Young adults left most at risk in recession

The report suggests that IPODs - Insecure, Pressurised, Over-taxed and Debt-ridden 18-34 year olds - are the "gilded generation": uniquely pampered and over-protected, yet increasingly isolated from financial services. Now they face the economic downturn without the tools to cope.

The report, Money's too tight to mention: will the IPOD generation ever trust financial services?, finds that the "financial establishment" has failed young people. Banks and financial services are out of touch, offering advice and products ill-suited to the way IPODs lead their lives. Government-sponsored regulation has compounded the situation, overprotecting young people into a state of irresponsibility and pushing up the costs of financial advice.

The report argues that unless financial services can engage the younger generation, and government dramatically reduce regulation, the UK is facing the potential post-retirement poverty of an entire generation.

Lucy Parsons, Senior Economics Researcher at Reform and report author, said: "We are living in "broke Britain", not broken Britain, and my generation is suffering. We are potentially more capable of managing our money than previous generations, but we have been let down by the financial establishment and government."

Trevor Matthews, CII President, said: "What is striking in this report is that IPODs possess the highest potential for appreciating the good value of advice and yet are not benefiting from it. Trust and the ability to explain complex concepts are the cornerstones of their service expectation. As the professional body for insurance and financial services practitioners, the CII Group including the Personal Finance Society (PFS) believes that restoring the IPOD generation's trust and confidence is paramount. We are keen to lead that debate."

The report's key findings are:

Over half of IPODs have debts excluding mortgages of up to £10,000 and a fifth has debts of over £10,000. The mean debt among 18-34 year olds is close to £6,000.

Nearly a third of IPODs have no savings. 60 per cent have either no savings or less than £1,000.

A third of IPODs think that financial advisers are out of touch with younger generations. Half rely on friends and family as their main source of financial advice. 60 per cent of IPODs cite trust as the key driver of this decision; clarity of explanation is another important factor.

A third of IPODs say they do not understand financial products enough, and only half feel confident in making financial decisions.

Half of IPODs are concerned they are not saving enough; 60 per cent would like to be saving more and borrowing less.