Marketing by Generation: The X and Y Generations: A Coming of Age

Technology, personal contact and employer-based information essential to capturing the younger markets 

There’s a lot of talk among financial industry experts about the retirement of Baby Boomers and its potential business opportunities, but if you look beyond the Boomers, there is a larger pool of consumers who will need our industry’s help to meet their financial goals.

Generation X and adult Generation Y consumers make up over a third of the U.S. population (as compared with Boomers, which make up one-fourth), totaling 105 million. As these generations continue to mature and form families of their own, they will have a great need for insurance and investment products, and will have the economic means to acquire them.

LIMRA’s most recent life insurance ownership study indicates that half of all households headed by Gen Y and over one-fourth of households headed by Gen X do not have any life insurance.

According to LIMRA’s research, saving for retirement is the most common financial goal for Generations X and Y. Many have already started saving, usually through a 401(k) or 403(b) plan. About half struggle with debt, though roughly one-third describe themselves as savers and cautious spenders.

Yet when asked, most Gen X and Y consumers say they lack knowledge about financial products. A third say they do not have time to look for information, and four in 10 prefer to have a financial professional advise them. However, most feel that they cannot afford professional advice.So how can companies effectively reach these generations and educate them about the financial products that can help them prepare for the future?

Let’s focus on the Internet.

The virtual marketer

Generations X and Y are prolific users of the Internet. They are connected — 92 percent of 18 to 29-year-olds and 85 percent of 30 to 49-year-olds use the Internet, compared with 75 percent of all U.S. adults. Gen Xers adopted technology early in life and are comfortable using it for myriad activities. They expect to access technology at home, at work and in the community. Gen Yers grew up using technology, and online communication and information-seeking is second nature for them. In fact, most Generation Y consumers cannot recall life before the Internet. The higher their education and household income, the more likely they are to use the Internet for product information.

Getting information about shoes or movies playing at a local theater is one thing, but what about using the Internet for information on life insurance or mutual funds? LIMRA found that information sources used by Gen X and Gen Y for these two products vary. For life insurance information, about one in four online consumers from both generations used the Internet sites of specific insurers. Gen Y and Gen X tend to locate these sites through a keyword search; in addition, Gen Y often locates company sites based upon recommendations. However, the Internet lags behind more traditional sources: friends and family, insurance agents or brokers and employers for those who already own life insurance.

For mutual fund information, general financial sites are more popular sources of information than individual company websites. In fact, they are the most-used information source for both generations, surpassing other sources of information such as friends, family and coworkers and financial planners. While just over one in three Gen Xers used general financial sites for mutual fund information, about one in two Gen Yers did so.

The next step

After obtaining the information, do these tech-savvy generations go ahead and buy online? Perhaps surprisingly, most often they don’t. LIMRA found that the majority of Gen X and Y consumers say that personal contact is important to them when considering and buying insurance and financial products. They use the Internet, if not for in-depth information, then for background information to help them gain a knowledge base and learn what questions to ask — but they don’t usually want to end the purchase process there.

For companies, this translates into having a sophisticated, educational, easy-to-use website that offers clear product information, calculators, educational tools and 24/7 access to a knowledgeable customer service representative at the company. In fact, one in five Gen X and Yers pay attention to insurance company websites, so building a strong online presence can be more influential to young consumers than such traditional branding sources as television, radio or print advertisements. For producers looking to target these generations, online is the place to focus.

Other sources of information

Gen X and Y consumers also rely on their employers for information about financial products and services. Advisors can build a relationship with these consumers through worksite marketing and educational seminars. About 20 percent of Gen X and Y consumers obtained life insurance information at the workplace.

Both companies and advisors, then, can engage these consumers by using social media platforms to communicate information about products and services. LIMRA found that the majority of Gen X and Yers spend time on social networking sites, listen to podcasts, watch streaming videos and read blogs.

Yet with all of the available online options, more than six in 10 of all Gen X and Y consumers bought their individual life insurance policies after in-person meetings with financial professionals. And more than half say they prefer to purchase life insurance through face-to-face meetings with financial professionals.  

Now is the time to build your brand with Gen X and Y consumers. Start by educating them about products and explaining how to identify and prioritize their financial needs. Keep the information clear and unbiased. Do not just sell your products, but instead teach them how to be smart consumers of all financial products. The future of the industry depends upon it.  «Nilufer Ahmed is senior research director at LIMRA Markets Research, responsible for conducting research related to unique markets.

What Products Do Gen X and Gen Y Want?

 A recent study conducted by Guardian Life Insurance suggests that Gen X and Gen Y have many of the same wants and needs when it comes to coverage — although Gen X is more likely to have actually acted upon these needs. Both generations placed importance on having a retirement savings plan, as well as long-term care and disability insurance. However, Gen X is significantly more likely than Gen Y to have life insurance.


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