plonkee money an english-er's thoughts on personal finance

October 12, 2007

investment companies missing a market?

Filed under: investment — plonkee @ 12:00 pm

Why aren’t investments marketed towards the young?

In the UK, student banking is one long list of freebies, usually involving a large interest free overdraft, free currency exchange and a signing up bonus. A big effort is made to market student bank accounts, on the grounds that graduates tend to have more money than non-graduates and so will be more lucrative and the oft-reported factoid that you are more likely to get divorced than switch your main bank account and so you are a prime candidate for lifelong cross-selling.

It seems funny then that investments aren’t marketed more heavily towards young professionals – graduates in their first few jobs. These are people with reasonably good salaries and relatively few encumbrances, generating significant amounts of disposable incomes, they should be prime candidates for being persuaded to part with a little of their cash now. In the same way that banks try to attract customers as young as possible so that they can form a relationship with them, I’d have thought that investment companies, fund supermarkets and the like would want to attract young investors who have a lifetime of paying fees for investments ahead of them.

It’s not like you need to have a lot of money to get started in investing any more. Most companies offer investments that cost the same or less than a broadband and cable tv package. Is it really that hard to sell a product that should make the customer money?

The silver lining is that lots of people aren’t getting suckered into paying top whack for poorly performing funds, but that doesn’t outweigh the big black cloud, lots of people aren’t being persuaded to invest for the future at the point in their lives when it will have the greatest effect.

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