The global investment management industry needs to increase its focus on Generation Y investors now in their 20s, according to a new study by professional services firm KPMG.

The study finds that 78% of industry respondents have failed to take definitive action over the past two years to target and engage Generation Y about their offerings. Moreover, over the next five years, only 50% of respondents intend to direct their resources toward targeting this demographic.

“As all industries are being affected by demographic shifts, the fund industry has largely been focused on Generation Y as employees as opposed to consumers,” says Bernard Salt, author of the study and a KPMG partner. “So it is not surprising that when asked about the relevance of this demographic to their long-term profitability, 56% of respondents admitted that they see this demographic as their future employee base, while only 33% admitted to perceiving Generation Y as their future client base.”

Furthermore, 69% of survey respondents acknowledge they need to gain a far better understanding of their current Generation Y employee base.

When asked how best to target this demographic as future customers, responses from the funds industry were highly variable, with no clear consensus demonstrated among them. Responses ranged from: advertising (33%), distribution techniques (27%), market research (26%), educational programs (23%), financial planning (23%), new technology (22%), product development (22%), and communication (21%).

“The study findings seem to suggest the industry has understandably been focused on our biggest client, ‘the baby boomers’,” says Katie Walmsley, president of the Investment Counsel Association of Canada. “We clearly have to rethink traditional business models to engage this up and coming investor.”

A more comprehensive presentation on the study findings will be presented at the ICAC 2007 Conference & Annual General Meeting today in Toronto.