Fund companies have been so busy focusing on the Baby Boomers that they have been overlooking Generation Y, those in their 20’s, the Financial Times reports, citing a report from KPMG. And that is going to have a profound effect on their bottom lines, particularly as the population of those between the ages of 40 and 59 is set to decline sharply in the next decade.

“Half of the surveyed fund managers are not interested in Generation Y as customers,” said Bernard Salt, a partner with KPMG and author of the report. “If there is no strategic shift, these businesses will wake up in 2015 and find themselves simply wrong-footed with a customer base that is slowly subsiding.

“The 40-59 demographic has delivered extraordinary growth to the fund management industry in the last 20 years, but in the first part of the next decade, Boomers as a whole move beyond working age,” Salt said. “We are looking at a seismic shift. We are looking at a seismic shift. There is an earthquake that will explode at the end of this decade, and businesses need to ensure they are not marginalized by the shift in the bedrock demographics.”

Between 1990 and 2005, the number of people in the 40 to 59 age bracket rose 51% to 83 million, but between 2005 and 2020, the number is expected to rise only by 1%.

The survey also found that even those companies that are pursuing Generation Y are not delivering the right products. While most investment firms have historically believed that younger investors want high-risk products with the potential to deliver outsize returns, KPMG discovered through focus groups that members of Generation Y actually prefer low-risk products.

“There is something of a disconnect between the fund management industry’s perception of what is required and the feedback from the focus groups,” Salt said. “This is an industry that knows its products far better than it know its future customers, or how to engage them.”

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