Executives at American Century Investments say they do not think young adults worry much about investing for retirement.
So the fund company is playing up more immediate goals - cars, engagement rings, travel, and the like - in appealing to members of Generation X and Generation Y.
"We see them as the next investors," said Donna Byers, American Century's senior vice president of direct sales and service, "and we're trying to understand what we need to do to connect with them for the long term."
The Kansas City, Mo., company's My (Whatever) Plan, an online product unveiled last week, is presented as "a simple way to invest towards your Whatever."
Participants can invest as little as $500 initially, and automatically an additional $100 goes into an American Century asset-allocation fund once a month. A "financial coach" is available by e-mail, a chat engine, phone, and investment tips and a calculator are included in the package.
"It was conceived to make investing more tangible - a home, grad school, a trip," Ms. Byers, said. Investment companies have been preoccupied with the baby boomers and have left the younger market up for grabs, she said. (Wikipedia defines Generation X as those born between 1963 and 1978, Generation Y as those born between 1979 and 1999.)
Too often, Ms. Byers said, younger people are intimidated by the arcane terminology of investing. Research suggested that American Century should try to make investing more inviting and that it should use the Web to reach this audience, she said.
The low minimum investment of $500 also arose from the research, Ms. Byers said.
"One thing we heard loudly from both generations is that it's real hard to lump together $2,500 in one sum," she said.
The company also discovered they are "more responsible than maybe we give them credit for," Ms. Byers said. More than 60% of Gen Y members (also known as millennials) and Gen Xers have savings accounts or certificates of deposit, and 14% even own mutual funds, in many cases gifts from their parents.
"They may not be saving a lot, but they are saving," Ms. Byers said.
American Century does not expect to turn much of a profit on My (Whatever) but hopes that getting young feet wet will pay off down the road.
"Obviously, $500 accounts aren't the most profitable," Ms. Byers said. "What this really is about is establishing relationships early on, and an underlying assumption that if we can make that connection early and help them understand the importance of investing, that they will stay with us over their lifetime."
Of course, plenty of other investment management companies are trying to lure young investors. Charles R. Schwab, the chairman and chief executive of Charles Schwab Corp., said during its investor relations business update this month that the San Francisco company wants to find ways to "seed its nursery" and attract younger investors. One way it hopes to do so is by adding to its 401(k) business.
"We have to find ways to get closer to Generation X and Generation Y," Mr. Schwab said. "This may mean enhancing our online services. We have to get to the children and the grandchildren of our client base, and that will make this franchise stronger."
American Century will "hard launch" the My (Whatever) Plan in late January or early February, Ms. Byers said. Not surprisingly, almost all of its ads will appear online, on sites like MySpace.com and YouTube and through search engines like Google, she said.
Ken Carbone, a founding partner of the Carbone Smolan Agency, a New York design and branding firm, said the youth market is indeed focused on quick results rather than long-term goals.
"It's unbelievable how fast things get old for them," he said. "Also, there is kind of an odd sense of entitlement - 'It's going to come to me anyway, so why do I have to bother?' "
Bringing the product to them through click-through ads on a site like YouTube is the right idea, he said, as long as the ads are catchy enough to compete with the site's videos.
Advertising using this crowd's slang, however, can backfire.
"Kids are so suspect; they roll their eyes at everything," Mr. Carbone said. "They'll only respond to something that feels true, and not top-down."
Banks have also begun pursuing the post-boomer market. For the past four years Zions Bank offer college students a free checking account, and it recently started offering free lava lamps. It also has a marketing program for children 12 and under.
