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Millennials: Conservative, Loyal, Affluent


HUNTINGTON BEACH, Calif.-Enough with the marketing bias toward Baby Boomers; it's time for mutual fund companies to move on to the Millennials.

"They are the most numerous, affluent and ethnically diverse generation in American history," William Strauss, ethnographic historian and co-author of "Millennials Rising," told attendees at the Investment Company Institute's Operations and Technology Conference and Service Provider Expo here earlier this month.

And just as the 77-million-strong Boomer bloc is rolling retirement savings out of qualified plans, the Millennials, defined by Strauss as those born between 1982 and 2000, are marching into the workforce.

"This is your next target. These are the folks you want to grab now," said Terry Retter, director of strategic technology services for PricewaterhouseCoopers.

But not all Millennials are alike. "You can't just have one strategy," said C. Steven Crosby, senior managing director for PwC's services technology advisory practice. "You have to have different approaches for different communities."

Reaching Millennials means first trying to understand them, Strauss said. Unlike the Boomers, who came of age in the 60s and are prone to rebellion and risk-taking, the Millennials grew up tethered to their parents, trusting of institutions and risk-averse.

And unlike Generation X, those born between 1962 and 1981, who shunned taking jobs at big corporations in favor of making a go of it as entrepreneurs and are typically civically unengaged, Millennials believe strongly in community, company loyalty and are politically plugged-in, Strauss said.

Marketing to the Millennials demands employing the media with which they grew up.

"Buzz is important," Strauss said.

But investment companies won't build buzz buying television spots, because Millennials are not watching. The next generation of investors is too busy instant messaging and texting, talking on their cell phones, and making sure their online profiles are up to date.

Banner ads don't do it, either, because although they may be sitting in front of a computer, Millennials aren't interested in what a company's marketing department thinks they want to hear. They want input from their network of friends. "Reputation matters a lot," Strauss added.

Websites such as MySpace, Friendster and FaceBook, allow people to publish their thoughts using various media in real-time, and troll the Web for others, wherever in the world they may be, who share their interests.

The fact that MySpace has 25 million members, most of them Millennials, testifies to the keen interest in community-building. The fact that NewsCorp. paid $580 million for the portal proves its power.

Record labels produce pages for rap artists, studios make sites for movie characters, and even clothing companies turn their logos into virtual "friends" with cult-like followings and complete back-stories, all with the same goal: to create interest, build brands, and sell their products.

Mutual fund companies should harness this power for themselves, Retter said. "Build a conversation between you and your clients about your value system."

At the same time, these multi-taskers will want their selections made simple. "There are so many choices, they don't know which to trust," Strauss said. The solution, said Retter, is service. "You ought to be in the advice business as well as the sales business," Retter said.

Millennials will want companies not only to provide them with products, but to explain how to use them. The up-and-coming investors will also look for tools that allow them to toy with their options, and create a portfolio that feels custom-fit. This may be as simple as leveraging existing online calculators that allow investors to plug in very person-specific data, by coupling the results with product suggestions.

"They expect to learn. They expect to be taught," Strauss said.

The April Securities and Exchange Commission ruling that allows broker/dealers to offer advice about products, provided certain conflict-of-interest disclaimers, makes such packaging possible in a way it was not before. Companies uncomfortable with offering advice at the time of sale can start earlier.

Unlike the more spontaneous Boomers or short-sighted Gen-Xers, Millennials tend to be long-term planners, Strauss said. His research shows that they typically wait longer to accept their first jobs because they want to make the right decisions, and often those decisions are driven by a need to pay back college-related debt. Companies can cater to this trend, and begin building trust among the brand-loyal bunch, even before they are ready to invest, for example, by offering free financial planning seminars on college campuses and targeting loan-laden students.

Brand-building can start even earlier. Retter suggested video games that make investing the objective, and teach strategies as part of the adventure.

The next generation of investors will demonstrate demographic shifts, too. The fastest-growing groups in the country are Hispanics and second-generation Asian-Americans. Both groups have a strong family focus, and companies should provide products or services that recognize those needs, Strauss suggested.

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