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GenX Marks the Spot

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If in the past you’d mentioned GenXers–52 million Americans born from 1961 to 1981–you might have conjured up an image of disloyal slackers who don’t do much to recommend themselves, says Beverly J. Moore, managing director of New York Life Ivestment Management (NYLIM) Retail Markets. But according to a survey released by MainStay Funds, a division of NYLIM LLC, GenXers are actually thrifty, industrious, and financially astute–good prospective clients for financial advisors. Yet advisors don’t target them.

According to the survey, GenXers begin saving early, save often, and expect their standard of retirement living to be better than their parents’. They also estimate that if suddenly unemployed, they could nevertheless financially support their families for 10 months. The sampling in the survey had investable assets of $50,000 or more, with an average annual income of $109,700. They consider themselves financially savvy and their priorities are taking care of their families and retirement planning, in that order (they intend to retire by the age of 59). There are 2.2 million [GenX] households that have an investable net worth of at least $100,000, according to Moore. Total assets of the group are over $700 billion. For advisors, perhaps the most telling finding of the survey: 66% do not have a financial advisor.

Even though they consider themselves financially astute, GenXers figuring on needing an average of $2 million in order to retire comfortably, i.e., better than their parents. Yet according to Moore, the average 30-year-old GenXer who wants to retire at 59 with an annual retirement income of $100,000 in today’s dollars will need, at a 3% inflation rate and an 8% investment return, not $2 million but $7.3 million net of taxes. That means, says Moore, that they need to save about $2,600 a month. Most are saving better than the previous baby boomer generation, she concedes, at 16% of their income. But “they’re not saving enough even to reach the $2 million.”

So how can they get there? With a financial advisor’s help. And 72% believe they need a financial plan. Yet, says Moore, “no one’s giving it to them. They’re not targeted at all by the financial services industry. Our gut told us this is the next wave in the marketplace, and no one is spending time to understand who they are and what they need.”

With such a huge untapped market, what’s the best way for advisors to approach them? Through their parents, says Moore. “The 2001 survey [the first year NYLIM conducted it] discovered they like to deal with advisors with whom they have a high degree of trust, and will go to the advisor used by their parents first.” But that’s not enough to guarantee that they’ll remain as clients. Moore goes on to say that while they start with their parents’ advisors, they aren’t always happy with how that advisor approaches them. “They’ll doublecheck what an advisor tells them,” she says, going home and checking it out on the Internet.

And they have very specific wants in an advisor, she says. The typical GenXer wants to be treated as a knowledgeable person. They want choices, information to make a decision, and a customized solution, not something out of the box. Otherwise, she says, they will go elsewhere.Will they go to you? Or will you find them first?