From the June 2006 issue of Investment Advisor • Subscribe!

June 1, 2006

Behind the Numbers

Turns out the generations like getting their financial advice in different ways

Freud famously asked, "What do women want?" but at Financial Finesse, we can answer a question more pertinent to advisors' lives: What do consumers want when it comes to financial advice? Every year, Financial Finesse tracks research on employee calls to our Financial Helpline Service from our 350 clients who provide access to our educational programs as part of their corporate benefits. When we first started tracking in 2001, we noticed many calls regarding serious debt within the first few quarters. This trend persisted for two years through the dot.com bust. Then, in 2004, we started to see a high percentage of "proactive" financial calls--possibly a sign of the improved economy or of baby boomers focusing more on saving for retirement.

In 2005, a new trend emerged--an increase in calls on both debt and retirement, and a greater interest in and appreciation for financial education, counseling, and guidance. Specifically:

  • Debt calls, mostly from Generation X callers in their 30s and early 40s, increased from 39% of total calls in 2004 to 45% in 2005, revealing that Americans in this demographic are still struggling with basic money management issues despite the fact that the economy has improved.
  • We also saw increased interest in retirement planning, mostly from employees aged 45 and older. The number of retirement workshops employers requested has skyrocketed, from approximately 30% in 2004 to almost 50% of our clients in the first quarter of 2005. Retirement is now our most popular topic for employee workshops, replacing basic money management. Additionally, average attendance rates have increased significantly, from 17 employees per workshop to 25. (Most employers "close" the workshops at around 25-30 attendees). Retirement has become more of a focus within our in-person planning sessions as well.
  • For both Baby Boomers and Generation Xers, we saw more employees seeking financial education. Additionally, employee appreciation was stronger as measured by another piece of data we track: thank-you notes or calls were initiated by some attendees in over 50% of the workshops conducted (compared to 35% in 2005).
  • We did not see any changes in activity in Generation Y employees. For the most part, these employees do not seek out financial education, guidance, or advice. There is some evidence that they are less inclined to do so than previous generations.

Implications for Advisors

There is reason to believe a "generational approach" to planning is more important than ever. While every individual is unique, you should always take into account your client's generation when providing advice. It is not surprising that the majority of calls to our Helpline come from employees in their 30s. This is a generation that has embraced cellular telephones and PDAs and values "efficiency" over in-person contact. With debt as an issue, they may feel embarrassed and will reveal information over the phone that they are uncomfortable sharing in person.

Boomers, on the other hand, are starting to get serious about retirement planning and are hungry for guidance. This is a generation that came of age without e-mail or cell phones and where in-person meetings and visits were important to building and sustaining relationships. We've found that most boomers welcome a level of detail that might overwhelm younger generations.

Boomers are significantly more educated about their options and familiar with different financial products and services. While they are not a skeptical group per se, direct product pitches tend to offend their sensibilities. They are excited about their retirement, yet concerned about their ability to afford it. They are anxious to share their feelings with a trusted advisor who hears their concerns and understands their needs. As an advisor, your ability to actively listen will be more critical with this generation. So will your accessibility and your willingness to spend time building a relationship before any plans or sales are made. Take the time to uncover their priorities and their values and they will become loyal customers for years to come.

Financial Finesse provides unbiased financial education, coaching, and counseling programs to more than 350 corporations and credit unions nationwide through counselors who must be CFPs. For more information, visit www.financialfinesse.com or e-mail info@financialfinesse.com.

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