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Marketing Financial Services to Millennials - US - May 2012

The vast array of financial products and services offered by insurance companies, banks and investment firms often seem just out of reach for the average Millennial, although their interest in all things financial makes them an eager audience. However, they are also an ambivalent one as they watch the fallout from the housing bubble and an increasing rate of joblessness, particularly for their generation. Because of this there are concerns that this group of young people may become a Lost Generation, who cannot finance the American Dream at the same level that they might expect. Best practices in marketing from as recently as five years ago may no longer apply when selling to these Millennials.

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Table of contents

  1. Scope and Themes

      • What you need to know:
        • Data sources
          • Consumer survey data
            • Competitrack
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                    • Companies mentioned in this report:
                    • Executive Summary

                      • Overview
                        • Student loan debt
                          • The economy is still weak
                            • Millennials are an excellent target group for FS institutions
                              • Social media taking on significance as a marketing channel
                                • Other advertising targeting Millennials
                                • Insights and Opportunities

                                    • Millennials know they need advice
                                      • More research on social media
                                        • Millennials are well-educated and serious, but use games to relax
                                        • Inspire Insights

                                            • Trend: Play Ethic
                                              • Work like an adult, play like a kid
                                                • Implications
                                                  • Trend: Guiding Choices
                                                    • Too much choice and too little time. Consumers are looking for shortcuts.
                                                      • Implications
                                                      • Market Size

                                                        • Key points
                                                          • Millennials represent 31% of the total adult population
                                                            • Figure 1: U.S. Adult Population, by age, 2010
                                                          • Product penetration can reach critical mass by 25-34
                                                            • Figure 2: Ownership of financial products, by age, July 2011
                                                        • The Impact of the Economy on Millennials

                                                          • Key points
                                                            • The student loan debt bubble
                                                              • Some 37 million student loan borrowers…
                                                                • Figure 3: Age of student loan borrowers, Q3 2011
                                                              • …owing $845 billion
                                                                • Figure 4: Total U.S. debt balance and its composition, Q3 2011
                                                              • Rising defaults among borrowers
                                                                • Figure 5: Total U.S. debt balance and its composition, Q3 2011
                                                              • Millennials are working for less money today
                                                                  • Figure 6: Average annual expenditures for 18-34 year olds, 2006 and 2010
                                                                • The growth in rental spending
                                                                  • Figure 7: Average annual expenditures by specific categories for 18-34 year olds, 2006 and 2010
                                                                • …and cutting back on vehicle purchases
                                                                  • Figure 8: Average annual expenditures by specific categories for 18-34 year olds, adjusted for inflation, 2006 and 2010
                                                                • More Millennials living with parents
                                                                  • Figure 9: Currently living with parent(s) or other relatives, by age, February 2012
                                                                  • Figure 10: Percent of Millennials living in parents’ home, by gender and age, 2011
                                                                • Lifestage expectations on hold due to the economy
                                                                  • Figure 11: How economic conditions have affected the lives of 18-34s, 2011
                                                                  • Figure 12: Times are harder for today’s young adults, 2011
                                                                • Have the Millennials become Generation “Why Bother”?
                                                                • Segment Performance

                                                                  • Key points
                                                                    • Figure 13: Ownership of mutual funds/stock accounts, by age, 2005-11
                                                                  • Fewer today have credit cards
                                                                    • Figure 14: Credit Card Ownership, by age, 2011
                                                                    • Figure 15: Trends in ownership of credit cards, by age, 2005-11
                                                                  • P&C insurance another segment showing a loss of customers
                                                                    • Figure 16: Trends in ownership of property & casualty insurance, by age, 2005-11
                                                                    • Figure 17: Trends in ownership of renters/tenants insurance, by age, 2005-11
                                                                • Marketing Channels

                                                                  • Key points
                                                                    • Millennials listen to financial advice from family/friends
                                                                      • Figure 18: Resources used for financial advice, by age, February 2012
                                                                      • Figure 19: Agreement with statements about financial advice, by age, February 2012
                                                                    • Mobile banking, online information help drive decision-making
                                                                      • Figure 20: Reasons for choosing primary bank, by age and generation, February 2012
                                                                    • For auto insurance, key channels are agents and buying online
                                                                      • Figure 21: Sources used when decided to buy insurance from current auto insurance provider, by age, July 2011
                                                                      • Figure 22: Method for last purchase of auto insurance, by age, July 2011
                                                                  • Mobile and Social Media Use among Millennials

