Generation X remains skittish toward investments
As customer loyalty in banking continues to waver with the economy, the number of Americans with a savings plan has decreased. According to a research from Harris Interactive, 34 percent of Americans have no retirement savings and 27 percent have no personal savings. Only 18 months ago these numbers were moderately lower, hitting 30 percent and 22 percent respectively.
The Harris Poll, which surveyed 2,151 adults in between November 8 and 15, 2010, additionally found that results vary by generation. For example, one in four Baby Boomers (aged 46-64) have no retirement savings, whereas Gen Xers (aged 34-35) continue to struggle with more immediate issues, resulting in 32 percent without any personal savings.
Additionally, 14 percent of Baby Boomers and Matures (aged 65 and over) have invested most of their personal savings in mutual funds - a much greater proportion than younger generations.
"Current economic conditions seem to be driving somewhat less risky investment behavior by Gen Xers, which goes against the grain of traditional investment advice," said Barbara Bertner, vice president of financial services research for Harris Interactive. "A combination of trust and education would likely bring these consumers back into alignment with traditional investment thinking."
However, a lack of education in the banking industry is not limited to younger generations. As a whole, more than half of people in possession of a bank account have heard nothing (24 percent) or little (35 percent) about last year's changes in overdraft rules.
And while more than two in five customers, 41 percent, indicated that they know about the new rules that require bank customers to sign an agreement to permit their bank to approve payments that exceed their balance, only one in six, 16 percent, have opted in.
Types of investment continue to differ by generation, however. The number of adults who maintain an "equal mix" of their personal savings in equities is higher among Baby Boomers and Matures, 23 and 22 percent respectively than among those 45 years of age or younger, at 7 percent and 18 percent.
"It seems Gen Xers are keeping money out of the markets in favor of less risky investments, possibly a result of being skittish about market conditions ... companies who understand Gen Xers investment attitudes and present new products with that in mind will generate a greater share of wallet among this group," the report stated.
As banks regain customer trust, investments are predicted to increase. However, if new products are not introduced and targeted to customer specific needs, not only could customer loyalty in banking decrease, but consumers may switch institutions altogether.
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