FUND managers in the Channel Islands should not be complacent about the effect of demographic change. A study by KPMG International has found that many in the industry are unaware or simply unprepared for generational changes affecting their business and they need to look beyond the baby boomers to today’s generation of 20-somethings, known as Generation Y.

The study was launched at the Fund Forum International 2007 in Monaco last month. It has received international acclaim.

‘It is a fascinating study which will no doubt be a warning to some fund managers in the Channel Islands as it shows that many in the industry are focused on the baby boomers and have all but ignored Generation Y,’ said Dr Elaine Monkhouse, KPMG Channel Islands executive director.

The study showed that only 22% have focused on Generation Y customers over the last two years and a further 28% intend to develop a relationship over the next five years.

‘This indicates that only half of the industry is changing the way it works to appeal to these customers who are no longer wealth accumulators, like their parents were, but create their own wealth or inherit it,’ said Dr Monkhouse.

‘Those companies who have been complacent will have products which simply do not appeal.

‘The survey shows that the products which will dominate will be mutual funds and equities but the industry is divided on how to engage or approach Generation Y.

‘This is an industry which knows its products better than its future customers and so it must take stock and adapt if it wants to continue to grow and prosper.’

As part of the survey, KPMG analysed 125 responses from 17 countries, which account for 20% of the $19,000bn of global funds under management, commissioned focus groups and undertook one-to-one interviews.

It also showed that the industry had a poor track record in keeping young staff. A quarter of companies have an annual turnover rate of more than 30% among Generation Y, but only 1% thought that they were unsuccessful in recruitment and retention.

‘This was a very detailed survey and KPMG hopes that this research will provide the fund industry with the insight they need to improve relationships with their Generation Y employees and customers,’ said Dr Monkhouse.