Why Advisors Need to Be Working With Gen X: The Worried Generation

Generation X — the generation that was raised on video games, MTV and “Seinfeld,” that brought us the Brat Pack, Nirvana, Jon Stewart and Google — has entered its peak earning and investing years.

Sandwiched between two giant demographic cohorts, the baby boomers and the millennials, the smaller Generation X is about to enter its 50s. Time to get serious: Kids are headed to college and those 401(k)s need feeding.

(Related: Thinking Gen X: An Overdue Look at an Overlooked Generation)

After years of feeling overshadowed by the generations before and after them, Generation X is finally in the spotlight — at least when it comes to finances.

Gen Xers are currently age 35-49. They have reached the “pre-retiree” stage, often called the “Retirement Red Zone,” when they become ideal clients for financial advisors.

What’s more, according to Scottrade’s 2016 American Investor Study (which surveyed 1,001 financial decision makers across the U.S. who had at least $2,500 invested with a full service brokerage, online broker or independent advisor), 83% of Gen Xers say they are likely to seek professional advice about planning for retirement.

Reality Bites

Although investors in general are confident that they will have enough money when they retire, Gen X is far less confident than other generations, the Scottrade Investor Survey found.

Only one in five (19%) of Gen Xers are extremely confident that they’ll be able to made ends meet, compared to roughly one in three baby boomers (31%) and about half of millennials (48%) and seniors (51%). More than half of Gen Xers — 56%—plan to work part-time in retirement, and 32% say they want to work part-time in retirement.

Why are they so unsure? Theirs is a generation of uncertainty and instability.

It was for Gen Xers that the term “latchkey children” was invented, many because their working parents left them alone until they could get home from work. In addition to witnessing the inspiring birth of personal computing and the internet, they’ve endured several recessions and market crashes.

They were in their formative years when speculation about Y2K became public chatter. And then there was the Great Recession, which destroyed personal wealth and set back many Gen Xers’ careers.

Generation Xers clearly have many serious concerns about their financial stability and saving for the future. They are more worried about job stability than any other generation. They’re also the first generation that has to cope with paying off large student loans while saving for retirement and their children’s education, which creates a great deal of stress and a sense of uncertainty.

Slackers? Not!

A good portion of Gen Xers’ concerns may simply have to do with their age. Approaching the “big 5-0” means that individuals are beginning to realize that they are no longer young. Responsibilities loom — for parents, for children, for oneself — at a time when major institutions are offering fewer assurances.

Will those expensive college educations launch the kids into lucrative careers? Will Medicare cover their parents’ surging health costs in retirement? Will they have enough to enjoy or even get to retirement?

In Scottrade Advisor Services’ 2015 RIA Survey, 400 registered investment advisors were queried on their clients’ most pressing needs. Among Gen Xers, the most pressing needs were growing assets and financing children’s educations.

These two goals beat out retirement planning by a substantial margin. Perhaps Gen Xers need to get over the college hump before retirement planning can begin in earnest — certainly, that was the case for boomers.

Back to the Future

Despite the fact that Generation X is more likely than any other generation to do its own financial research online, their financial stresses are leading them to advisors’ offices.

About three out of four Gen Xers said in the Scottrade American Investor survey that they’re investing for retirement, and almost 80% call it their top financial priority; more than half say they’re building a nest egg as well. Nearly two-thirds of them (64%) invest on a regular basis. Among these active and committed savers and investors, 36% of Gen Xers say that financial advisors are their most trusted source of investment opportunities.

The opportunity for financial advisors is huge. Understanding Gen X worries can help thoughtful advisors win more “Internet Generation” hearts and minds.

While there will continue to be much chatter in the financial services industry about using technology as an aid in courting the younger millennial generation, advisors who focus squarely on meeting the more immediate needs of Gen X clients can benefit from this demographic “red zone” shift. As the one and only Cosmo Kramer would say, “Giddyup!”

--- Read Pay Attention to Gen X Women on ThinkAdvisor. 

Page 1 of 2
Single page view Reprints Discuss this story
We welcome your thoughts. Please allow time for your contribution to be approved and posted. Thank you.

Most Recent Videos

Video Library ››