous generations” The literature: Millennials are at risk of becoming the first ever generation to record lower lifetime earnings than their predecessors5 due to a range of factors including stagnating wages, and rising levels of insecure employment, part-time working and lower-paying occupations in comparison to their predecessors. At the same time, higher property prices mean that more millennials find themselves stuck in a vicious cycle of spending high proportions of their income on rent and living costs, with less discretionary income to put towards saving.

The lived experience: The ability to afford a comfortable standard of living was a key concern for our research participants, particularly younger millennials at early stages of their working life. Our research participants defined financial satisfaction and control as being able to cover current expenses, paying down debts, and being prepared for financial shocks. A majority of those consulted felt that their financial stability would improve incrementally over time.

“Millennials face higher inter- and intra-generational wealth inequality”

The literature: While younger people in general have always been less wealthy than their older contemporaries, a combination of increased living costs, lower savings, and rising property prices without similar levels of earnings growth mean that millennials are accumulating wealth and assets at a slower rate than previous generations at the same age. There is also an increased prevalence of inequality within the millennial cohort - according to the Intergenerational Foundation the 10% of young savers with the highest level of savings on average had 150 times as much in their savings accounts as the 10% of the young savers with the lowest savings, with consequences for compound wealth growth in future.7

The lived experience: The majority of participants who have long-term savings or investments had received support from family to do so. Most of those consulted viewed home ownership as their main route to accumulating assets. Over a fifth (22%) of millennials told us they are saving for a deposit for their first home, well over the national average of 9%.8 But there was also a notable number of millennials who have decided they are ‘priced out’ of the housing market, at least in the short to medium term, and therefore not planning their current finances around saving for home ownership.

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A more detailed look at the life experiences of millennials, and the drivers and contextual factors which influence their preferences and decisions, can help financial providers and policymakers become more responsive to their needs and find ways to frame proactive financial behaviours in a more positive and aspirational light. The challenge – and opportunity – for Government, employers, civil society organisations, and financial providers is to understand how this optimism can be harnessed and transformed into agency and practical action from citizens and consumers to take ownership of their financial futures, and balance immediate money management needs at each life transition with longer-term financial planning.

“Millennials are under-saving for the future” The literature: Although popular commentary and some isolated research findings have portrayed millennials as a cohort that over spends on leisure and luxury items, several studies have debunked the myth that millennials do not prioritise saving. That said, these tend to be short-term savings, often held in cash products rather than traditional savings accounts.9 Stagnating wages, decreasing home ownership, and increased costs of living in the private rented sector have affected the ability to save for the longer-term – or at least the perception that this is possible.

The lived experience: The vast majority of participants in our focus groups and interviews acknowledged that saving is important, but many cited affordability and current financial insecurity as a barrier to saving more, or using fixed term savings products. Many participants mentioned that they put aside money regularly, but do so via their current accounts, often using ‘jam-jarring’ functions, in order to have immediately accessible savings for emergency expenses or big-ticket items or spending goals. Saving for later life is not seen as a priority compared to financing immediate life transitions and only 12% of millennials we polled are saving towards their retirement compared to 18% of the population as a whole.10 Almost all of the millennials who participated in our research mentioned they didn’t have adequate knowledge of their pensions provisions.

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3. How the millennial life course affects financial behaviours

A generation who are currently in their 20’s and 30’s, millennials experience a number of key life transitions in the “transition to adulthood” which are likely to affect their attitudes and behaviours relation to spending, saving, and investing, with longer-term effects on their money management habits. Research on the customer switching journey conducted by CASS found that key life transitions such as getting married, starting a new job, buying a house, or having children are all points that prompt consideration of a new current account.12 In other words, many of the life milestones experienced by millennials are linked to making active financial decisions.

The millennial life course is notably different to the experiences of older generations at the same age. Life expectancy is rising globally and people in the UK are living longer than ever before. As people live longer they are also likely to be working longer, and hitting life milestones at different ages to previous generations in what has been termed a ‘delayed transition to adulthood’. The Office for National Statistics has published recent research, Journeying into adulthood13, which provides a useful overview of how life milestones for young people have changed over the last two decades – with

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implications for their personal banking preferences.

It therefore makes less sense to break down the millennial life course in terms of age, and instead look at the transitions they experience. Collectively the millennial generation encompasses a wide cohort of young people, young and mature adults transitioning through broadly four key life stages: Dependency; Independence; Towards settlement; and Settlement and responsibility.

Each of these milestones present important points to nudge young adults to balance present day money management with supporting financial preparedness for later life. In particular, sustaining strong financial habits across the life course is an important way to combat savings ‘under-provision’ amongst young adults. Many of millennials who participated in our research perceive a ‘path dependency’ of financial priorities whereby they seek to accomplish one discreet financial goal – such as paying off debt or achieving a certain quality of life – before moving onto another financial goal, such as saving for a mortgage or a pension. Life transitions are therefore opportunities to nudge and incentivise young adults to balance present day money management with plans for later life. Beyond savings there are also implications for other financial responsibilities and choices. FCA research finds that without home ownership as a ‘trigger’ for more complex financial products, there is an emerging protection gap amongst young adults – for example only 19% of 25-34 year old renters have home contents insurance and 88% have no form of protection cover.

In the ‘multi-stage’ life20, where people will need to reskill, retrain, and adjust to rapidly changing social and economic forces, nudging specific financial behaviours must take place alongside developing broader financial capability and resilience throughout the life

course. This lifelong financial education could take place through formal government-led interventions and employer-led financial wellbeing and education initiatives which encourage young employees to manage their money and build up good savings habits from their first paycheck and at key points of career progression.

There is also a key role for the financial sector in encouraging active consideration of new financial products, supporting the take up of tools and services which build financial literacy, and enabling money management and savings habits that will stand the test of time.

Many of our focus group participants stated a need for personalised information sources which spoke to their specific concerns and life stages - although trust in financial providers is lower amongst younger generations than older people, information from financial providers remains highly

Financial education ...is the process of providing resources and training to allow people to develop knowledge, attitudes, and money management skills so they can make informed financial decisions and avoid financial exclusion.21

Financial literacy...is having the knowledge to make informed choices about financial products and services, to take effective money management decisions, and to access and evaluate independent financial advice.22

Financial capability...is having the individual ability and confidence to manage money and make informed personal finance decisions, both on a day-to-day basis and through significant life events.23

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Millennial life stages... and their financial implications

Assets and familial responsibilities mean that these millennials have more complex financial needs. Home ownership has been found to trigger use of other financial products -76% of 25-34 year old residential mortgage holders hold home insurance, 51% life insurance, and 27% critical illness cover.19 Even for those millennials who are priced out of the housing market, forming long term relationships, getting married, and/ or having children means that they are more likely to hold insurance and protection products, compared with those who are not married or have no children. As well as the introduction of new products, this stage also allows for ongoing financial education by reaching new parents through their school-aged children. But there remain challenges such as around preparing for later life, and issues including gender disparity whereby women are more likely to be undersaving for retirement than men.

Settlement and responsibilityHaving reached a “settled” stage of life, young adults may experience a higher degree of stability in their careers, personal relationships, and living circumstances. This group is likely to be an older category of millennials – unlike previous generations it is no longer the norm for people to get married and start a family in their late teens and early twenties, and less than 5% of 18-24s have experienced one of these life events in the last 12 months.17 Settlement may coincide with home ownership; 38% of 25-34s have a residential mortgage compared with 13% of 18-24 year olds.18

Life-changing events in the late-20s and early-30s often lead to more complex financial requirements. As older millennials settle into employment, they also gain associated workplace benefits. That said, they also continue to face large student loans and other debts. 25-34s are the age group most likely to be in financial difficulty (13%) and the most likely to be over indebted (23%) in comparison to all other age groups.16 Here there are opportunities for smoothing products to help with unstable costs, and tools which allow a transition towards regular savings for a house deposit at the same time as saving for later life.

Towards settlementYoung adults are progressing in career or looking for new opportunities. They typically live alone or with a partner and are saving for a property, although renting continues to be more common across all but the oldest age groups.

