NEW YORK, March 25 (Reuters) - If there is one thing that gives brokerage executives the cold sweats at night, it is the attitude of younger Americans toward the stock market.
A startling 44 percent, for instance, think plain old savings accounts are the best way to save for one's golden years, according to the Generation Z and Money Survey, put out last year by online brokerage TD Ameritrade.
Only 11 percent think the stock market is the way to go.
For online brokerages, that represents a dagger to the heart of their business model, which depends on people investing their cash, not than stuffing it under a mattress.
One fresh response to that threat: TD Ameritrade University (http://tdameritradeu.com), a learning site to be announced Tuesday at Thomson Reuters' 2014 Annual Online Financial Services Symposium. It is a venue for college students to craft simulated investment portfolios and for finance professors to arrange investing competitions for their classes.
"Every statistic we have seen reveals that younger generations are very risk-averse," says Nicole Sherrod, TD Ameritrade's managing director of trading. "They think they only need to start investing after they have gotten married and bought a house."
That starts around age 28, Sherrod says, which means they are missing out on a lot of potential compound interest.
The deep wariness of younger generations toward stocks is understandable. They have grown up in an era of terrifying market swings, from the dot-com bust to the financial crisis.
But their ultra-conservative response - favoring savings accounts, for instance - is not going to get their retirement savings where they need to go. The average bank savings account offers an annual interest rate of 0.45 percent, according to Bankrate.com, a level that does not come close to keeping up with inflation.
The deeper issue here is low financial literacy. Experts have long lamented that schools are not equipping youngsters with the financial smarts to handle core life tasks like budgeting and retirement saving.
Scary news headlines about the economy and the financial markets are not helping.
"I think younger people are more wary of the stock market because they have come of age during a recession," says Laura Levine, president and chief executive officer of the Washington, D.C.-based Jump$tart Coalition for Personal Financial Literacy.
"I think that financial literacy among kids is not at the level we would hope because we are not reaching them with financial education early enough, often enough -- and some we are not getting to at all."
That is where TD Ameritrade University hopes to come in, by promoting class portfolio competitions to foster financial learning and an early familiarity with stock trading.
To be sure, it is not the only offering in this area: Interactive Brokers Group's Student Trading Lab offers a similar environment, where professors and students can try out simulated trading accounts for free.
TD Ameritrade itself already has a platform called "paperMoney" at its affiliated options-trading site thinkorswim.com, where investors receive $100,000 of play money to trade with in virtual margin accounts and individual retirement accounts.
TD Ameritrade University is a more formalized curriculum designed for college students and their professors. Sherrod points out that Tuesday's announcement is the first phase of the site's rollout, to be followed by a nationwide trading competition in fall 2014.
But some students and professors have already been working with the beta version, and with similar tools at thinkorswim.com. One of them: Taylor Jolin, a recent graduate of the University of Southern California who is now pursuing his master's degree in finance from Georgetown University.
Impatient with finance classes that only taught abstract investment theory, Jolin helped found a club - which has about 100 members - where students could approximate real-life trading and compare notes, using the paperMoney platform.
"The first time students look at a trading platform, it can seem very complex, like you are trying to land a plane with no instruments," he says. "Then once you get started, it is so much fun to be on a live platform with moving markets. It almost becomes an addiction."
(Follow us zReutersMoney or at http://www.reuters.com/finance/personal-finance. Editing by Beth Pinsker and Douglas Royalty)