Advisors who have focused their efforts on boomers’ retirement needs should make sure they’re not neglecting Generations X and Y. A survey conducted by Greenwald & Associates and sponsored by Security Benefit, a Topeka, Kansas-based insurer, found younger investors lack direction and could benefit from an advisor’s guidance.
The “Gen XY Financial Maturity Study,” released Monday, found two-thirds of Gen X and Y investors haven’t calculated how much they need to save for retirement. Furthermore, 65% say it’s harder for them to save than it was for boomers and older generations.
“There seems to be this generational difference that’s clouding retirement planning for Gen X and Gen Y,” Al Dal Porto, vice president of market research with Security Benefit, told ThinkAdvisor on Thursday. “A lot of that is that they lack direction. When you don’t have an end-goal, it’s really hard to set a plan or get a plan ready. It seems like they’re fighting an uphill battle when it comes to saving for retirement.”
There are opportunities for advisors to help younger investors, the report found. Almost half of respondents feel they are behind in saving for retirement and the vast majority (90%) know it’s an important goal. However, 71% are using employee sponsored plans like 401(k)s, 403(b)s or 457 plans and just 39% have used an IRA to save for retirement.
“What’s also good to see is they do have a lot of time on their side, especially Gen Y; they’re still young enough. They need to focus on growth and accumulation.”
However, Dal Porto said, the survey also found that 81% don’t currently have an advisor.
“When they are looking for advice,” he added, “one of the questions in the survey showed the No. 1 source that they look to are financial advisors and planners. Four out of 10 actually look to them for that type of advice. What we have to try to do is get the financial advisors in front of more of the Gen X and Gen Y [investors] to start those additional conversations. They know that they need to save, they know it’s important. Some of them are starting with their work plan, but we have to find ways to get beyond that.”