Entering full-time work for the first time is a one of the most significant financial milestones for young adults, and pivotal to financial education and lifetime money habits. Yet often young adults receive their first paycheck with no accessible explanation of their pensions, taxes and national insurance contributions, or other workplace financial benefits. Here there is a clear remit for employers to take on more responsibility for employee financial wellbeing and education, and for financial products and tools which provide accessible and practical insights as young people actively manage their money for the first time so that they can build up good behaviours and savings habits.

IndependenceYoung adults are earning an independent income and living outside of the family home. The most common life event for 18-24s is moving house, with 21% having done so in the last 12 months.15 Progression into full-time employment is also a key window for financial decision-making, particularly in the context of making regular savings and auto-enrolment into pensions.

DependencyAt this stage, a young person may still live within the family home and be in full-time education or early career. Young adults are remaining in this life stage for longer as more people are staying in full time education and working less than they did 20 years ago. Living with parents is now the most common living arrangement for young adults (whereas in 1997 it was being in a couple with 1+ children). More young men are staying at home than young women (37% compared to 26% of 18-34s).

Young people in this group have ‘fledgling’ financial needs,14 with low demand for financial services beyond simple products such as current accounts. Many are already working and earning, but may choose to live with parents so that they can reduce expenses and/or build up savings. This is a key time to build financial literacy while they are still in education, entering work, or living in the family home. There are opportunities here for tailored financial services which allow young people to model and experience financial independence whilst having lower real risk of financial instability. Encouraging consumer choice and product switching at an early life stage could help build strong consumer agency when it comes to more complex products.

31W W W . C O V I . O R G . U K / M I L L E N N I A L S - M O N E Y

30M I L L E n n I A L S A n D M O n E Y


valued when personal banking data and insights are made readily accessible to the customer, enabling them to appraise their own financial behaviours and make product comparisons and choices based on this personal information. Life transitions are also key points at which consumers want formal financial advice: nearly three quarters of consumers want a financial adviser to help them predict how major life moments could affect their finances.24

In summary, encouraging active consideration of new financial products, promoting financial education, and incentivising long-term financial provisioning are all interventions that could be better tailored to millennial life stages and transitions. There are key opportunities for government, employers, and financial providers and services, including the Current Account Switch Service (CASS), to use these transitions to enable and empower this age cohort to make sound financial choices and decisions that are fit-for-the-

future.

Banking in the age of the 100 year old25

Key Points

• As the population ages, the very concept, definition, and socio-economic norms of ‘later life’ is also changing. For millennials - a generation who may be experiencing a delayed transition to traditional notions of adulthood, who expect multiple shifts in employment as they age, and for whom the concepts of ‘retirement’ and ‘old age’ will look very different to that experienced by older people today - financial planning for later life means much more than saving for a pension. It means building up financial assets, knowledge and resilience across the life course.

• The vast majority of participants in our focus groups and interviews acknowledged that saving for later life is important, but many cited affordability and current financial insecurity as a barrier to saving more or using fixed term savings products. Those who do save regularly are often doing so with their next life transition in mind, with a view to building stability and certainty in the near-term, before progressing to saving for subsequent life stages. Financial products and services are currently not catering for this perceived ‘path dependency’ of financial priorities, and there are untapped opportunities for support, tools, and new hybrid products which allow young adults to balance their more immediate financial goals with longer-term savings provisions.

• Additionally, one of the biggest barriers to making informed decisions about saving for later life is rooted in a lack of knowledge and awareness about the choices which exist. These low levels of financial literacy and confidence do not only affect the propensity to save, they also influence the product consideration and decisions that people do make when they are saving, hindering market competition.

• A recurring theme mentioned by focus group and interview participants was their inability to visualise or forecast what their retirement years would look like given the pace of social, economic and technological change. This presents a psychological barrier to seeking relevant knowledge and taking practical decisions with regards to financial planning for later life. As such, incentivising or mandating people to put aside savings for later life is just one intervention that must take place alongside developing financial capability and resilience throughout the life course.

• Millennials experience a number of different life stages and milestones, each presenting important points to nudge young adults to balance present day money management with plans for later life. Encouraging active consideration of new financial products, delivering workplace financial education and incentives, and increasing levels of auto-enrolment are all interventions that could be better tailored to life stages. new products and financial innovations could also be used to complement immediate money management needs at each life transition with longer-term planning.

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4. Responding to millennial experiences and expectations

Our qualitative research set out to explore the extent to which millennial preferences and expectations of personal banking products differ to other age cohorts. We took a user-led approach, asking participants about their money management concerns, the support they require to meet their financial objectives, whether the financial products and services they currently use meet their needs, and their overall expectations of the “customer experience”.

The main current financial priorities cited by our research participants were budgeting for day-to-day costs and tracking spending, avoiding debt, putting aside money for a contingency fund, building short-term savings for lifestyle expenses or a more comfortable living situation, and for some participants, saving for first-time home ownership. As well as responding to these requirements, financial providers, government, employers, and civil society have opportunities to be responsive to the longer-term needs of millennials and help them build financial resilience for the

future.

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Millennial expectations of banking products and services

In terms of what millennials expect from the financial ecosystem, we found that, in many respects, millennials aren’t that different to other generations in terms of what they expect from banking products. But there are key differences in their expectations of how these expectations are met.

Accessibility and convenience

The decline of the high street and rise of online commerce clearly affects the ways in which people of all ages interact with their bank, but younger customers are less likely to view face-to-face services as important. That said, accessibility expectations go beyond online access and digital payment methods, which are now considered a bare minimum for younger customers.26

Communication

People of all generations prioritise good customer service when choosing financial providers, but unlike older customers millennials expect most of this communication to take place online. In fact previous research has found they interact more with their banking provider than older generations, largely due to their frequent use of the internet, apps, social media, and other channels for banking activity.27 The speed and responsiveness of communication is also an expectation from this age group, with real-time updates, automated reminders to pay bills, and other tailored forms of communication relating to budgeting or spending patterns, for example.

Control

Across all consumer sectors, products which allow users to access and utilise their personal data analytics are growing in prominence. Financial providers have responded by offering predictive services which analyse behaviours and allow users to understand and plan for different financial scenarios. Large banks as well as digital providers now use customer data to offer personalised recommendations on which of their services might be most suitable to individual preferences.

Trust and accountability

Trust has always been vital to the customer experience of banking services. While for previous generations a personable and approachable branch manager was indicative of trustworthiness, reputation and accountability manifests differently in the digital age. Our research participants acknowledged a generational difference in the levels of trust placed in digital technologies, with millennials being more comfortable sharing data and processing transactions using online platforms than older family members for example. Word-of-mouth and peer referrals are also important, whereby knowing someone who uses a new product or service helps confidence in its reliability.

Responding to the digital-first customer

Demand for accessibility, convenience, and customer control goes some way in explaining the rising popularity of the mobile-first ‘challenger’ banks amongst younger age groups. new banking providers such as Monzo, Starling, and Revolut have been adept in applying FinTech developments to banking services, often faster than the traditional high street banks have rolled out similar products because they don’t have legacy systems and infrastructure. Services which allow instant transfers using mobile numbers, integrated budgeting tools, automatic spending and savings reports, and the ability to earmark money or use ‘jam-jarring’ functions to track spending have proved successful in attracting young, digital-first customers. Research by Kantar found that 71% of Monzo, Revolut, Starling, and Atom customers are under 35.28 A 2018 Crealogix UK study29 found that 1 in 4 under 37s are using digital-only challenger banks and 14% of UK bank customers across all age groups have at least one mobile-only digital banking provider.

Open banking reforms, requiring UK-regulated banks to allow

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customers to opt to share their banking data with licensed third-party providers, have also accelerated the development of new third-party apps and tools which enable users to aggregate information from different financial providers.

As more and more individuals use these digital services, providers are able

to tap into a growing pool of data, spot patterns, and refine products so they are more accurate and attuned to customer preferences and behaviours in the future.

However, these products still only have a minority market share. Although awareness of digital banks is higher amongst younger age groups, the majority of millennials continue to favour traditional high street banks31 over new market entrants, and only a small (but growing) proportion currently use challenger banks as their main account. A number of traditional financial providers have begun to use new technologies to adapt to the ways that millennials want to manage their money.

