If the latest research is right, the mutual funds industry has a real problem marketing to younger investors.

Financial Planning reviewed the latest research from both the ICI and BofA Merrill Lynch, finding a big generation gap in investors' perception of mutual funds. Only 44 percent of investors under 35 had a favorable impression of mutual funds, compared to 74 percent of those 65 and older, and two-thirds of those aged 50 to 64.

"The main strength of mutual funds is now the aging investor," writes Tom Steinert-Threlkeld. That won't surprise anyone in the funds business. So what can funds firms do to appeal to the young?

Steinert-Threlkeld offers two prescriptions: riskier funds and better online tools. Younger investors are more likely to accept increased risk in return for better returns, and they're much less likely, according to a BofA Merrill survey, to describe themselves as "conservative."

The Financial Planning reporter also thinks that younger investors' preference for managing their money online can be "leveraged" by fund companies to engage this demographic, but he doesn't detail how. There's a plum marketing job at a fund firm for the person who can figure this one out.  

Edited by: Chris Cumming


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