The “Great Generational Wealth Transfer” has sparked a new conundrum for advisors. On the one hand, there is growing opportunity to capitalize on the massive $30 trillion asset transfer that will be expected from Boomers to their heirs over the next several decades. Since younger generations don’t typically have a lot of experience with managing large sums of money, they will probably be looking for assistance. On the other hand, there’s a tremendous amount of risk in losing assets under management. According to Kim Dellarocca, head of segment marketing and practice management at Pershing, “almost 90% of prospective heirs say they will move assets to another firm once they receive their inheritance.”
Why haven’t more firms prepared to manage this transfer knowing it was coming? The reason is usually not because they lack the desire to build relationships with the primary investor’s children, but more so because these generations are not easy ones to work with. Being a member of Generation X, I can vouch for my own and say that’s true.
The reason is simple: falling between the Boomer and Millennial generations, we may be experiencing a sort of middle-child syndrome. We graduated when the stock market and economy were doing relatively well, but have had little to get excited about since. We are accustomed to being “do it yourselfers” having grown up with no “formal” education around how to manage money, how to climb the corporate ladder or how to raise our families. Because of these and other factors, advisors need to work differently with Gen X’ers. They must relate to this generation’s ever-growing host of financial responsibilities, economic uncertainties and continually rising costs that only further cause cynicism about the market, retirement and working with financial professionals.
Our latest research report identified some roadblocks to retirement planning and investing that Gen X’ers currently face. Keeping these in mind when working with Generation X will help you appeal to their specific financial planning needs and turn these obstacles into opportunities:
What Your Peers Are Reading
Roadblock No. 1: They struggle with money management and also with competing priorities and are looking for an advisor who “gets them” and understands their challenges.
Gen X investors realize they need to be saving more but may lack the basic financial management skills needed to proactively plan for retirement and other long-term goals. Our research found that Gen X’ers between the ages of 30 and 44 scored significantly lower on our Financial Wellness Assessment in the area of basic money management than any other age group. Over 50% are uncomfortable with their debt, more than 40% are spending more than they make each month, and 60% don’t have an emergency fund. Some Gen X’ers face competing priorities in caring for both their children—the “boomerang generation”—and their aging parents, who need help because of less government and employer benefits to help supplement retirement and health care costs. They’re even opting to raid their retirement funds to pay for their children’s college education in many cases.