Why Banks Would Want Lazy, Impulsive, Penniless Youth as Customers

As the economy improves, firms hope to sell more financial products to young people. Photographer: Getty Images

Since when did irresponsible slackers become such hot financial prospects?

Banking and investment firms have ordered up and publicized an avalanche of studies and surveys on the millennials, or "Generation Y," or whatever you want to call teens and young adults born since the early 1980s. Mostly they list a parade of stereotypes -- lazy, entitled, suspicious of authority, technology-obsessed, risk-averse, impulsive -- about this generation of 77 million. From a study by retirement plan expert Buck Consultants: "Millennials are not prone to long-range planning" and are a group that "tends to act later rather than sooner and may not take time for the thoughtful analysis needed for retirement planning."

These feckless youths, underemployed and with record student debt , are the financial services industry's next big pool of customers. So why are firms pushing out all these studies basically insulting the very people they're wooing?

Because before 77 million consumers start making real money, financial firms must convince them to worry about retirement and other dilemmas the firms claim to be able solve -- for a fee. Problem is, any semi-sentient organism learned some searing and sobering lessons about the volatility and irrationality of stock and housing market over the last few years, not to mention about Wall Street self-dealing and Ponzi schemes. There are a few trust issues here.

One theory for the storm of surveys: As the economy improves, firms hope to sell more financial products to young people who have so far been constrained and conservative, says Aite Group banking consultant Ron Shevlin. If you spent your formative years watching the markets lurch from one crisis to another, "the idea that you're going to take money and turn it into more money" seems like an 1980s-era relic, says Adam Nash, chief executive officer of online investment manager Wealthfront.

That skepticism flies in the face of the industry gospel that stocks are the long-term way to generate wealth. Tim Courtney of Exencial Wealth Advisors says of millennials: "They just don't understand how markets work in the first place."

Kids these days. The truth is, kids these days aren't all that different from kids those days, or the days before that. That's what really annoys Shevlin about millennial-focused studies. "They're not fundamentally different at their age than the Baby Boomers were in their 20s,” he says. Most studies don't compare millennials with previous generations at the same age.

Nor is there anything fundamentally different in the jump to generalize about generations. It's just that this time around it's much cheaper and easier to crank out authoritative-sounding studies, Shevlin says. Slap up an online survey, ignore the fact that you're only getting a small, self-selected slice of Generation Y, and bludgeon anyone who'll listen with it.

But why single out the young? All retail investors have been reluctant to buy stocks lately, and the money habits of older adults aren't shining examples of fiscal responsibility. That Buck study also says, contradicting itself a bit, that millennials may even be "more interested in saving and investing" than previous generations were at the same age. It's actually Generation X, not millennials, who have the most trouble paying bills on time, paying off credit card balances in full and spending less than they earn each month, according to a 2013 Financial Finesse study.

It's all a little reminiscent of the strategy recommended by TV reality show "pickup artists" a few years ago. Their advice to millennial men looking to seduce women: Start by putting them down. The financial industry seems to have taken that tip.

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