For a generation already accustomed to digital platforms, smart technology, and data-driven personalisation and predictions, these are fast becoming the minimum requirements for modern financial products and services, as well as many other of the services that relate to retail payments operations,

of 18-34s either bank with or have heard of Monzo compared to 44% of older age groups.

– Common Vision/ Opinium Research30

69%

52%

52%

of 18-34s bank with or have heard of Starling, compared to 37% of older age groups.

of 18-34s bank with or have heard of Revolut, compared to 28% of older age groups.

such as processing transactions and making international payments. Insights from our qualitative research correlates with other studies which have found that younger customers embrace digital banking and payment methods; but digital services are a ‘hygiene factor’ expected of all banking products, not enough by itself to entice millennials.32

However, although new digital tools and services are helping younger customers in particular to become more aware and confident in terms of their day-to-day money management, there are gaps, particularly in terms of wrap-around digital tools which aggregate information across different accounts, investments, and wider services such as utility bills, and provide market knowledge to customers. Effective day-to-day budgeting tools are not necessarily assisting long-term financial stability for a generation of millennials facing far more insecurity than their parents did at the same age. Digital services for pensions and investments are also less prevalent - 2019 research by Share Action found that only two of the nine large UK pension providers interviewed had an app of some kind, and these had low user ratings.34 FinTech and digital banking has the potential to be deployed to make a difference to the millennial

Multiply creates a personal financial plan that covers savings, investments, pensions, and insurance needs based on users’ data. It is designed for people who earn under £300,000 a year, and is adaptable to freelance employment with variable income.

HSBC’s Connected Money app allows customers to see account information from 21 banks in one place, has a spending analysis feature, and allows customers to round up debit card purchases to earmark savings. The app is now being rolled into HSBC’s main mobile banking interface.

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The cautious calculator

Mark, 24, is a recent graduate and has been working for one year. He moves money into his mobile bank to budget for everyday expenses and automatically puts aside money for savings. Growing up, his parents were always stretched beyond their means and didn’t pass on any knowledge on how to manage money. When he moved outside the family home for university he found it difficult to budget independently and struggled to feel in control of his finances, which is why he is much more careful now. For Mark, being financially secure means living within his means and not worrying about finances. Using digital tools and products helps him feel secure, at least in the short term, and encourages regular habits so he can start to plan for the future.

experience of money by aiding financial resilience, wellbeing and inclusion, but this market is as yet fairly niche, and would benefit from capital, government and regulatory support, and impact evaluations.

Banking in the age of the robot: Digital customer pen portraits

Our Banking in the Age of the Robot33 trends paper presented a series of ‘pen portraits’ summarising some of the recurring themes we have found across focus group and interview participants as to why they have switched to, or multibank with, digital products.

Responding to information overload

Millennials have grown up in a world of instantaneous information, powered by the internet. But this does not necessarily correlate with levels of knowledge and literacy, particularly on financial matters. Many of our research participants noted that even though trustworthy sources of financial information and education do exist, they are not sure where to find them. 18-24 year olds rate themselves as the least confident and knowledgeable of all UK adults about managing money and financial matters, while older millennials cite

The finance-phobe

For Lily, 27, financial satisfaction means not having to think about money. In the past, she has had help from family members in meeting financial milestones and large expenses, so hasn’t ever actively saved. She has been in stable employment for a while but finds budgeting stressful and avoids dealing with banks. She doesn’t want to spend time researching different products but uses the app recommended by her friends. Using the budgeting tools and spending reports provided by her mobile bank has meant she is more aware of her current financial situation and takes steps halfway through the month to limit her spending if the app indicates she will exceed her income. Although she didn’t have any savings before, she now feels a sense of achievement when she sets a goal that she is able to work towards.

The digital devotee

Bea, 30, feels that high street banks have failed at providing a modern service. From branch opening times, to the letters they send in the post, to the hassle of having to speak to someone on the phone, they haven’t adapted or evolved to modern life. She uses digital platforms and interfaces for almost everything she does in both her working and personal transactions, so when friends recommended their mobile bank it was instantly appealing. She loves the functionality of the app, but also feels the provider is more trustworthy for being able to move with the times and respond to her lifestyle.

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more confidence with financial products, but are still less confident than older age groups.35 Confidence does not correlate with levels of education - adults with degrees or postgraduate qualifications are just as likely to feel certain or uncertain about their abilities as those educated to GCSE level36 – although it does grow with experience and age.

There is nevertheless clear demand for reputable and impartial financial information that is responsive to trends in how millennials receive and perceive information. This includes how younger consumers perceive marketing communications and advertising from financial services, how they seek formal or informal product advice, and which digital channels they trust to make and process payments and purchases. An Ipsos MORI study found that millennials are the age cohort most comfortable using multiple sources to gather information or educate themselves on any topic of interest, taking stock of information and adverts across a diverse range of media channels. Millennials were also found to be more open to a wider selection of communications approaches from financial providers, such as virtual bankers and tools which enable peer learning. They are interested to know how other people in similar situations to themselves are managing their finances, and value information which is personalised to their current financial status and accounts, and which can help them manage their finances, set financial goals, and get support in meeting these goals.37

This preference for personalised information is perhaps one of the reasons why advice from parents and peers remain the most valued source of financial information and guidance amongst the millennial age cohort. Our polling results showed that millennials still turn to their parents for financial advice, more than any other source. Our focus group participants also frequently cited specific family

members as initial ‘ports of call’ for guidance on financial matters. And whilst a stigma and reluctance to talk about money and finances was acknowledged, some participants said that they do feel they are

able to talk to their friends.

Seeking, and acting on, advice from parents and friends differs by financial product. Some of our focus and interview participants acknowledged that the economy has changed significantly since their older relatives had experienced the financial transitions or requirements that young adults encounter today. In the same way, certain types of peer advice are valued above others. Peer recommendations for everyday products, current accounts and money management apps were more frequently cited than peer recommendations relating to more complex products.

However, few to none of our research participants mentioned using an IFA, ‘robo-advisors’ or other digital tools and apps that make formal financial advice more accessible. This could be due to market supply: Just under half of IFAs currently offer these life transition-related scenario exercises, while a further 27% plan to in the future.44

– Common Vision/ Opinium research43

0%10%20%30%40%50%60%

18-24 25-34 All adults

Where do you turn to for advice on current accounts?

My parents Price comparison sites My spouse/ partner

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RelevantInformation is most useful when it is tailored to life stages and personal goals. Here, the growing personalisation of digital marketing techniques may help raise awareness of products and services on the market, but this also presents a risk that riskier products, such as cryptocurrencies, may be presented in such a way that makes them seem personally beneficial.

Banking in the age of fake news

What sorts of financial information do millennials want?

Our Banking in the Age of Fake news38 trends paper notes that financial information is most useful when it reflects the following characteristics:

ImpartialMany of the millennials we spoke to cited demand for impartial sources which are independently verified by government or charities. While financial providers have a role to signpost their younger customers to independent sources of advice and guidance, they also have a responsibility to be transparent about how they communicate information about their products and services, and allow millennials to weigh up this information. Ofcom’s Media Use and Attitudes study found that only 22% of 16-24s and 38% of 25-34s who have used PCWs are aware that the deals which appear first may be because companies have paid for these listings.42 Although this is broadly comparably with 34% of all adults, this indicates a worrying level of digital literacy which clearly affects consumer choices and healthy market competition.

PersonalisedAlthough millennials are less likely to rely on direct information and guidance from banks than older generations, financial providers have a continued role to play in ensuring that millennials are provided with the tools and resources that will enable them to appraise their own financial behaviours and make product comparisons and choices based on accurate and responsive personal information. new digital banking services have begun to adapt to this demand for real time money management information, as outlined in the first paper in the series Banking in the Age of the Robot.39 There remain untapped opportunities for digital products to address the financial literacy gap which many millennials feel inhibit their money management, even if banking services are not held in high regard for other forms of financial guidance and advice.

