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Advisors & Gen X, Pt. 2: Using Your Boomer Clients to Reach Them

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This is the second in a two-part blog series on how advisors can take advantage of the opportunities among younger clients—the children and grandchildren of Baby Boomers.

We all want to work smarter, not harder. Yet thousands of advisors are draining resources and energy trying to gain Generation X  business with strategies that were meant for this generation’s parents.

In my last column, I wrote about some of the financial issues this generation faces that advisors should keep in mind as they tailor their services to a new and, in many cases, more difficult to reach, client base. However, there is opportunity to work smarter with this new wave of clients through the Boomers you are working with now. Advisors who are having the most success with wealth transfers are capitalizing on the direct channel they have to their Boomer clients’ children and grandchildren, in order to build relationships and gain their trust. It may seem  an impossible task since over 90% of heirs transfer their money from their parents’ advisors once they receive it, but it’s not. There are ways to reach this generation better, without much further effort and while working with your current clients.

Gen Xers are a unique bunch. They’re “wary of hype and overselling” according to Karen Ritchie, late author of Marketing to Generation X and a leader in global marketing and media strategies. Because of this, advisors must penetrate through the noise and reach Gen Xers with a message that is tailored to their needs and that continues to grow and change as Gen X changes; advisors will need to appeal to their specific expectations and values. There are some general themes to keep in mind in order to tailor your business for working with this generation:

Working With Gen X, Theme 1: Start Early; Be Patient

Gen Xers tend to bounce around a lot. They’ve been accustomed to earning their keep and are resourceful—using technology to advance their careers rather than sticking around a company for many years to climb the ladder. This means they have generally been perceived as less loyal to corporations than past generations—mainly because they are opportunistic in seeking ways to better their situation. That means gaining loyalty from this generation is harder than it was with Boomers. Advisors will need to start working with this generation early on—they’ll need to take time to build their trust and respect, and to keep it: waiting until a wealth transfer will be too late.

If you’re dealing with Gen X children who will likely be heirs to your clients’ estates, begin working with them as early as possible in any way you can. Ask your clients if they are comfortable with you sharing communications with their children as well, to develop a theme of transparency and build their trust so that when time comes for the transfer of wealth to them, they are aware of how you’ve worked with their parents and are more likely to keep their assets with you.

If your client is not comfortable with you communicating with their children, do what you can to provide your client with information they can share with their children to manage their financial priorities, such as college planning or home buying guidance. Though it’s definitely more work up front, starting to work with this generation early will be necessary to gain their trust since this won’t be a generation that will keep their assets with you just because their parents were.

Working With Gen X, Theme 2: Appeal to Competing Priorities

Gen X may face significant challenges in meeting long-term financial goals, but growing up in a consumer-oriented society has made it even more difficult to stay focused. According to an IRI study, 15% of Generation Xers made withdrawals from their 401(k) plans during the recession and 23% stopped contributing to their retirement accounts altogether. They continue to face issues in managing their daily finances—feeling uncomfortable with the amount of debt they have and not having a handle on their cash flow; 33% reported they did not have a handle on their cash flow in the second quarter of 2012, according to our research.

Unlike Boomers who came from an economic landscape that instilled in them a mentality to save and protect the money they earned, Gen Xers struggled and continue to struggle with more “wants” than they can usually obtain financially. Gen X clients will expect advisors to anticipate their concerns and be able to come up with creative solutions to overcome the obstacles they face in meeting long-term goals while also maintaining a lifestyle where they can enjoy short-term goals.

Advisors should keep this in mind from the forefront—Gen Xers are balancing student loan debt, the desires to buy a home, sending kids to college, paying for retirement and paying off high-interest credit card debt. Advisors need to emphasize the importance of retirement planning with Gen X in relation to their other priorities because clients who are focusing on other priorities may not be saving as much as they should and you might be losing out on assets as a result.

Connect with heirs of your clients who should be anticipating hefty or reasonably-sized inheritances, before the transfer occurs, to get them thinking about this. Again, though this may require more time up front, it will be imperative to gaining Gen X’s trust—they must believe you “get” them.

Working With Gen X, Theme 3: Share Know-How That Effects Change in Habits

Behavioral finance has taught us more about what impacts our investing and financial decisions. For example,  if we don’t make change easy for people, they won’t make the shifts necessary to improve their financial situations. Advisors need to keep in mind the principles of behavioral change in order to get clients to see the value in working with them.

If you are working with heirs through a wealth transfer, make it easy for them to work with you. Keep away from overloading them with information—walk them through every piece of the transfer, but also tell them how it will impact their lives. Start by getting a feel for their personal financial goals and desires, for how they will use the inheritance. Once you do this, provide information in a way that:

  • Doesn’t overload them with too many decisions to make. Walk heirs through each piece of the transfer and provide them with resources and advice that’s easy to follow and easy to act on. Gen X investors will need information provided to them in a way that ties all of their competing financial priorities together, not in a vacuum the way advisors have traditionally worked with clients.
  • Keeps reality in perspective. Heirs may feel overconfident about their ability to maintain their newly gained assets on their own and achieve their goals. Stress the importance of starting a plan and ask them if they want to do this simultaneously, so that they can ensure they have a plan for how to use the gain to achieve all of their goals.

Just like Boomers were molded by a specific set of financial and economic situations throughout their lifetime, Generation X has its own mindset about financial planning that stems from seeing a variety of economic situations and most recently having gone through two aggressive bear markets, multiple changes in their employee benefits and ongoing market uncertainty. Now is the time for advisors to adapt to a new generation’s approach to wealth and retirement planning. 

Read part one of this series here.


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