                                                                    • Key points
                                                                      • Social media pervasive among Millennials
                                                                        • Figure 23: Visit or belong to social sharing/networking websites, by age, 2011
                                                                        • Figure 24: Length of time involved with social sharing/networking sites, by age, 2011
                                                                        • Figure 25: Frequency of usage of social sharing/networking sites, by age, 2011
                                                                        • Figure 26: Reported behaviors on social networking sites, by age, 2011
                                                                      • Millennials more open to social marketing
                                                                        • Figure 27: Attitudes/opinions about brand marketing on social networking sites, by age, 2011
                                                                      • And smartphones are everywhere…
                                                                        • Figure 28: Smartphone ownership, by age, July 2011
                                                                        • Figure 29: Social media activities conducted online or on smartphones, by age of Millennials, July 2011
                                                                        • Figure 30: Additional activities conducted online or on smartphones, by age of Millennials, July 2011
                                                                    • Market Drivers

                                                                      • Key points
                                                                        • Unemployment still problematic
                                                                          • The bursting of the housing bubble
                                                                            • Figure 31: Median price of home, 1998-2011
                                                                            • Figure 32: Private housing starts, 2000 -12
                                                                            • Figure 33: Existing home sales, 1998-2011
                                                                          • More Millennials are saying “no” to home ownership
                                                                            • Auto and light-truck sales turning positive
                                                                              • Figure 34: Auto and light-truck sales (in millions), 2000 – 12
                                                                          • Leading Companies

                                                                            • Key points
                                                                              • Large firms have improved revenues
                                                                                • Figure 35: Revenues and profits of leading financial services companies, 2005 and 2010
                                                                            • Brand Qualities

                                                                              • Key points
                                                                                • Honesty is the most important quality
                                                                                  • Figure 36: Most important attributes for establishing trust in a financial services brand (strongly agree), July, 2010
                                                                                  • Figure 37: Brand attributes which describe actual banks (any agree), July, 2010
                                                                                  • Figure 38: Brand attributes which describe actual insurance companies (any agree), July 2010
                                                                              • Innovation and Innovators

                                                                                • Key points
                                                                                  • Credit card loyalty programs using social media
                                                                                    • State Farm’s Next Door
                                                                                      • State Farm’s Pocket Agent
                                                                                        • Progressive’s Flo in Sims game
                                                                                          • Progressive’s Image Capture
                                                                                            • GEICO Arcade apps
                                                                                              • GEICO HomeFront App
                                                                                                • Chase QuickPay
                                                                                                • Marketing Strategies

                                                                                                  • Key points
                                                                                                    • Banner ads and TV commercials dominate for Millennials
                                                                                                      • Print advertising
                                                                                                        • Figure 39: American Family Protect Your Dreams print ad, 2012
                                                                                                        • Figure 40: Free Checking at Fulton Bank of New Jersey print ad, 2012
                                                                                                        • Figure 41: E-Trade Mobile Pro print ad, 2012
                                                                                                      • Direct mail and email advertising
                                                                                                        • Figure 42: Discover Card student loan direct mail ad, 2012
                                                                                                        • Figure 43: Gerber Life Grow-Up Plan email ad, 2012
                                                                                                        • Figure 44: Wells Fargo mobile banking email ad, 2012
                                                                                                        • Figure 45: American Express Link, Like, Love email ad, 2011
                                                                                                      • Online advertising
                                                                                                        • Figure 46: Allstate Mayhem renters insurance online advertisement, 2012
                                                                                                        • Figure 47: Liberty Mutual online advertisement, 2012
                                                                                                        • Figure 48: GEICO 15 reasons online advertisement, 2012
                                                                                                        • Figure 49: New Car? GEICO online Advertisement, 2012
                                                                                                        • Figure 50: Smart App from Bank of America online advertisement, 2011
                                                                                                      • Television advertising
                                                                                                        • Figure 51: Allstate “Connection” TV ad, 2012
                                                                                                        • Figure 52: Chase “Kicker” TV ad, 2012
                                                                                                        • Figure 53: ING Bank “Pay Fast” TV ad, 2012
                                                                                                        • Figure 54: MetLife “Too Low” TV ad, 2012
                                                                                                        • Figure 55: Progressive “It’s Flo-time” TV ad, 2012
                                                                                                        • Figure 56: Travelers “Keeping Up” 2012
                                                                                                    • The Consumer – Millennials and their Financial Situation