RelatableThe tone and style of product information, marketing communications, and even formal notices like service terms and conditions all contribute to whether a provider is seen as relevant to personal needs and lifestyles. Jargon-free communications need to be balanced with the ambition to develop knowledge and resilience in longer term, as financial needs evolve and become more complex.

Low costAlthough many young adults perceive independent financial advice as a service for the wealthy, the growth of digital financial advice (or ‘robo-advice’) brings the potential for low-cost tools to serve as an easy ‘entry point’ to financial advice from an early life stage. new technologies may also allow advice to become more tailored to specific life stages, transitions, and population segments, including older people and those who are financially vulnerable as well as younger customers. These new developments would require careful regulatory oversight - tailored information currently falls within the scope of financial advice which is regulated by the FCA, which recently warned of a potential “mis-selling scandal” if online tools are used to direct people towards unsuitable products.41

Peer-verifiedThe ways in which millennials trust peer support and advice from family members is not necessarily in conflict with the communications and advice priorities from financial providers. There are already examples of bank marketing campaigns – as well as campaigns from charities such as Relate - which encourage more informal conversations amongst peers and family members about money matters. Furthermore, emerging online platforms are helping peer support and ‘user generated content’ which is quality-assured by finance professionals.

TangibleInformation about clear practical actions with visible results is seen as helpful, such as the ways in which money management techniques like microsaving can achieve personal financial goals over a defined period of time. Financial communications which detail the tangible outcomes of investments have also been found to be more appealing to younger audiences.40

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Some banking providers have begun to tailor their customer services to millennial needs. However, the vast majority of financial products still mirror the historical taboo surrounding money discussions and don’t enable peer learning and information exchange. There are clearly untapped opportunities for financial providers to address the financial literacy gap which many millennials feel inhibit their money management in a way that is responsive to their preferences, and for government and employer-endorsed platforms which enable peer-to-peer financial education enabled by technology and AI.

Responding to the housing crisis

Limited available housing stock and rising property prices, with lower proportions of earnings growth, mean that first-time buyers today are faced with a widespread affordability challenge. The resulting decrease in mortgage applications has been further exacerbated by stricter regulations for mortgage products since the 2008 financial crash. These challenges combined mean that the millennial generation is more acutely ‘priced out’ of home ownership than previous generations. This is demonstrated through an increase in the average age of homeowners, and a growing proportion of millennials finding themselves ‘trapped’ in the rental market. More and more young adults are now living in rented properties. In 2017/18 the total number of private renters aged 25-34 had

Barclays Money Mentors has been developed in response to feedback from the bank’s millennial customers who said they wanted a more open forum to talk about everyday money matters and financial goals. Customers and non-customers can book a free session through a participating branch and receive practical tips and guidance to help them keep control of their finances. The sessions can be booked a face to face, or branches can arrange for the session to be held via video call.

“For me, financial satisfaction means being able to afford something beyond just paying my rent. I’m living at home because I don’t think I’d be able to do that right now.

- James, 24

“In the next 2-5 years, I think my financial situation will improve slightly along with my career progression. My first priority is achieving a better quality of life, I’d like to live [rent] somewhere better, with a second bedroom, maybe a garden so I can get a dog, and have a more balanced lifestyle.

- Alex, 29

“I find it hard to trust online information about financial products and services… even if the website is fairly well known I don’t know whether the information is up to date. Comparison sites don’t always tell me what I want to know.

- Maddi, 23

“I save every month but I recently looked at a pensions calculator and it said I should be saving £600 a month which is just not feasible or realistic. There’s a lack of guidance around how I should be planning for the future.

- Bea, 25

“

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increased to 1.4 million (31.5% of all private renters), up from 1 million in 2008/9 (14.6% of all private renters), an increase of 44%. 41% of current 25-34s are owner occupiers, compared to 58% of 25-34s in 2003-4. The Resolution Foundation has predicted that if the current trends of declining home ownership continue, up to a third of millennials will be “cradle to grave” renters.47 Meanwhile an inquiry by the All-Party Parliamentary Group on housing and care for older people warns that more than 630,000 millennials will be unable to afford their rent when they retire, and will need lower-cost rented accommodation.48

Beyond the challenges of saving for a deposit and accessing the property ladder, there are also a number of knock-on effects in terms of the longer term financial resilience of individuals and families. For those without property assets who may be paying rent into later life, it is crucial that the market responds with other ways to plan and build long term financial security. Support is also needed for millennial homeowners who continue to face financial security concerns alongside longer mortgage terms and paying off debt late into older adulthood and even retirement.49

Here there are opportunities for product innovation which enable degree of flexibility in terms of savings targets and product choices. Government too, has a role to play in helping individuals to save simultaneously for a home deposit and a pension, or make withdrawals from their superannuation funds. There are also market gaps and government support required to help grow financial resilience among young and lifelong renters.

Growing dependence on parental wealth to access the property market contributes to inequality within the generation as a whole. Research by the Resolution Foundation found that at the age of

30, those without parental property wealth are approximately 60% less likely to be homeowners than people whose parents are homeowners. Just 13% of people whose parents have not accumulated any wealth owned their own home at the age of 30. This leapt to 35% for children whose parents are in the highest third of the parental wealth distribution.50 The resulting challenge for financial providers is the extent to which existing products cater for young adults without parental support and whether more targeted interventions are needed to build financial resilience for this group. Some products have emerged which allow parental assets to underwrite mortgages so that parents don’t have to release equity or

sell assets.

Legal & General has piloted what it describes as a first protection product for private rental tenants, which pays out a monthly benefit that can be used for rent, bills or other financial commitments. The scheme offers three possible plans: rental income protection benefit, rental life insurance and rental life insurance with critical illness cover. There is also an option for clients who eventually take out a mortgage to switch the policy to an income protection benefit plan.

new Zealand’s KiwiSaver is a workplace pensions scheme which allows first-time buyers to access their savings to put towards a home. KiwiSavers can also access grants to help with purchasing or self-building a home.

Halifax’s Family Boost Mortgage is aimed at first time buyers without a deposit. Family members provide security on the mortgage by putting 10% of the agreed property purchase price into a 3 year fixed term savings account.

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Banking in the age of the renter

Key points

• A combination of economic factors means that the millennial generation face more acute housing challenges than previous generations. The average age of homeowners has increased and a third of millennials could become “cradle to grave” renters. Although many of the millennials who participated in our research aspire to become homeowners one day, they cited the uncertainty of rising property prices, increased living costs, and low interest rates as barriers to saving for a deposit. Home ownership has become delayed to later life, and it is not until age 34 that more than 50% of people own a home, whereas in 1997 the average age was 26.51

• Targeted financial support to encourage active consideration and switching of utility providers and financial products may help young renters build up their savings and become more financially resilient. Meanwhile, support is also needed for new millennial homeowners who continue to face financial security concerns alongside longer mortgage terms and paying off debt late into older adulthood and even retirement.52 Financial providers and market enablers including the Current Account Switch Service (CASS), which supports those who wish to move their current account to a new provider that better meets their needs, have opportunities to tailor their products and services to these needs.

• More millennials are living at home for longer to save money, with some groups relying on parental wealth, the ‘Bank of Mum and Dad’, to make it onto the property ladder – potentially compromising the financial security of other generations. Financial providers are responding with products which leverage, or are underwritten by, the wealth of older relatives, but further innovation is needed for those who cannot access familial support.

• The term ‘Generation Rent’ aptly captures a significant and urgent challenge more acutely experienced by young adults

Responding to the pensions gap

The pensions gap amongst millennials comprises two different angles. In terms of provision, on average millennials are still not saving enough (or accumulating wealth and assets) to ensure adequate finances in retirement and later life. Although the government’s auto-enrolment initiative, designed to encourage more individuals to pay into a workplace pension, has proved successful in increasing the number of eligible adults (those who are aged over 22 and earning at least £10,000 per year) who have a workplace pension, these pensions provisions form just one part of the picture when it comes to saving for later life. Analysis from Aegon shows a 22 year old on average earnings would need to contribute an additional 4% above the 8% minimum auto-enrolment combined contribution from individuals and their employers, in order to retain their lifestyle in retirement.53

Furthermore there is a stark knowledge gap regarding this pensions deficit. While almost a quarter of under-35s acknowledge their current workplace or personal pension contribution is not high enough54, a large proportion of young adults do not know the extent to which they are under-saving for the future.

today than any previous generation. But in many ways it also risks homogenising the millennial cohort, within which there is notable variation and economic inequality, and different financial experiences and aspirations of individuals. Responding to the age of the renter requires a concerted effort from the financial market as a whole, not just mortgage providers, to enable and empower the millennial generation to make sound financial choices and decisions.

