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September 01, 2008 at 04:00 AM
“I think the real opportunity for advisors is building a bridge between the generations,” argues Dave Welling, VP of advisor practice management for Schwab Institutional, upon releasing the results of the Schwab and Age Wave study–Rethinking Retirement: Four American Generations Share Their Views on Life’s Third Act–which examines attitudes and opinions of 3,866 respondents across four generations: Silent Generation (ages 63 to 83); Boomers (ages 44 to 62); Generation X (ages 32 to 43); and Generation Y (ages 21 to 31).
The survey reveals generational differences in attitudes about and understanding of investing that have implications for the role advisors can play in helping clients prepare for retirement, the report states. In particular, Welling says the survey found that advisors concerned with inter-generational financial planning would do well to be aware of the unique perspectives and needs of the generations, so they can play an active role in bridging generations that are as different as iPods and vinyl records. Specifically, understanding how Gen Y members think will help advisors prepare their business for this group before they reach retirement age. Fortunately, the retirement-planning future may very well be a bright one, since Gen Y is open to education and is well aware that they can’t look to government plans for retirement income.
The data collected by Harris Interactive found that members of Generation Y are more likely to say they will need to use their own financial resources for retirement (61% vs. 42% of boomers). Additionally, 31% fear they will have to help support their siblings compared to 26% of all respondents, and more than half (53%) worry about having to support their parents. Furthermore, while there is a general lack of trust in all traditional sources of information for financial security during retirement, financial advisors do score a bit higher among respondents of all generations compared to other sources like brokerage firms, insurance companies, banks, and even family or friends. Respondents from Generation Y have more trust in professional advisors than respondents in all the other generations.
“I think Gen Y, especially, are realists,” Welling says. “They expect that they are going to need to fund a lot of their financial future themselves.”
