Never mind the deadbeat, bearded Millennial non-doers. The generation that follows is an ideal retail FX target audience
The Millennials may have been a void in the financial markets world, but here is why FX brokerages should look toward a bright future as the generation that follows is staunchly capitalist, and is exactly the right demographic for FX trading
Throughout the post-financial crisis western world, socialist and neo-liberal politics have dominated the minds of the young on a widespread scale.
Attempts at following sub-culture fashion, being anit-establishment and in particular anti-capitalist have taken precedence over planning for the future in the traditional fashion as per the forerunners to the ‘Millennial’ generation, and the will to be self-empowered and financially independent by trading the electronic markets has been absent, instead wasting money that they often do not have on follies and fashion has been a priority.
Thus, for any retail investment firm, electronic or traditional, attempts to draw the attention of the Millennial generation have proven expensive and in many cases fruitless, especially toward a whole range of people who fit the age range for most retail FX firms, but have no money and are simply not interested in investing.
There is light at the end of the indie music-infested darkness, however, as recent research is beginning to reveal that the generation which is now maturing, and that follows the Millennials, is quite different and that a counter culture which is emerging as an antidote to the ‘modern hippy’ mentality of the Millennials is emerging, and that counter-culture is overtly capitalist.
Generation Z, as this new generation is being labeled, comprises those born in the early years of this Millennium rather than those whose childhood was experienced throughout those years.
Generation Z could arguably be the most enterprising cohort society has ever spawned. It’s rare to meet an educated person under the age of 21 in the leading economic centers (Britain, Australia, Hong Kong, New York, Chicago, Toronto, anywhere in mainland China, Singapore, Tokyo) who isn’t the founder of a blog, indie fashion label, or YouTube channel. On the whole, they carry a fierce sense of personal ambition and are equipped with the skills and mindset to achieve their goals.
This entrepreneurial characteristic is extremely modern, and in most cases the young generation are self-starters and ready to come up with their own method of generating prosperity rather than follow the path paved by others.
Jeff Brauer, a professor at Keystone College who is studying the political habits of ‘Generation Z,’ people born after 1996, told Chris Stigall during an interview on Talk Radio 1210 WPHT. He claims this generation is much more open to conservative capitalist ideas than the Millennial generation that precedes them.
Professor Brauer’s view is “These young folks that are coming through, Gen Z’s, the way they look at the world, in so many ways, I would call really more like a moderate Republican. They’re definitely much more moderate to conservative when it comes to fiscal issues and to security issues. They’re more liberal when it comes to some of the social issues, the civil rights type of issues because they’re very diverse, it’s a very diverse population. Their friends are diverse. That, kind of, fits the mold of a very traditional, moderate Republican.”
It is quite a widely held opinion as the youth that are now approaching high school leaving age are displaying conservative capitalist ideologies which they are applying to the modern world of self-empowered business.
This empowerment and self-generated profit is superseding the arrogance of entitlement and dependency.
During the 1980s, when the capitalist Thatcherite yuppies marked the aspirational yardstick for most, those wishing to do well either followed a corporate career, or attempted to emulate existing magnates by starting rival businesses.
These days, it is a case of ideas turning to very unique businesses, driven by young ambitious people whose head is firmly connected to their work and development, rather than connected to a cigarette whilst standing outside a trendy coffee bar vegetating whilst posing as a web designer or marketing mogul as per many of their forebears.
Thus, the millennial generation that came before them are idealistic thinkers, more at home writing reports for think tanks than at the forefront of innovation and actualization.
When FX firms look to target retail financial instruments to a global audience, demographic is a vital consideration, and it does not just extend to which age group is the largest and the most literate in terms of modern technology that ensures their familiarity with today’s highly advanced retail trading platforms.
There is much more to this consideration than pure deduction, disposable income multiples and technological literacy.
Whilst a very large proportion of research and development budget is being poured by FX firms into the design and production of ultra-modern trading platforms, new ancillary services that are intended to attract the Millennials which are being cited as the next generation of retail traders, thus the investment in such user interfaces and interactive technology to which Millennials have become accustomed in every other aspect of their lives is considered a means of ‘future-proofing’ by FX firms and third party software providers.
This is even more important when considering the profit-hungry, ultra high-tech generation that is now emerging to replace the ponderous and daydreaming Millennials who demand the latest technology and then use it to create the whole sum of nothing, resulting in expensive R&D costs for brokers, and not much revenue generation.
The technologically literate Millennials have got some income stream and unlike the Generation X who had purchased their own homes during their 20s, the Millennials often have no burdens such as mortgages or dependents, but do not want to think about the future and do not want to consider building a portfolio in the financial markets business, even if it is provided by a very interesting and highly advanced system.