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Alongside action from Government, financial education providers, and employers, financial services have a practical role to play in developing the knowledge and savings habits that will enable young adults to balance their current financial needs with the urgency of planning for later life.

For example, increased levels of automatic enrolment could be tailored to the life course, as could employer-led financial wellbeing and education services which encourage young employees to manage their money and build up good savings habits from their first paycheck and at key points of career progression.

But a more strategic policy-driven approach is also needed to address the savings deficit over the long-term, which could be addressed through a new Government-backed pensions commission with a remit to look at levels of state and private investment needed in ensuring all generations are provided for in their old age.

Responding to the rise of the portfolio career

While older generations saw many of their financial provisions linked to the stability of a long-term career, millennials will transition through more jobs and career paths in their lifetimes than older generations.

The rise of the ‘gig economy’ or the ‘portfolio career’ means that many millennials are undertaking multiple jobs at the same time. Even those millennials in traditional work are changing in terms of how they view career progression and workplace loyalty.

This has implications in terms of financial precariousness associated with variable income patterns. On the market side, some smoothing products have emerged which could help freelancers and self-employed people better balance irregular incomes, multiple bills, and save more consistently and effectively.

new ‘FinTech for Good’ interventions have begun to use AI and data-driven methods to provide tailored financial support for at-risk customers.

Looking to the longer-term, non-traditional work and self-employment present a barrier for financial planning which is implemented through workplace mechanisms, notably participation in pensions schemes. Under current auto-enrolment provisions, millennials who work in the growing gig economy or those who pursue ‘portfolio careers’ are also at risk of under provision; if one of their jobs earns below £10,000 they do not meet the auto-enrolment threshold, even if they are working full-time hours in total. Almost 106,000 working people are not being auto-enrolled into a pension as their earnings come from more than one job and they therefore don’t meet the threshold of £10,000. 70% of these are women.58 The aforementioned pensions review should account for changing working patterns and how pensions policy needs to adapt accordingly to counteract intra-generational inequality on this basis. A pensions dashboard service, which would allow users to view and consolidate of different funds from different employers, and switch between pension providers, could help encourage more agency around planning for income in retirement.

86% of 18-34 year olds agree a pensions dashboard would be a useful tool, compared to 66% of all age groups.- Ipsos MORI55

14% of all millennials have already taken on gig economy roles instead of full time employment.

Another 43% would consider doing so in future.- Deloitte56

Just 32% of self-employed people aged 20-39 saving adequately for retirement, while 41% save nothing at all. - Scottish Widows57

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Responding to the conscious consumer

There has been various consumer research on the ethical concerns of millennial consumers, who are often reported to be more inclined towards purpose-driven and socially responsible employment, product preferences and consumer choices. In a 2016 survey of 7,700 millennials across 29 countries, Deloitte found that 87% believe that business success should be measured by more than just financial performance.59

A general preference for products which are sustainable or cause-driven may provide opportunities to attract interest from young adults in specific products and services, such as green investments, ethical pension funds or community-driven financial providers such as credit unions. A study of individual investors by Morgan Stanley in the US found that 95% of millennials are interested in sustainable investing, and are more likely to take part in sustainable investing, to exit an investment position for ethical reasons, and to be interested in tracking the impact return on their investments compared to other age cohorts.60 Other international studies have found that millennial investors also more likely to choose investments by themes such as cleantech or automation.61 There is some evidence to suggest that a more ‘activist’ approach to investments may occur as the more well-off millennials accumulate wealth.

In terms of the financial services landscape in the UK as well as globally, a growth of sustainable financial services products reflects current and future demand. In the retail sector the UK’s first green mortgage has recently been launched. As demand increases, there is also an increased role for regulators to ensure that investors have a clear understanding of sustainable and ethical products and that there is a common taxonomy to avoid ‘green washing’ and consumers investing in mislabelled products.

5. Millennials and Money: The opportunitiesThere is clear rationale for financial providers to become more responsive to the needs of the millennial generation. Millennials are fast becoming the largest and most influential age cohort in the UK, with their financial expectations, workplace behaviours, and social attitudes becoming ever more powerful as they take up positions of responsibility and leadership.

Their preferences are likely to further disrupt the financial sector in years to come. These young adults are more likely than older groups to be in the market for a new banking service, and are increasingly expanding their product preferences as they undergo the multiple life transitions set out in Chapter Three of this report. Market diversity and competition is important for a cohort who on average hold almost two accounts each, meaning that many of them will hold three or even four different accounts.62 However, it is clear from our consultation with millennials that one of the biggest barriers to making informed decisions is rooted in a lack of knowledge and awareness about the choices which exist. Even the young adults who are most active in tracking and managing their finances did not

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feel they had enough access to impartial information from credible and independent sources. This knowledge gap particularly applies to choices relating to long-term financial needs such as pensions or investment products.

Focusing on the needs of millennials is also an opportunity for the financial sector to respond to the public trust deficit and restore the ‘social contract’ between banks and consumers. Although millennials are less likely than older groups to trust traditional banks,64 trust and reputation remain key drivers for millennials when choosing financial products and services. However, trust is ‘won’ in different ways to older age groups. Our focus groups backed up other studies which have found that millennials value authenticity of products and services and do not want to be exploited by rhetoric or gimmicks.65

A quality banking experience is seen as one which is responsive and tailored to personal lifestyles, and which helps build financial confidence.

The imperative to enable young adults to become more financially

– Common Vision/ Opinium research63

41%

of 25-34s have switched or opened a new current account

of 18-24s are considering switching or opening a new current account

of 25-34s are considering switching or opening a new current account

of 18-24s have switched or opened a new current account

25%

28%

31%

(compared to 17% of all age groups)

(compared to 17% of all age groups)

In the last 12 months...

In the next 12 months...

confident and independent has benefits beyond the millennial generation alone given the intergenerational dependencies with older cohorts - a recurrent theme across our focus groups and interviews was the extent to which young adults turn to their parents for support at various points of their financial lives, while the so-called ‘Bank of Mum and Dad’ has been described as the 10th largest bank in the UK gifting over £6 billion in 2018.66 Additionally, the attitudes and behaviours of a generation of young children today will be shaped by their millennial parents (the Money Advice Service has shown that many key financial habits are set by the age of seven).67 As more millennials enter a ‘settled’ phase of life, the next generation of consumers and citizens – often referred to as Generation Z or the ‘Centennials’ – will take up the mantle as market disruptors and providers and policymakers alike will need to respond to this younger cohort, within which there are similar attitudes and behaviours to millennials but also emerging differences. For example, Generation Z have a different experience of technology, with no memory of a pre-digital society. They may have different educational norms both in terms of learning styles and routes from education into employment. As consumers, they have yet to build brand loyalties but are as conscious, if not more so than millennials, when it comes to ethical concerns.

Efforts to promote and engender financial resilience must account for the rapidly changing external context. Changing employment patterns, income levels, and new ways of conducting business will have inevitable, but as yet unknown, consequences for economic resilience and financial behaviours in the future. As individuals weather these changes, finance providers will need to use innovation to continue to ensure both quality everyday experiences and long-term economic resilience. But at the same time, millennials will need the skills and confidence to critically assess new and emerging

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financial products which could potentially cause harm, such as buy-now-pay-later products, cryptocurrencies or personalised services which use their personal data.

These are important and urgent challenges for a range of stakeholders, but they also present opportunities to think creatively and aspirationally about the sort of society and economy that will stand the test of time for a generation that has another three or four decades left of working life, and even longer in terms of retirement and old age. Helping millennials to take control of their finances now rather than put off financial planning for later life is an opportunity for public authorities to reduce future pressure on state resources, while for private actors it presents a market opportunity to demonstrate purpose and social responsibility. In the context of increasing focus on employee health and wellbeing, supporting financial wellbeing is also likely to be a growing prerogative for employers. We outline just a few of these opportunities below.

