Millennial fightback

The greatest current threat to motor manufacturers is that people no longer want to drive. The second biggest threat is that people no longer want to own a car. That’s the message that comes loud and clear from an article in the FT that features the Volvo car stand with no cars on it.

Screenshot 2019-06-04 at 05.43.43

I have to admit a reluctance to get in my car myself, my personal mileage was below 5000 miles last year and I keep my car out of nostalgia and for the personal number plate S4 HEN – which tells me who I’m owned by!

Car’s are not alone – what about houses?

The value of owning a record collection, of philately , of wine cellars – all seem to have dropped. People who I talk to who are under 35 no longer value themselves in terms of what they own. I suspect that we are returning to a different set of values that may be rather less materialistic and (dare I say it) more spiritual.

I suspect that houses are also way down on value. Owning property is certainly not a priority for my son (who was bullied into getting a driving licence but who has never used it – other than as identification).

Is this behaviour a result of pragmatism, or does it continue a trend we are seeing?

If young people fall out of love with home ownership, what will this mean to the value of older people’s housing stock? Will the equity on which so many of us rely for financial security prove illusory?

A house is only worth what someone is prepared to pay for it and as we age, there is a very real chance that ownership rates amongst older people will fall. The lack of income arising from pensions will inevitably place greater reliance on equity release and the lifetime mortgages which pass property from self ownership to the ownership of lenders.

Milennial fightback

There is only one way for millennials and that is to take control. Historically that has been through securing ownership of cars, houses and possessions.

I don’t see the urge to control today among younger people who are quite happy to stream services and use them on demand.

Instead of owning, millennials are investing heavily in themselves. They are taking jobs that are interesting and rewarding in themselves, not just a means to get a mortgage.

They are buying into training and taking an inordinate interest in their personal finances. Bloggers like Iona Bain – of young money – are the new Martin Lewis’ but they are talking to a new generation more interested in how their money is invested than what to buy with their savings.

I am dubbing this “millennial fightback” as it is their way of dealing with the impossibility of competing with the baby boomers on the baby boomers terms.

A car stand with no cars

The motor industry is first to feel the wave of change. The shift towards car- leasing or in the most extreme – Zip car – is illustrative of a new way of dealing with ownership – that moves from the balance sheet to profit and loss. Kids no longer want a balance sheet weighed down by personal possessions which they see as liabilities as much as assets.

This has profound implications for the savings industry too.

We must recognise it is not the valuation of an asset that is most important to a young person but its utility under ownership.

People are already moving away from conventional measures of worth (the valuation) to a different measure “the value of their money”. If you start valuing your money by what it is doing , then your interest is in the investment itself – what it does – not what other people will pay for it. People are interested in cars as a service , not as objects and property and even savings  may follow.

How this plays in pensions

There seem to me to be two competing views of pensions . Those who see pensions as part of wealth are owners. Those who see pensions as a means of doing things, are renters.

We do not of course own ourselves freehold, our lives are on leases which expire when we do. Younger people do not even take for granted ownership of the planet which they see as under existential threat, they may possess a blighted planet when their parents are gone.

This sense of possession rather than ownership could mean a reversion to a view of a pension as something that does something rather than as a balance sheet item.

Currently the  “pensions are wealth”  brigade dominate the agenda and have pretty well excluded the idea of pension as a utility.

But that is likely to change over generations. The question for pension providers today is how to ride both horses in mid-stream.

horses stream

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in actuaries, advice gap, pensions and tagged , , , , , , , . Bookmark the permalink.

7 Responses to Millennial fightback

  1. Mark Scantlebury says:

    Wow – thank you Henry, so much food for thought! (I need to go away and think.)

    • henry tapper says:

      I think some of the ideas that the FT set running in my brain need to calm down- but this question about the difference between possession and ownership is a really useful one.

      Young people seem happier to possess than own – so long as they have management rights they seem more comfortable not to have the freehold.

      When we don’t even own the right to life- it seems odd that we aspire to so much certainty, best make the best of what we have!

  2. Mark Scantlebury says:

    By management rights do you mean the ability to tailor (curate) things to our own needs and values?