The generation of people in the age range between 35 and 45 may be fewer in numbers, but are a better target audience than the happy-go-lucky (and in their own way wasteful) baby boomers, many of whose teenage years in the 1960s were by no means occupied by building financial portfolios or acquiring assets, and fewer in numbers yet a better audience than the 20 to 30 age group which are known as Millennials, who according to various studies recently, have by enlarge absolutely no interest in accruing capital.
However good a target audience the investment-savvy and hard working 35 to 45 year old Generation X in developed Western markets may be, it is not large enough or sustainable enough for FX brokers to rely on this narrow band of retail customers for continuous trading volume.
According to RateSetter, a peer-to-peer lending service, research that has been conducted concluded that ‘live-for-the-moment’ young adults are ‘clueless’ about money, opting to spend a fortune on one-off nights out, coffee, fashion and takeaways rather than securing their financial future.
An astonishing 26% of 25 to 30 year olds do not save or invest anything at all, with 62% admitting that they are clueless about financial matters, according to RateSetter’s research.
In Britain, home to the largest institutional and retail financial center which powers the markets of the entire world, one in seven young people have not considered planning for their retirement.
Indeed, the Millennials have now attracted a less than flattering acronym – YOLO – literally, “You Only Live Once”, admitting in surveys to spending all their money on nights out, fashion and luxuries rather than investing or saving.
This is all set to change now, thankfully, and is a dynamic that FX brokers should consider very seriously as it may well be the route to sustainability.
While Generation X, born into the austere 1970s, watching their preceding generation work extremely hard for very little, has weathered two massive financial crises and is much smaller than the preceding and succeeding generation, is prosperous and interested in building portfolios by comparison.
Still young enough to appreciate modern technology (although not born into it like the Millennials), yet financially astute, hard working and responsible, the 35 to 45 year olds are an absolutely perfect target market for top quality electronic trading firms.
An industry professional who agrees with this is Goldman Sachs Head of Thematic Research Hugo Scott-Gall, who has provided an insight into why Generation X is a vital demographic.
Indeed, they may not be engaged by the latest graphics-heavy GUI, or respond to geotargeting by ultra-modern and on the pace marketing departments, but their investing potential is higher than that of both their parents and children. Mr. Scott-Gall explains why this is.
“Generation X is the genration born between 1965 and 1980, and they are a demographic which is smaller than the baby boomers and the Millennials” he said.
“They are in the sweetspot for consumption and are at an age where consumption peaks. They are making very important spending decisions, big ticket spending decisions” – Hugo Scott-Gall, Head of Thematic Research, Goldman Sachs
Mr. Scott-Gall continued “So economically they are very significant. People of the Generation X account for 25% to 30% of all consumption in the US yet they are the least talked about generation. It is therefore very important for companies to look at how are htey spending differently, where are they spending more, and where less than the baby boomers that went before them.”
“Members of Generation X are are spending more on their children, which is fascinating. Education has become expensive, but they are overweighting that as an important category of expenditure, so broader children realted expenditure is a growth area compared to previous generations.”
Mr. Scott-Gall also stated “They spend more on housing. This is partly due to price inflation, as houses and general accommodation costs more these days, however they are spending less on cars, as only 3.5% of their income is spent on cars, significantly less than the previous geneation which spent 5.5% on cars, which is a big difference.” This is further testimony to the frugality of 35 to 45 year olds who invest in assets and savings rather than depreciating lifestyle accessories.
It therefore should be noted that as education and property investment is more of a priority for this generation than depreciating consumer goods such as cars, their propensity toward understanding what is of investment value and what is not is generally higher than that of the generation either side of them.
Mr. Scott-Gall emphasizes that lessons learned during a difficult and fluctuating economic period has led to the astute approach of Generation X “Generation X had a tough time” he said.
“You could argue that they have been unlucky” continued Mr. Scott-Gall. “They saw two big falls in the equity market, end of the bull market that peaked in 2000 and 2001 and then the financial crisis of 2008 and 2009. These were scarring and very significant events, and they have changed the attidude of Generation X toward how they save and how they invest. they are more cautious and more frugal than the baby boomers.”
Bearing this in mind, it is important to note that the new generation of eager would-be achievers have not been disillusioned by financial crises, did not fall into the bad influence of the ‘industrial grunge’ era in which popular culture took a swing at industry and the organized commercial world, and are not jaded by attempts to flourish followed by bankrupt economies which have taken the fruits of their labor away from them.
Instead, they are fascinated by new technology, in particular the availability of new resources hosted on a cloud, and in some cases are developing new solutions themselves via opensource platforms, are empowered by the no-boundaries modern world and are clean-cut and eager to live their lives in an ultra-modern and independent way without railing up against anyone.
This not only means that naturally their interest in electronic trading would fit well with interest in using electronic platforms to further their own goals in business and social contexts, but also we are entering the age of the self-directed user of electronic systems, hence the acquisition cost per client may decrease as the new generation seek out trading solutions themselves rather than have to be targeted.
Hence this is exactly the right audience for FX brokers to target.