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Millennials and Finance - US - April 2015

“Millennials are young and in the beginning stages of establishing themselves, their households, and their families. Their needs at this time are quite specific and revolve largely on learning how to manage their day-to-day finances. Institutions that can best help them with these most fundamental are likely to be those Millennials will look to stay with as time goes on.”
– Robyn Kaiserman, Financial Services Analyst

This report discusses the following key topics:

  • Financial literacy: A huge problem
  • So how do they really feel about money?
  • Are advisory services for Millennials an opportunity for banks?

Millennials represent one quarter of the population in the US, even more than Baby Boomers. Consisting of “older Millennials” and “younger Millennials,” they are two groups with very different sets of financial needs. Younger Millennials are just starting out and have very little money or knowledge of how to manage what they have. Older Millennials are likely to be more established, perhaps married with children and with either a newly-purchased home or the desire to purchase one. The challenge for financial institutions is to find a way to reach all of them with messages that resonate with each group. This report examines the types of financial accounts Millennials have, as well as the types of institutions in which they have them. It also looks at the how Millennials view money and finances, as well as how they feel about financial advice and advisers.

Millennials are a diverse group that spans several life stages, each with its own unique set of financial needs. Therefore, financial institutions need to segment this generation into smaller sub-groups and recognize that the needs of one are not necessarily the needs of another. However, regardless of the slant of the marketing message, financial institutions need to be cognizant of the fact that Millennials don’t trust them fully; they lived through the recession, saw how it affected their families, and are committed to dealing only with businesses they believe have their best interests at heart. Building that trust requires institutions to position themselves as partners rather than “parents;” only then will Millennials be open to discussing the ways in which an institution can help them achieve their financial goals. 

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • Who are the Millennials?
                      • How they feel about financial institutions
                        • The Millennial consumer
                          • Account ownership
                            • Financial challenges and priorities
                              • Do they want help?
                                • How Millennials feel about money
                                  • Unsure about credit – and their futures
                                    • What we think
                                    • Issues and Insights

                                        • Financial literacy: A huge problem
                                          • Issues
                                            • Implications
                                              • So how do they really feel about money?
                                                • Issues
                                                  • Implications
                                                    • Are advisory services for Millennials an opportunity for banks?
                                                      • Issues
                                                        • Implications
                                                        • Trend Application

                                                            • Inspire Trend: Help Me Help Myself
                                                              • Inspire Trend: FSTR HYPR
                                                                • Inspire Trend: The Unfairer Sex
                                                                • The Size of the Millennial Market

                                                                  • Key points
                                                                    • Millennials are one-quarter of the population
                                                                      • Figure 1: US population, by generation share, 2015
                                                                    • Millennial population continues to grow
                                                                      • Figure 2: US population, by generation, 2010-20
                                                                  • Socioeconomic Profile of Millennials

                                                                    • Key points
                                                                      • A racially and ethnically diverse group
                                                                        • Figure 3: US population, by race/Hispanic origin, 2015
                                                                      • Millennials are delaying marriage
                                                                        • Figure 4: Percentage of those married at age 18-32, by generation
                                                                      • Millennials are living at home
                                                                        • Figure 5: Percentage of Millennials living at home (2012)
                                                                      • Millennials’ median household income
                                                                        • Figure 6: US median household income, by generation of householder, 2013
                                                                    • Innovations and Innovators

                                                                      • Key points
                                                                        • Automated investing services
                                                                        • Marketing Strategies

                                                                          • Overview
                                                                            • Reaching Millennials
                                                                              • Incentives work
                                                                                • Figure 7: People’s United Bank’s gift card direct mail ad, 2015
                                                                                • Figure 8: TD Bank incentive checking account direct mail ad, 2015
                                                                                • Figure 9: Ally Bank IRA online ad, 2015
                                                                              • Mobile banking
                                                                                • Figure 10: Wells fargo mobile text banking service email, 2015
                                                                                • Figure 11: Synovus Bank P2P email ad, 2015
                                                                              • Long-term planning
                                                                                • Figure 12: Fidelity IRA print ad, 2015
                                                                            • Account Ownership

