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March 28, 2016 at 08:00 PM
When I coach financial advisors about the differences in the generations, there is often a bit of disbelief as it relates to our own generation. No one wants to be part of a generalization and yet we make them all the time. It helps to look under the hood at what causes generational bias, and the most telling factors are historical events and parenting trends.
As a child, there’s nothing you can do about either of them, but there is an undeniable impact on a generation in terms of ideas, perspectives and behaviors. Parenting trends are especially telling.
Consider the “mature generation,” born prior to 1946. They are the children of the wartime era and their experiences are imprinted with scarcity. Their parents, likely born during the Great Depression, would not allow waste or indulgence and, as a result, their formative years were an exercise in frugality. Today, many well-off matures are still influenced by scarcity. As a financial advisor, you may question the logic of a couple who has $25 million in assets and regularly bargain hunts at Goodwill, but it is unnatural for that mature to feel secure that he or she has enough. This is a manifestation of generational bias that is important to recognize.
How do parenting trends create generational bias today?
No doubt you’ve heard of the helicopter parent — the ones who hover over their children, protecting them from harm, insult and just about any form of adversity. Helicopter parenting is largely a baby boomer phenomenon and in many cases is the reaction to the scarcity-based philosophy of their own parents, the matures. Helicopter parents caused colleges to develop orientation weekends for parents in addition to incoming freshmen. They have overseen every aspect of their children’s lives and are likely to be involved in, or at the very least influencing, their adult children, including their financial planning.
Helicopter parents are evolving into “drone parents.” This new era of parents, mostly Gen Xers, fly far above their children keeping a watchful eye with less direct interaction. When they do interact, they strike with shock and awe. Drone parents are dangerous because they trick themselves into thinking they are not meddlesome — a direct reaction to the helicopter parents they disdain — but they can cause massive destruction.
