Millennials and Stable Value: Made for Each Other?

The millennial generation and the stable value industry may be made for each other.

The young are often painted as risk-takers, but in the case of millennials—those Americans born between 1982 and 2004—old measures may be misleading, says Neil Howe. Neil Howe is the founding partner and president of LifeCourse Associates, a publishing, speaking and consulting company focused on generational research.

He contends that millennials are more risk averse than their predecessors in Generation X and the baby-boomers.

That could be good for the stable value industry as millennials begin saving for retirement, since stable value funds are conservative investments offering principal preservation and interest rate stability that are not available from most other investment products.

One way we know millennials are risk averse is by their behavior, Howe said at the 2014 SVIA Fall Forum. The violent crime rate for offenders ages 12 to 20 peaked in the early mid-1990s, when Generation X last occupied those age brackets, and has since fallen by 75 percent.

Meanwhile, surveys show that substance abuse rates are at their lowest levels ever for students in grades 8, 10 and 12. Elsewhere, the percentage of teens applying for drivers’ licenses fell over the 25 years from 1983 to 2008. And finally, data and surveys shows that older millennials are leery of investing in stocks.

“Risk-taking and independence no longer attract this generation,” Howe said.

He expressed little surprise at the development. He contends that generations cycle through four archetypes: the heroes (such as the “government issue,” or G.I., generation that came of age in the 1920s and 1930s), the artists (the “silent generation” that followed the G.I. generation), the prophets (the Baby Boomers) and the nomads (Generation X).

The millennials, Howe said, remind him in many ways of the G.I. generation, which also eschewed risk-taking by turning inward, to family, amid the turmoil of the Great Depression. In fact, he said, millennials are much closer to their parents than previous generations were. In one recent survey, 82 percent of teenagers reported having no problems with any family member, up from 75 percent in 1983 and 48 percent in 1974.

Howe said millennials are accustomed to being protected by their parents and feeling special, and want to be good citizens and team players. He concluded that organizations that want to market to them should factor these attitudes into their messages.