                                                                              • Key points
                                                                                • Most accounts are in own name
                                                                                  • Figure 13: Ownership of financial products/accounts, December 2014
                                                                                • One bank, or many?
                                                                                  • Millennial women are behind
                                                                                    • Figure 14: Ownership of financial products/accounts – In my own name, by gender, December 2014
                                                                                  • Millennial parents are strapped for time
                                                                                    • Figure 15: Ownership of financial products/accounts – In my own name, by parental status, age of children, December 2014
                                                                                  • So…who has online accounts?
                                                                                    • Key driver analysis – Methodology
                                                                                        • Figure 16: Key drivers of online only banking, December 2014
                                                                                    • Communication Preferences

                                                                                      • Key points
                                                                                        • Frequency
                                                                                          • Less communication is better than more
                                                                                            • Figure 17: Preference of communication frequency, December 2014
                                                                                          • Frequent communication is not important to young women
                                                                                            • Figure 18: Preference of communication frequency, by gender and age, December 2014
                                                                                          • Mail and email serve different purposes
                                                                                            • Figure 19: Preference of communication frequency, by communication channel, December 2014*
                                                                                          • Channel
                                                                                            • Most want to be reached via email
                                                                                              • Figure 20: Communication channel preference, December 2014
                                                                                            • Parents have different preferences
                                                                                              • Figure 21: Communication channel preference, by parental status, December 2014
                                                                                          • Major Financial Challenges and Priorities

                                                                                            • Key points
                                                                                              • Current financial challenges
                                                                                                • Saving money and paying bills are the biggest challenges
                                                                                                  • Figure 22: Top savings and paying priorities, December 2014
                                                                                                • Marriage changes priorities…
                                                                                                  • Figure 23: Top three major financial challenges, by marital status, December 2014
                                                                                                • As does having children in the household
                                                                                                  • Figure 24: Top three major financial challenges, by presence of children in household, December 2014
                                                                                                • Upcoming financial priorities
                                                                                                  • Current challenges remain future priorities
                                                                                                    • Figure 25: Most important financial priorities in next 12 months, December 2014
                                                                                                  • Saving is most important to highest earners
                                                                                                    • Figure 26: Most important financial priorities in next 12 months, by household income, December 2014
                                                                                                  • Parents prioritize paying day-to-day bills
                                                                                                    • Figure 27: Most important financial priorities in next 12 months, by parental status, December 2014
                                                                                                • Use of Financial Advice

                                                                                                  • Key points
                                                                                                    • Advice is not popular among Millennials
                                                                                                      • Figure 28: Professional financial advice received, December 2014
                                                                                                    • More Millennials need advice about saving
                                                                                                      • Figure 29: Professional financial advice received, by major financial challenges, December 2014
                                                                                                    • Men are more likely to seek advice
                                                                                                      • Figure 30: Professional financial advice received, by gender, December 2014
                                                                                                    • Gender differences disappear with age
                                                                                                      • Figure 31: Professional financial advice received, by gender and age, December 2014
                                                                                                    • Bank advisers are most used by Millennials at all income levels
                                                                                                      • Figure 32: Professional financial advice received, by household income, December 2014
                                                                                                    • Millennials with families want advice
                                                                                                      • Figure 33: Professional financial advice received, by marital and parental status, December 2014
                                                                                                    • Bank advisers are preferred
                                                                                                      • Figure 34: Type of financial adviser preferred, December 2014
                                                                                                  • Attitudes toward Finance and Money

