Young Brit IPODs are Broke Says a CII Report

ING picks up a $13 billion cash injection; Climate change for fund managers

They aren’t the Apple kind of iPod’s; they’re 18 to 34 year old Brits, who are “Insecure, Pressurized, Over-taxed and Debt-ridden” — i.e. “IPODs,’ according to a report from the United Kingdom’s Chartered Insurance Institute (CII).

The CII cites “a heavily-regulated and outdated financial establishment,” as the primary cause for leaving them most at risk in any recession. The CII study, issued jointly with the independent think tank Reform, suggests that the IPODs are a sort of “gilded generation, uniquely pampered and over-protected, yet increasingly isolated from financial services.”

The report said they may now “face the economic downturn without the tools to cope. Their lack of money — it’s “too tight to mention — “means they won’t have access to financial services, nor would they trust them, if they did. The report accuses the U.K.’s financial establishment of having failed young people. “Banks and financial services are out of touch, offering advice and products ill-suited to the way IPODs lead their lives,” said the CII.

“Government-sponsored regulation has compounded the situation, overprotecting young people into a state of irresponsibility and pushing up the costs of financial advice.”

The report argues that unless financial services “can engage the younger generation, and government dramatically reduce regulation, the U.K. is facing the potential post-retirement poverty of an entire generation.”
Lucy Parsons, senior economics researcher at Reform, the report’s author, stated: “We are living in ‘broke Britain’, not broken Britain, and my generation is suffering. We are potentially more capable of managing our money than previous generations, but we have been let down by the financial establishment and government.”

The report cited the following statistics to back its conclusions:

• Over half of IPODs have debts excluding mortgages of up to £10,000 [$17,000] and a fifth has debts of over £10,000. The mean debt among 18-34 year olds is close to £6,000 [$10,230].
• Nearly a third of IPODs have no savings. Sixty percent have either no savings or less than £1,000 [$1700].
• A third of IPODs think that financial advisers are out of touch with younger generations. Half rely on friends and family as their main source of financial advice. Sixty percent of IPODs cite trust as the key driver of this decision; clarity of explanation is another important factor.
• A third of IPODs say they do not understand financial products enough, and only half feel confident in making financial decisions.
• Half of IPODs are concerned they are not saving enough; Sixty percent would like to be saving more and borrowing less.

The full report is available from at: http://www.cii.co.uk/research and http://www.reform.co.uk/documents/Final%20Report.pdf.

Lest we forget, global warming is still with us. Risk Management Solutions has joined HSBC to provide fund managers with direct access to specialist climate change research.

“As the present and future implications of climate change become increasingly critical to investment portfolio management — and the need for robust risk assessment falls into sharp focus — fund managers will, for the first time, be able to draw on in-depth research to underpin their investment decisions,” RMS said.

Jason Futers, vice president at RMS, added: “The current turmoil in the financial markets acutely illustrates the importance of having sound risk management processes in place, and the potentially dire pitfalls of inadequate due diligence. Climate change is not just a future threat — it is already having an impact today, and fund managers have a duty to their investors to understand how it can affect their portfolio risk.” This assumes they’ll have anything in their portfolios to manage.

The Dutch government agreed to a $13.25 billion cash injection into the country’s largest financial group ING. Shares rallied on the news, but have since fallen back as banks and insurance companies continue their downward spiral.

As reported by Reuters, ING sought government help to shore up its core capital and restore investor confidence after a weekend of intense negotiations and following the partial nationalization of rival Fortis at the beginning of October.

The Group also agreed to sell its Taiwan life insurance unit to Fubon Financial for $600 million.

“We are in a large financial storm, and the storm has been building in recent weeks. We wanted to make sure we had a buffer, a buffer large enough to carry us through the storm,” ING Chief Financial Officer John Hele told CNBC.

“Our shareholders and customers, all our stakeholders don’t have to worry about ING group.” Hopefully that last statement won’t come back to haunt him, as it has a number of U.S. politicians. When they make similar statements, things inevitably get worse.

Topics Climate Change