Opportunities for financial providers

• Financial providers have a key opportunity to restore public trust from younger customers – but to do so they must actively provide innovative solutions, in the form of new products or integrated tools which enable customer agency and control and ultimately improve their daily lives. These may include personalised and predictive services which empower customers by allowing them to access data around their spending and savings habits. Transparency around product development is also key to ensuring customer trust.

• Challenges such as helping millennials get on the housing ladder or saving for retirement are not challenges for mortgage

or pension providers alone – there are opportunities for other providers to think creatively around how their products and services can help millennials build assets and plan for their long-term futures.

• Service providers should carefully consider the ways in which they communicate information to young customers, with accessible bitesize information, real-time updates via digital channels, and information about social impact all important parts of the millennial experience.

• Beyond information around products and services, financial providers have a wider responsibility to engender financial literacy amongst their customers and the wider public, and have opportunities to counter social taboos around discussing money issues. Supporting independent and impartial government or charitable information platforms, and encouraging accurate transmission of financial information through online and offline peer networks, is another way to demonstrate market leadership.

• Serving the underbanked and financially excluded is as much a prerogative when it comes to the millennial generation as other age cohorts. The ways in which financial information is communicated, and the digital presence offered by financial providers, are important to ensuring products are accessible to young customers.

Opportunities for Government, policymakers and regulators

• The millennial generation face a number of acute and unprecedented economic challenges which require both urgent policy solutions and a long-term systemic response to address

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issues such as debt, housing supply and health and social care provision in later life and old age. Thinking specifically about millennial experiences of financial services, national policy responses could include:

○ A new pensions commission to review levels of state and private investment needed for a secure later life in the context of an ageing population and changing employment models;

○ Leading the development of a code of conduct for financial providers and media outlets which provide information about personal finances and financial products;

○ Appropriate regulatory measures to ensure that Open Banking and Open Finance developments do not hinder market competition or financial inclusion;

○ Support for community lenders, credit unions, and CDFIs to innovate and improve their offers for the digital age.

• Government has an important role to play in ensuring consistent and effective lifelong financial education. Beyond shaping the education curriculum within schools and universities, this involves working with civil society and private actors to provide support and guidance to young adults as they progress through crucial life transitions. But incremental education is not enough to prevent a looming crisis of public finance and personal pensions provision. A national campaign to build awareness of the importance of saving more for later life, as well as more general financial health and wellbeing issues, would be one way to ensure this becomes an urgent public issue.

• Building on the experience of UK Government interventions such

as Help-to-Buy and international examples, there are further opportunities for Government to roll out schemes which could:

○ Match individual savings for a home deposit and a pension, allowing individuals to save simultaneously for these goals and make withdrawals from their superannuation funds when necessary;

○ Extending the provision of ‘rent-to-buy’ models;

○ Support new savings vehicles which allow for the transfers of assets between family members;

○ new savings bonds or trust funds for under-18s which encourage their millennial parents to invest in their childrens’ savings, and new young adult trust funds, with an associated government starting payment.

Opportunities for civil society

• There are already a number of financial education charities, community advice hubs, and national bodies such as Citizens Advice who provide impartial advice around personal finance and debt. However these are often geared towards individuals in difficulty or crisis rather than preventative educational materials. Instead financial resilience needs to be viewed as the next horizon on the wellbeing agenda.

• Calls for improved financial education often focuses on the roles of schools, colleges and universities. A joined up national campaign to make financial wellbeing ‘everyone’s business’, coupled with materials tailored for specific life stages, would enable more people to benefit from lifelong financial education.

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• As with the private sector, there is an opportunity for civil society organisations to think about how their efforts support the accurate transmission of financial information through online and offline peer networks, and the critical skills consumers need to make financial choices.

Opportunities for employers

• As with wider civil society organisations, financial resilience needs to be viewed as the next horizon on the wellbeing agenda and incorporated within employee wellbeing programmes. Employers are well placed to provide workplace educational materials, signposting and support.

• Employers have opportunities to go beyond the bare minimum when it comes to auto-enrolment and pensions top-up incentives. They can also be proactive in nudging and incentivising employees, casual workers and freelancers to consider being active in their financial choices, and expanding their financial portfolio, for example to income protection

products.

Opportunities for millennials

For millennials reading this report it’s important to note that, despite an often gloomy analysis by economic commentators and the media, we have time on our side. Many of the issues laid out in this report are very serious challenges which require urgent policy and market responses. But a large part of preparing for the future will need to be led by millennials as the generation of leaders and decision makers in public life. It is perhaps not helpful to make sweeping generalisations about the actions and solutions millennials can take

given the diversity within the generation. Many of the millennials who participated in our study were keen to do their own research and appraise their own options rather than being told what to do. Therefore we would simply flag the broad opportunities to:

• Adopt a ‘mindful’ approach to money. Such as setting yourself spending and savings goals - or barriers such as removing auto-populated payment information to stop making impulse buys, or setting spending limits or limit transactions with specific merchants. Avoid late payment fees by choosing accounts which send you notifications of insufficient funds and take care to avoid high fees and transaction charges, or buy-now-pay-later products which may significantly increase the costs of purchases.

• Seek advice from others. This could be friends, family, employers, price comparison websites or financial providers. Ensure you use a balance of sources and impartial opinions as well as referrals from people you trust. Consider booking an appointment with an independent financial advisor – some providers offer a low-cost initial consultation call.

• Exercise individual agency and make active choices about money management now. Think carefully about your current financial products and whether you can get a better deal elsewhere. Ask your employer for clarification about your pension provisions. Download and test tools and apps which can help with budgeting and financial planning. Think about what your financial needs will be in the future and what you can do now to support your future comfort and stability.

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“[Digital bank] tells you about technical developments and plans and make you feel invested. It’s about transparency… but also it’s that I trust they are fit for the future. I don’t know what I might need in five years’ time, but I think they will know, as unlike the high street banks they have already shown they can move with the times.

- Lizzie, 33

“I didn’t think about retirement until I hit my thirties. I know that I’ll need to supplement my workplace pension as it won’t be enough for the lifestyle I want. At work we had someone from the pensions company come in to explain it and that’s when I realised I had to do more. Before that, I didn’t know how it all worked.

- Ash, 34

“One of the main reasons I rely on my family is because they know what I am like and how I do things, so they give me personal money tips. However, on the big things, like the best mortgage, my mum won’t cut it, so I’d look elsewhere.

- Bo, 24

“I ask my friends and colleagues what they do because they’re at a similar financial position and have gone through similar experiences. I think talking about money is becoming less of a taboo - but maybe that’s because I talk to people so they talk back!

- Ingrid, 26

References1 Common Vision (2019) Banking in the Age of the Robot, http://www.covi.org.uk/wp-content/uploads/2019/10/Millennials-and-Money-Banking-in-the-age-of-the-robot-FInAL2.pdf

2 Common Vision (2019) Banking in the Age of the 100-Year-Old, http://covi.org.uk/dev4/wp-content/uploads/2019/11/Millennials-and-Money-Banking-in-the-age-of-the-100-year-old-FInAL.pdf

3 Common Vision (2019) Banking in the Age of Fake news, http://covi.org.uk/dev4/wp-content/uploads/2019/12/Millennials-and-Money-Banking-in-the-age-of-fake-news-FInAL.pdf

4 Common Vision (2020) Banking in the Age of the Renter, http://covi.org.uk/dev4/wp-content/uploads/2020/02/Millennials-and-Money-Banking-in-the-age-of-the-renter-FInAL.pdf

5 Intergenerational Commission (2016) Stagnation Generation: The case for renewing the intergenerational contract, https://www.intergencommission.org/wp-content/uploads/2016/07/ Intergenerational-commission-launch-report.pdf