    And I wonder about possession and ownership. I think they’re pretty much the same thing. Are we really talking sharing rights? And where we’re really engaged we are also shaping the ‘thing’ we’re engaged in. So like Wikipedia. Or AirBNB – in it’s ideal form it’s a two way experience of give and take.

    There’s a lot of talk about people, particularly younger people valuing and defining themselves by their (authentic) experiences above their possessions.

    I’ve just read The Forsyte Saga which is all about ownership and the late Victorian’s belief that property rights are the foundation of a stable and moral society. But the younger Forsytes kick against this idea with their new fangled thinking (and their new way of talking incomprehensibly between themselves and wasting money on trivial entertainment)!

    I don’t think having investments and ‘wealth’ is how younger people want to see themselves – a bit like the younger Forsytes.

    Wealth Management and High Net Worth Individuals and even Mass Affluent – these concepts are only likely to appeal and to make sense to those who sell related solutions and those who currently buy them. Both buyer and seller look very similar.

  3. henry tapper says:

    I take it from your last paragraph that you see the financial services excluding the young and that pensions has become about the wealthy managing each other’s wealth. I agree,

    What your videos are telling us is that we are not including young people in the conversation – let alone getting them involved in the stewardship of their money.

    Those people in your video who go home and try to find out about their money will probably not get very far. I was with the investment committee of a huge GPP yesterday and they couldn’t get the information they wanted for their staff from a leading insurer.

    If we want to help young people save more – we need to help them understand what they are spending their savings on and give them a real chance to steward. Even if they don’t take up the option – they will feel included. Right now it’s them and us!

  4. Nigel Hawkes says:

    Increasing car purchases on finance have been driven by increasingly low rates of interest. It is these low interest rates which have driven up house prices (along with other factors such as immigration and arguably buy to let). Perhaps therefore it is a changing attitude to the time value of money that is making people more content to use rather than to own.
    Demand for homes has been fanned with help to buy(Help for housebuilders) and housing benefit(Help for landlords) while at the same time making the market less fluid with stamp duty (a tax on ownership). Owner occupier rates have fallen. If there is a lesson for pensions it is that the involvement of politicians will leave fewer people with decent pensions.

    Incidentally the biggest threat to car manufacturers is not that people will not want to drive – they will always want personal transport whether self driven , owned or rented- it is the management of the transition from petrol/diesel to electric and hydrogen power.

    If young people are to be encouraged to save more they need better returns and confidence that it will grow in value. Education, engagement and simple statements (not reams of caveats and waffly wording) would be a good start.

  5. Doug Brodie says:

    “If young people are to be encouraged to save more they need better returns and confidence that it will grow in value.”.

    I agree with the sentiment, however returns can’t be ‘made better’, they are what they are, the stock market, property, fixed income and cash will deliver what they deliver, the point about returns being unknown is how the whole thing works. If any investment was predictable it would be called cash (or Goldman Sachs would have bought it).

    Pensions are a lousy proposition but a great delivery: we advise folk to put an amount of money – as much as you can afford – into investment funds each month, for a time in the future you’ll guess about, dictated by a future government using rules made up by people who are still in nursery school today, to give you benefits that might be in income, might be in tax free cash (sorry, PCLS, no tax free words allowed), that might clash with state benefits, can’t give you a clue how much capital you’ll have, even less of an idea of how much income you’ll get or what it’ll buy for you, or when you get to stop working for a living. I can tell you though that it if you pay £200 per month increasing at 5% per year you will pay total charges of £20,250.

    Come on millenial, that’s enough nudging…sign here…

    What we need is to visually demonstrate the value, eradicate the lunacy of quantifying costs but not value (how come we know what the costs will be but not what the value will be?) and continue to remove choice from the areas where choice only serves to confuse – a/e works because there is no choice, different investment options for a 30 yr + term are unhelpful.

    We need to show, not tell, and we need to demonstrate that sitting on a sofa ordering food to be delieverd might be ‘convenient’ to a millenial, but at the same time it is removing jobs from the millenial peer group. It takes a lot less staffing to run an app than it does to run a restaurant.

Leave a Reply