                                                                                                      • Key points
                                                                                                        • Millennials are an optimistic bunch
                                                                                                          • Figure 57: Expectations as to improvement in household financial situation, by age, February 2012
                                                                                                          • Figure 58: Expectations as to improvement in household financial situation, indexed to all Millennials by education, employment and marital status, February 2012
                                                                                                        • Unemployment is an issue
                                                                                                          • Figure 59: February 2012
                                                                                                          • Figure 60: Unemployed respondents - whether looking for a job, by age, February 2012
                                                                                                          • Figure 61: Employed respondents - attitudes about current employment and under-employment, by age, February 2012
                                                                                                        • Emphasis on more savings, less debt
                                                                                                            • Figure 62: Attitudes about debt and savings, by age, February 2012
                                                                                                            • Figure 63: Agreement with statements about debt and savings, all Millennials, February 2012
                                                                                                          • Recession babies
                                                                                                            • Figure 64: Attitudes about financial future, by age, February 2012
                                                                                                            • Figure 65: Attitudes about financial future, by short-term financial goals, February 2012
                                                                                                          • Spending less is the key
                                                                                                              • Figure 66: Primary financial concerns of the household, by age, February 2012
                                                                                                            • Student loan debt much more of a concern today than in 2009
                                                                                                              • Figure 67: Primary financial concerns of the household, by age, 2009 and 2012
                                                                                                          • The Consumer - Attitudes About Finances and Expectations about Lifestage Events

                                                                                                            • Key points
                                                                                                              • Attitudes about money and goals compared to other generations
                                                                                                                • Figure 68: Attitudes about finances, by age, February 2010 – March 2011
                                                                                                              • Lifestage goals for the coming year vs. last year
                                                                                                                • Figure 69: Events experienced in the last 12 months, by age, 2011
                                                                                                                • Figure 70: Events expected to experience in the next 12 Months, by age, 2011
                                                                                                            • The Consumer – Interest in Financial Products and Switching Banks

                                                                                                              • Key points
                                                                                                                • Millennials are in the market for new financial products
                                                                                                                  • Figure 71: Financial products currently owned, by age, February 2012
                                                                                                                  • Figure 72: Intention to purchase financial products in the near future, by age, February 2012
                                                                                                                  • Figure 73: Intention to purchase financial products in the more distant future, by age, February 2012
                                                                                                                • Switching behavior higher among Millennials
                                                                                                                  • Figure 74: Bank switching behavior in last 12 months, by age, February 2012
                                                                                                                  • Figure 75: Reasons for switching banks during last 12 months, by age, February 2012
                                                                                                              • The Consumer – Millennials online

                                                                                                                • Key points
                                                                                                                  • Three quarters of Millennials online at home in past week
                                                                                                                    • Figure 76: Usage of internet at home during the last 7 days, by age, February 2010 – March 2011
                                                                                                                  • Many bank, shop, seek entertainment online
                                                                                                                      • Figure 77: Online activities during the last 30 days, by age, 2011
                                                                                                                    • Privacy is still a concern for Millennials
                                                                                                                        • Figure 78: Attitudes/opinions about the internet, by age, 2011
                                                                                                                    • Appendix—Trade Associations

                                                                                                                      Companies Covered

                                                                                                                      • Aetna Inc.
                                                                                                                      • AIG Group (American International Group Inc)
                                                                                                                      • Allstate Corporation (The)
                                                                                                                      • American Express Company (The)
                                                                                                                      • Bank of America Corporation
                                                                                                                      • Bear Stearns
                                                                                                                      • Berkshire Hathaway Inc
                                                                                                                      • Capital One Financial Corporation
                                                                                                                      • CIGNA Corporation
                                                                                                                      • Citigroup Inc.
                                                                                                                      • Countrywide Financial Corporation
                                                                                                                      • Electronic Arts, Inc
                                                                                                                      • Goldman Sachs Group, Inc., The
                                                                                                                      • Humana Inc
                                                                                                                      • Lehman Brothers Holdings Inc.
                                                                                                                      • Liberty Mutual Holding Company Inc.
                                                                                                                      • Merrill Lynch & Co. Inc
                                                                                                                      • MetLife, Inc.
                                                                                                                      • Morgan Stanley
                                                                                                                      • New York Life Insurance Company
                                                                                                                      • Northwestern Mutual Life Insurance Company (The)
                                                                                                                      • Prudential Financial, Inc
                                                                                                                      • State Farm Insurance Companies
                                                                                                                      • The Hartford Financial Services Group, Inc.
                                                                                                                      • Wachovia Corporation
                                                                                                                      • Washington Mutual Inc
                                                                                                                      • WellPoint, Inc.
                                                                                                                      • Wells Fargo & Company

                                                                                                                      Marketing Financial Services to Millennials - US - May 2012

                                                                                                                      US $3,995.00 (Excl.Tax)