6 Aviva (2016) Press release https://www.aviva.com/newsroom/news-releases/2016/08/uk-generation-regret-over-a-third-of-millennials-who-went-to-university-regret-doing-so-as-they-struggle-with-debts-and-squeezed-finances-17653/

7 Intergenerational Foundation (2018) using data from the Wealth and Assets Survey (WAS) conducted by the Office for national Statistics, http://www.if.org.uk/2018/10/15/half-of-young-adults-have-no-savings-ons-data-reveal/

8 Opinium Research/ Common Vision carried out a survey of 2003 UK adults, weighted to be nationally representative, between 16th and 19th July 2019

9 Intergenerational Foundation (2018) using data from the Wealth and Assets Survey (WAS) conducted by the Office for national Statistics, http://www.if.org.uk/2018/10/15/half-of-young-adults-have-no-savings-ons-data-reveal/


65













https://www.intergencommission.org/wp-content/uploads/2016/07/ Intergenerational-commission-launch-report.pdf



https://www.aviva.com/newsroom/news-releases/2016/08/uk-generation-regret-over-a-third-of-millennials-who-went-to-university-regret-doing-so-as-they-struggle-with-debts-and-squeezed-finances-17653/




http://www.if.org.uk/2018/10/15/half-of-young-adults-have-no-savings-ons-data-reveal/






12 OnePoll/ CASS conducted a survey of 2000 UK adults aged 18-36 between 28th August and 6th September 2019

13 Office for national Statistics (OnS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-18

14 Financial Conduct Authority (FCA) (2017) Understanding the financial lives of UK adults Findings from the FCA’s Financial Lives Survey 2017, https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf

15 Ibid.

16 Ibid.

17 Ibid.

18 Ibid.

19 Ibid.

20 Lynda Gratton (2016) The 100-Year Life - Living and Working in an Age of Longevity, Bloomsbury Publishing

21 Young Enterprise (2019) Impact of Financial Education, https://www.young-enterprise.org.uk/home/impact-policy/research-evaluation/research/impact-of-financial-education/

22 Sandie Schagen and Anne Lines (1996) Financial Literacy in Adult Life: A Report to the natWest Group Charitable Trust, https://www.nfer.ac.uk/publications/91091/91091.pdf (page ii); Citizens Advice (2001) Bridging the Financial Literacy Divide, https://www.citizensadvice.org.uk/Global/Migrated_Documents/corporate/summing-up-bridging-the-financial-literacy-divide.pdf

23 Money and Pensions Service (2019) What is financial capability? https://www.fincap.org.uk/en/articles/what-is-financial-capability; Toynbee Hall (2013) Financial inclusion and financial capability: what’s in a name? http://toynbeehall.brix.fatbeehive.com/data/files/Services/Financial_Inclusion/Financial_Inlcusion_and_Capability_-_Whats_In_A_name.pdf

24 Scottish Widows (2019) Millennials now Look to IFAS for Help With ‘Adulting’, https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-04-millennials-ifa.pdf

25 Common Vision (2019) Banking in the Age of the 100 Year Old, http://covi.org.uk/dev4/wp-content/uploads/2019/11/Millennials-and-Money-Banking-in-the-age-of-the-100-year-old-FInAL.pdf

26 YouGov (2016) Five ways millennials are banking differently, https://yougov.co.uk/topics/politics/articles-reports/2016/10/10/5-ways-millennials-are-banking-differently

27 Ibid.

28 Kantar (2019) CX The Experience Advantage: UK Retail Banking 2019 report https://cxplus.tnsglobal.com/uk

29 Crealogix (2018) 1 in 4 Millenials and Gen-Zs are using Challenger Banks with Monzo the most popular, https://crealogix.com/uk/news/crealogix-research-1-in-4-millenials-and-gen-zs-are-using-challenger-banks-with-monzo-the-most-popular/


31 Instinctif Partners (2018) Millennials and challenger brands – a match made in heaven or not to be? https://instinctif.com/insights/millenials-challenger-brands/

32 YouGov (2016) Five ways millennials are banking differently, https://yougov.co.uk/topics/politics/articles-reports/2016/10/10/5-ways-millennials-are-banking-differently

33 Common Vision (2019) Banking in the Age of the Robot, http://www.covi.org.uk/wp-content/uploads/2019/10/Millennials-and-Money-Banking-in-the-age-of-the-robot-FInAL2.pdf

34 ShareAction (2018) Pensions for the next generation: Communicating what matters, https://shareaction.org/wp-content/uploads/2018/03/nextGenerationPensions.pdf

35 Financial Conduct Authority (FCA) (2018) Financial Lives Survey, https://www.fca.org.uk/publications/research/understanding-financial-lives-uk-adults#data

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https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-18



https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf

https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf

https://www.young-enterprise.org.uk/home/impact-policy/research-evaluation/research/impact-of-financial-education/



https://www.citizensadvice.org.uk/Global/Migrated_Documents/corporate/summing-up-bridging-the-financial-literacy-divide.pdf

https://www.citizensadvice.org.uk/Global/Migrated_Documents/corporate/summing-up-bridging-the-financial-literacy-divide.pdf

http://toynbeehall.brix.fatbeehive.com/data/files/Services/Financial_Inclusion/Financial_Inlcusion_and_Capability_-_Whats_In_A_Name.pdf



https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-04-millennials-ifa.pdf





https://yougov.co.uk/topics/politics/articles-reports/2016/10/10/5-ways-millennials-are-banking-differently



https://cxplus.tnsglobal.com/uk

https://crealogix.com/uk/news/crealogix-research-1-in-4-millenials-and-gen-zs-are-using-challenger-banks-with-monzo-the-most-popular/



https://instinctif.com/insights/millenials-challenger-brands/

https://instinctif.com/insights/millenials-challenger-brands/







https://shareaction.org/wp-content/uploads/2018/03/NextGenerationPensions.pdf


https://www.fca.org.uk/publications/research/understanding-financial-lives-uk-adults#data

https://www.fca.org.uk/publications/research/understanding-financial-lives-uk-adults#data


(these specific figures can be found in the ‘main’ excel document.)

36 Ibid.

37 Ipsos MORI (2017) Ipsos MORI Thinks: Millennial Myths and Realities Summary Report, https://www.ipsos.com/sites/default/files/2017-05/ipsos-mori-millennial-myths-realities-summary-report.pdf

38 Common Vision (2019) Banking in the Age of Fake news, http://covi.org.uk/dev4/wp-content/uploads/2019/12/Millennials-and-Money-Banking-in-the-age-of-fake-news-FInAL.pdf

39 Common Vision (2019) Banking in the Age of the Robot, http://www.covi.org.uk/wp-content/uploads/2019/10/Millennials-and-Money-Banking-in-the-age-of-the-robot-FInAL2.pdf

40 Share Action (2018) Pensions for the next generation: Communicating what matters, https://shareaction.org/wp-content/uploads/2018/03/nextGenerationPensions.pdf

41 Financial Conduct Authority (FCA) (2017) Robo advice: An FCA perspective, https://www.fca.org.uk/news/speeches/robo-advice-fca-perspective

42 Ofcom (2018) Media Literacy Tracker 2018, https://www.ofcom.org.uk/__data/assets/pdf_file/0026/149840/adults-media-use-attitudes-2019-data-tables.pdf


44 Scottish Widows (2019) Millennials now Look to IFAS for Help With ‘Adulting’, https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-04-millennials-ifa.pdf

45 Ministry of Housing, Communities & Local Government (2019) English Housing Survey, https://www.gov.uk/government/collections/english-housing-survey

46 Ministry of Housing, Communities & Local Government (2019) English Housing Survey Headline Report, 2018-19, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/860076/2018-19_EHS_Headline_Report.pdf

47 Resolution Foundation (2018) Home improvements: action to address the

housing challenges faced by young people, https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/

48 All Party Parliamentary Group for Housing and Care for Older People (2019) Rental Housing For An Ageing Population, https://www.housinglin.org.uk/_assets/Resources/Housing/Support_materials/Other_reports_and_guidance/HAPPI-5-Rental-Housing.pdf

49 natCen and Halifax (2014) The reality of generation rent, https://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/

