Summary of Michael Townsend's Presentation

Michael Townsend presented Charles Schwab & Company’s research on Generations X & Y from the perspective of financial marketing. Research findings showed 45 percent of Gen X & Y think they have too much debt to save and 35 percent think they will be in debt forever. Concurring with the NEFE focus group videos, half of them do not think investment firms will take them seriously because of their lack of money. They also perceive investing to be risky which adds to their avoidance of using financial planners.

While Gen X & Y are very resourceful, self-reliant and flexible, they are not confident about financial decisions. They need validation from experts once they gather their own research. They like online research but want to “seal the deal” in person, which presents an opportunity for financial educators. The trusted sources for financial advice are their parents, older colleagues and lessons learned from friends’ mistakes. 

Charles Schwab & Co. has approached Gen X & Y by lowering the barriers to investing and making it less intimidating.   Schwab’s mainstream advertising drives young adults to a dedicated website with answers to questions, a comparison chart of how peers are facing financial challenges, and other tools. Product development included high yield investor checking accounts to start off their relationship with young adults in a non-threatening, simple way. Then, they build on that relationship by offering additional services. 

The implications for financial educators are to keep things simple and to help young adults come to their own conclusions instead of lecturing them. When young adults feel they own the solution, they are more inclined to engage in smart financial decisions. 

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