Get em while they're young and keep em for life. They have a longer time horizon. They only get richer as they get older. And they want financial advice. It seems simple enough.

So the question remains: Why aren't more funds targeting this promising, younger age bracket? Perhaps it stems from the ambiguity of the term young people itself. Who are they? The term young people includes Gen X, ages 23 to 35, and Gen Y, ages five to 22.

But more importantly, how does who they are translate into a potentially great untapped market? And how can funds attract these individuals?

A new report, "Gen X Professionals, Financial Services and the Web," conducted by Celent of New York found that 42% of the GenXers surveyed had a financial planning provider, and an additional 15% said they planned on finding one within the next 12 months. Moreover, a recent survey conducted by the MainStay division of New York Life Investment Management of Parsippany, N.J., found that GenXers, on average, had a net worth of $117,000. The survey also found 35% put money into a savings or investment account several times a month.

Gen Y, on the other hand, spans a more diverse age range, with its oldest members now graduating from college and its youngest still fascinated with Big Bird. Michelle Porif, associate director at Yankelovich of Norwalk, Conn., said the difference between Xers and Yers is not so much generationally driven as "life-stage driven." By that she means that these individuals are motivated by where they are in their lives.

Porif said Gen Xers are predominantly in their "prime career years, potentially moving into their peak earnings years of their careers." She said Xers are rational, pragmatic and realistic, realizing that in terms of finances, investments "might not [turn out to] be what they had hoped for."

Porif went on to say Gen Yers are also very pragmatic, but not at a phase in their lives to be worrying about their future. The Yankelovich Youth Monitor found 67% of Yers talk to their parents about saving money, but found that nearly half of the mothers (47%) said that getting their kids to save money was a big challenge for them.

"Gen Y is in a live-in-the-moment kind of phase, not as concerned about saving money for the long-term, and more willing to indulge," Porif said.

Moreover, a Teenage Research Unlimited of Northbrook, Ill., study finds that they have the money to satiate these fancies. The study found the personal annual income was $1,664 for 12 to 15-year-olds, $4,940 for 15 to 17-year-olds, and $7,852 for 17 to 18-year-olds.

Moreover, according to Stein Roe Mutual Funds of Boston, approximately 20% of students in grades eight through 12 own stocks or bonds. But what about the remaining 80% who aren't investing?

Christina Mus-

son, 21, a student at New York Uni-

versity, seems to capture the sentiment of many people her age. An investor in mutual funds for three years now, she admits to leaving the details to her financial adviser, a family friend whom she trusts. However, she also says the reason is not due to a lack of interest, "I have the interest. I think it's something a lot of people neglect. It's just a language I don't understand," Musson said. A key factor in the low participation rates seems to be the lack of financial know-how.

Bob Bacarella, president and portfolio manager of Monetta Financial Services of Wheaton, Ill., noticed this lack of interest in his own kids and started his Monetta ExpressKids Program a couple of years ago to teach children and young adults about investing and give them "financial life skills." Barcarella said kids today lack the discipline and incentive to save and his program can make them informed investors by the time they are 23. Wait, by 23? "Yes," he replied, "For financial life skills, Gen X is old. They gotta do a little catch-up." The MainStay study, however, found that GenXers put away, on average, 16% of their income as opposed to their predecessors, who only saved 13%. It seems Gen X just may have these "financial life skills."

Smart Kid

O.K. Young people may need some educating. From a practical perspective, funds should start educating and targeting this latent market from a young age to start building trust, familiarity, and rapport. After all, the young don't stay young, or so trusting, forever.

Sabrine Faragallah, 21, an economics student at NYU, said, "For me, the best way for fund companies to reach me is through word of mouth. I feel more secure if I've heard something from a reliable source, like a trusted friend, accountant, or co-worker I'm critical towards advertisements and magazine articles because the sources of information are profit-driven." If Xers are, at best, hesitant types, Yers are flat out skeptics. Gen Y is a markedly different generation. They've seen quite a lot in their lifetimes, from O.J. and Monica Lewinsky to Sept. 11. They're more racially diverse, and one in four lives in a single-parent household. They're tech savvy and get their information from a wide range of media. With a practical and global view, Yers are not kidding around.

A 1998 survey of students by Northwestern Mutual Life Insurance of Milwaukee found one in nine high school students has a credit card co-signed by a parent, and many will take on extensive debt to finance college.

According to Yankelovich, 60% of 24 to 37 year-olds are parents. Porif added that Gen Xers are now in their "family formation years," meaning they are more concerned with their future, retirement and saving for education.

So, how much money collectively are we talking about with the X/Y crowd? Teenage Research Unlimited estimates the 31-million-strong teenagers in the U.S. spent $153 billion in 1999, 8.5% more than in 1998, and consumption is not declining. However, further studies have shown that teenage consumer tastes are quite fickle, meaning Britney Spears could become as passe tomorrow as her New York eatery, Nyla.

Couldn't young people hold off on Britney and direct some of that cash to less-erratic, sounder investments? Absolutely. And why aren't they? Because no one's been educating them. No one's given them reasons why they should.

And how should fund companies go about giving them such reasons? "Fund companies should stick with their responsible' reputation and not [attempt] something cool,'" 21-year-old Faragallah said. "If a company is handling my money, I care more that they are responsible and less if they care to know what music my generation is listening to." Porif said companies should try and "focus on other things [kids] might look forward to, like saving for business," for example.

According to Yankelovich, that would resonate among Gen Y, which the lifestyle and consumer tracking firm found to be very entrepreneurial and independent in spirit. Because Yers are more concerned with living in the moment, fund companies might focus on saving for college, or for starting their own business, rather than retirement - which as far as kids are concerned is eons away.

Whatever the approach, an incentive-based program has proven to be invaluable. To keep young investors engaged, Monetta offers plenty of incentives, ranging from toys and gift certificates for a topic well learned, to a computer game mirroring real-life investing, set to be launched next year.

Though most funds cannot offer kids laptops as an incentive to play their "game" and invest in their companies, Bacarella's premise still holds. Get them excited about investing. Make it accessible. And they'll naturally want to play.

No Slackers Here

One way to get them excited is to specifically buy stocks that pertain to kids. Morrison said the Liberty Young Investor's Fund does just that. She also noted that the fund doesn't invest in "sin stocks," or stocks that would send out a bad message to kids, such as tobacco or pornography stocks. But Bacarella disagrees: "Kid funds are a disaster ... Theme investing doesn't maximize a company's return." He says that most kid funds include stocks like Microsoft and GE, which focus some of their efforts on kids, but are certainly not known as kid stocks. While they may differ on individual stocks, both Bacarella and Morrison agree on the fact that the younger market has great latent potential because of its longer time horizon. Beverly J. Moore, managing director of NYLIM Retail Markets said, "Most GenXers are well positioned to weather market turbulence." She goes on to say they may actually benefit from the current drop in stock prices.

"In the past, GenXers were often portrayed as lazy' or slackers' and received little respect from the financial community. But, in fact, this generation of young Americans has grown up knowing the importance of saving for the future," Moore said.

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