50 Resolution Foundation (2018) House of the rising son (or daughter): the impact of parental wealth on their children’s homeownership, https://www.resolutionfoundation.org/publications/house-of-the-rising-son-or-daughter/

51 Office for national Statistics (OnS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-18

52 natCen and Halifax (2014) The reality of generation rent, https://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/

53 Aegon (2019) AE and State Pension won’t be Enough to the Retain Lifestyle, https://www.cofunds.aegon.co.uk/content/ukcpw/customer/news/ae_and_state_pensionwontbeenoughtoretainlifestyle.html

54 Prudential (2018) Millennials Want More From Pensions, https://www.pru.co.uk/pdf/press-centre/20180728-millennial-money.pdf

55 Ipsos MORI (2020) Introducing Pensions Dashboard would make life easier, https://www.ipsos.com/ipsos-mori/en-uk/introducing-pensions-dashboard-would-make-life-easier

56 Deloitte (2016) Millennials want business to shift its purpose, The Deloitte Millennial Survey 2016, https://www2.deloitte.com/sg/en/pages/about-deloitte/articles/gx-millennials-shifting-business-purpose.html

57 Scottish Widows (2019), Gen Z faces pension shock as research finds stark gap between retirement expectations and reality, https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-08-future-of-retirement.pdf

6968

https://www.ipsos.com/sites/default/files/2017-05/ipsos-mori-millennial-myths-realities-summary-report.pdf

https://www.ipsos.com/sites/default/files/2017-05/ipsos-mori-millennial-myths-realities-summary-report.pdf









https://www.fca.org.uk/news/speeches/robo-advice-fca-perspective

https://www.ofcom.org.uk/__data/assets/pdf_file/0026/149840/adults-media-use-attitudes-2019-data-tables.pdf

https://www.ofcom.org.uk/__data/assets/pdf_file/0026/149840/adults-media-use-attitudes-2019-data-tables.pdf



https://www.gov.uk/government/collections/english-housing-survey

https://www.gov.uk/government/collections/english-housing-survey

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/860076/2018-19_EHS_Headline_Report.pdf



https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/



https://www.housinglin.org.uk/_assets/Resources/Housing/Support_materials/Other_reports_and_guidance/HAPPI-5-Rental-Housing.pdf



https://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/


https://www.resolutionfoundation.org/publications/house-of-the-rising-son-or-daughter/

https://www.resolutionfoundation.org/publications/house-of-the-rising-son-or-daughter/






https://www.cofunds.aegon.co.uk/content/ukcpw/customer/news/ae_and_state_pensionwontbeenoughtoretainlifestyle.html

https://www.cofunds.aegon.co.uk/content/ukcpw/customer/news/ae_and_state_pensionwontbeenoughtoretainlifestyle.html

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https://www.ipsos.com/ipsos-mori/en-uk/introducing-pensions-dashboard-would-make-life-easier

https://www.ipsos.com/ipsos-mori/en-uk/introducing-pensions-dashboard-would-make-life-easier

https://www2.deloitte.com/sg/en/pages/about-deloitte/articles/gx-millennials-shifting-business-purpose.html


https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-08-future-of-retirement.pdf

https://adviser.scottishwidows.co.uk/assets/literature/docs/2019-08-future-of-retirement.pdf


58 Citizens Advice (2017) People in multiple jobs missing out on a workplace pension, reveals Citizen Advice, https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/people-missing-out-on-workplace-pensions/

59 Deloitte (2016) Millennials want business to shift its purpose, The Deloitte Millennial Survey 2016, https://www2.deloitte.com/sg/en/pages/about-deloitte/articles/gx-millennials-shifting-business-purpose.html

60 Morgan Stanley (2019) Sustainable Signals: Individual investor interest driven by impact, conviction and choice, https://www.morganstanley.com/pub/content/dam/msdotcom/infographics/sustainable-investing/Sustainable_Signals_Individual_Investor_White_Paper_Final.pdf

61 HSBC (2018) Millennials are different: They’ll have more money, https://www.gbm.hsbc.com/insights/global-research/millenials-are-different-they-will-have-more-money

62 Kantar (2019) CX The Experience Advantage: UK Retail Banking 2019 report, https://cxplus.tnsglobal.com/uk


64 YouGov (2016) Millennials and Banking: Are banks meeting the needs of the next generation of customers? https://d25d2506sfb94s.cloudfront.net/r/53/Millennials%20and%20Banking%20-%20YouGov%20Report.pdf

65 Inkling (2018) UK Millennials Report, https://static1.squarespace.com/static/566824117086d7d425e48806/t/575e873f8259b5bbefd5e6a

66 BBC (2019) citing research by Legal and General, Bank of mum and dad ‘one of UK’s biggest mortgage lenders’, https://www.bbc.co.uk/news/business-49477404

67 Money Advice Service (2013) Adult money habits are set by the age of seven years old shows new study, https://www.moneyadviceservice.org.uk/en/corporate/adult-money-habits-are-set-by-the-age-of-seven-years-old-shows-new-study

AcknowledgementsAbout the authorsCaroline Macfarland, Director, Common Vision

Caroline is the founder and director of Common Vision. She has written a number of research reports on topics ranging from intergenerational trends to public finance. Prior to establishing Common Vision she was a special adviser at the Big Lottery Fund, one of the founding team members of the foundation Power to Change and managing director of think tank ResPublica. In 2015, she was named one of Management Today’s 35 women under 35 and in 2018 she featured in the WISE100 list of top 100 women in social enterprise.

Chris Hayes, Research Associate, Common Vision

Chris is a researcher with over ten years’ experience of project management, policy development, and research and analysis. His current interests include: sport and culture, health and wellbeing, localism, and education and leadership. Chris is founder of Live Projects Ltd and also Director of Freedom Works UK, a social enterprise providing training and mentoring to employees and entrepreneurs.

Published March 2020

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https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/people-missing-out-on-workplace-pensions/





https://www.morganstanley.com/pub/content/dam/msdotcom/infographics/sustainable-investing/Sustainable_Signals_Individual_Investor_White_Paper_Final.pdf



https://www.gbm.hsbc.com/insights/global-research/millenials-are-different-they-will-have-more-money



https://cxplus.tnsglobal.com/uk

https://d25d2506sfb94s.cloudfront.net/r/53/Millennials%20and%20Banking%20-%20YouGov%20Report.pdf

https://d25d2506sfb94s.cloudfront.net/r/53/Millennials%20and%20Banking%20-%20YouGov%20Report.pdf

https://static1.squarespace.com/static/566824117086d7d425e48806/t/575e873f8259b5bbefd5e6a

https://static1.squarespace.com/static/566824117086d7d425e48806/t/575e873f8259b5bbefd5e6a

https://www.bbc.co.uk/news/business-49477404

https://www.bbc.co.uk/news/business-49477404

https://www.moneyadviceservice.org.uk/en/corporate/adult-money-habits-are-set-by-the-age-of-seven-years-old-shows-new-study




With thanksThank you to all the participants who took part in our survey, focus groups and interviews in 2019. names of research participants have been changed in this report.

Special thanks to Anupama Mundollikkalam and Simon Hanson at CASS, and James Crouch and Laura Holden at Opinium Research. Thanks also to Will Barnes, Simon Throssell, Jasper Hill-Baldwin, Matilda Agace and Tiffany Curnick for their assistance with the publication of this report.

To contribute to the discussion, please email:

[email protected]

Supported by CASSThe Current Account Switch Service (CASS) is the UK’s sole designated current account switch service. CASS is working with Common Vision to seek to understand how younger people navigate an increasingly complex market and what they identify as the key components of a convenient, useful and reliable banking product. This research will help CASS to ensure it continues to deliver successfully in the future.

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About Common Vision

Common Vision (CoVi) is a think tank working to change the narrative around our shared future. We use the power of positive ideas to detoxify angry, binary debates and unite people around long-term intergenerational goals. We aim to revitalise public diplomacy by championing deliberative dialogue and encouraging established and new leaders to work together to turn collective social challenges into opportunities. Millennial Labs is our programme of research, consultation and leadership development initiatives designed to engage and inform millennials and build bridges with other generations.

M I L L E N N I A L L A B S

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