                                                                                                    • Key points
                                                                                                      • Millennials: Money does not buy happiness
                                                                                                        • Figure 35: Attitude toward finance and money – Any agreement, December 2014
                                                                                                      • How Millennials feel about money
                                                                                                        • How Millennials feel about credit
                                                                                                          • Older Millennials have a changed perspective
                                                                                                            • Figure 36: Attitude toward finance and money – Any agreement, by age, December 2014
                                                                                                          • Hispanic Millennials are focused on saving
                                                                                                            • Figure 37: Attitude toward finance and money – Any agreement, by Hispanic origin, December 2014
                                                                                                          • Mothers and fathers have different outlooks
                                                                                                            • Figure 38: Attitude toward finance and money – Any agreement, by parental status, December 2014
                                                                                                        • Source of Financial Information

                                                                                                          • Key points
                                                                                                            • Family is most important source of financial information
                                                                                                              • Figure 39: Source of financial information, December 2014
                                                                                                            • How Millennials get information
                                                                                                              • Social media use
                                                                                                                • Figure 40: Source of financial information, by gender and age, December 2014
                                                                                                              • Parents more likely to seek out information
                                                                                                                • Figure 41: Source of financial information, by parental status, December 2014
                                                                                                            • Cluster Methodology

                                                                                                                • Financial Free Spirits
                                                                                                                  • Demographics
                                                                                                                    • Characteristics
                                                                                                                      • Opportunity
                                                                                                                        • Interested Conservatives
                                                                                                                          • Demographics
                                                                                                                            • Characteristics
                                                                                                                              • Opportunity
                                                                                                                                • Financially Disinteresteds
                                                                                                                                  • Demographics
                                                                                                                                    • Characteristics
                                                                                                                                      • Opportunity
                                                                                                                                        • Cluster demographic tables
                                                                                                                                          • Figure 42: Target groups, by demographics, December 2014
                                                                                                                                        • Cluster characteristic tables
                                                                                                                                          • Figure 43: Target groups, by target clusters, December 2014
                                                                                                                                        • In own name
                                                                                                                                          • Figure 44: Ownership of financial products/accounts – In my own name, by target clusters, December 2014
                                                                                                                                          • Figure 45: Ownership of financial products/accounts – In my own name, by target clusters, December 2014
                                                                                                                                        • Joint account with parent(s) guardian
                                                                                                                                          • Figure 46: Ownership of financial products/accounts – Joint account with my parent(s)/guardian, by target clusters, December 2014
                                                                                                                                          • Figure 47: Ownership of financial products/accounts – Joint account with my parent(s)/guardian, by target clusters, December 2014
                                                                                                                                        • Joint account with spouse/partner
                                                                                                                                          • Figure 48: Ownership of financial products/accounts – Joint account with my spouse/partner, by target clusters, December 2014
                                                                                                                                          • Figure 49: Ownership of financial products/accounts – Joint account with my parent(s)/guardian, by target clusters, December 2014
                                                                                                                                        • Do not have
                                                                                                                                          • Figure 50: Ownership of financial products/accounts – Do not have, by target clusters, December 2014
                                                                                                                                          • Figure 51: Ownership of financial products/accounts – Do not have, by target clusters, December 2014
                                                                                                                                          • Figure 52: Preference of communication frequency, by target clusters, December 2014
                                                                                                                                          • Figure 53: Preference of communication frequency, by target clusters, December 2014
                                                                                                                                          • Figure 54: Preference of communication channel, by target clusters, December 2014
                                                                                                                                          • Figure 55: Major financial challenges, by target clusters, December 2014
                                                                                                                                          • Figure 56: Major financial challenges, by target clusters, December 2014
                                                                                                                                          • Figure 57: Major financial challenges, by target clusters, December 2014
                                                                                                                                          • Figure 58: Most important financial priorities, by target clusters, December 2014
                                                                                                                                          • Figure 59: Most important financial priorities, by target clusters, December 2014
                                                                                                                                          • Figure 60: Most important financial priorities, by target clusters, December 2014
                                                                                                                                          • Figure 61: Professional financial advice received, by target clusters, December 2014
                                                                                                                                          • Figure 62: Attitude toward finance and money – Any agreement, by target clusters, December 2014
                                                                                                                                          • Figure 63: Attitude toward finance and money – Any agreement, by target clusters, December 2014
                                                                                                                                          • Figure 64: Source of financial information, by target clusters, December 2014
                                                                                                                                          • Figure 65: Source of financial information, by target clusters, December 2014
                                                                                                                                          • Figure 66: Source of financial information, by target clusters, December 2014
                                                                                                                                      • Appendix – Other Useful Consumer Tables

                                                                                                                                        • Account ownership
                                                                                                                                          • In own name
                                                                                                                                            • Figure 67: Ownership of financial products/accounts – In my own name, by demographics, December 2014
                                                                                                                                            • Figure 68: Ownership of financial products/accounts – In my own name, by demographics, December 2014
                                                                                                                                          • Joint account with spouse/partner
                                                                                                                                            • Figure 69: Ownership of financial products/accounts – Joint account with my spouse/partner, by age, December 2014
                                                                                                                                            • Figure 70: Ownership of financial products/accounts – Joint account with my spouse/partner, by age, December 2014
                                                                                                                                          • Do not have
                                                                                                                                            • Figure 71: Ownership of financial products/accounts – I do not have this, by gender, December 2014
                                                                                                                                            • Figure 72: Ownership of financial products/accounts – I do not have this, by gender, December 2014
                                                                                                                                          • Communication preferences
                                                                                                                                            • Figure 73: Preference of communication frequency, by demographics, December 2014
                                                                                                                                            • Figure 74: Preference of communication frequency, by demographics, December 2014
                                                                                                                                            • Figure 75: Preference of communication frequency, by preference of communication channel, December 2014
                                                                                                                                          • Major financial challenges
                                                                                                                                            • Figure 76: Major financial challenges, December 2014
                                                                                                                                            • Figure 77: Major financial challenges, by demographics, December 2014
                                                                                                                                            • Figure 78: Major financial challenges, by demographics, December 2014
                                                                                                                                            • Figure 79: Major financial challenges, by demographics, December 2014
                                                                                                                                          • Most important financial priorities
                                                                                                                                            • Figure 80: Most important financial priorities, by demographics, December 2014
                                                                                                                                            • Figure 81: Most important financial priorities, by demographics, December 2014
                                                                                                                                            • Figure 82: Most important financial priorities, by demographics, December 2014
                                                                                                                                          • Professional financial advice received
                                                                                                                                            • Figure 83: Professional financial advice received, by demographics, December 2014
                                                                                                                                            • Figure 84: Professional financial advice received, by ownership of financial products/accounts – Investment account, December 2014
                                                                                                                                            • Figure 85: Professional financial advice received, by major financial challenges, December 2014
                                                                                                                                            • Figure 86: Professional financial advice received, by major financial challenges, December 2014
                                                                                                                                          • Attitude toward finance and money
                                                                                                                                            • Figure 87: Attitude toward finance and money, December 2014
                                                                                                                                            • Figure 88: Attitude toward finance and money – Any agreement, by demographics, December 2014
                                                                                                                                            • Figure 89: Attitude toward finance and money – Any agreement, by demographics, December 2014
                                                                                                                                          • Source of financial information
                                                                                                                                            • Figure 90: Source of financial information, by demographics, December 2014
                                                                                                                                            • Figure 91: Source of financial information, by demographics, December 2014
                                                                                                                                            • Figure 92: Source of financial information, by demographics, December 2014
                                                                                                                                        • Appendix – Key Driver Analysis

                                                                                                                                            • Interpretation of results
                                                                                                                                              • Figure 93: Key drivers of online only banking – Challenges, December 2014
                                                                                                                                              • Figure 94: Key drivers of online only banking – Priorities, December 2014
                                                                                                                                          • Appendix – Trade Associations

                                                                                                                                            Companies Covered

                                                                                                                                            • Ally Financial Inc.
                                                                                                                                            • Fidelity Investment Services Limited
                                                                                                                                            • The New York Times Company
                                                                                                                                            • Wells Fargo & Company

                                                                                                                                            Millennials and Finance - US - April 2015

                                                                                                                                            £3,277.28 (Excl.Tax)