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5 Tips for Advising the New Sandwich Generation

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While the “sandwich generation” is nothing new, the latest members of this group are facing a unique set of challenges, like more debt, increasing college costs for their kids and parents who are living longer. Based on the findings of Fidelity’s ninth Millionaire Outlook study, 61% of Gen X/Y millionaires are supporting children and/or grandchildren and 20% are supporting parents and/or grandparents. What’s more, nearly seven in 10 are carrying debt[i], adding to their financial juggling act.

This challenge obviously isn’t unique to millionaires — it applies to all levels of wealth. How can advisors provide the most value to these clients? Here are five tips to keep in mind when advising the new sandwich generation:

1. Be focused on the big picture

When clients are juggling many priorities, it’s more important than ever to look at their full financial picture. Approach these investors with a life event management philosophy and work with them to set goals around upcoming life events. How much money do they want to have set aside for their kids’ college tuition, and when will they need that money? When do they hope to retire, and with what kind of lifestyle? What elder care costs are in their future? What are their personal goals besides retirement, such as purchasing a vacation home? Having a clear understanding of those life goals will help you develop an effective plan and add value to your clients’ overall lives.

2. Be assertive about tough topics

Talking about death certainly isn’t easy, but planning for their parents’ passing is a crucial conversation to have with sandwich generation clients. You should also make sure your clients are thinking about their parents potentially outliving their retirement savings. How will they pay for health care and other costs if that happens? Also, talk about what happens after their parents pass away or become unable to make decisions. It’s helpful to have a full understanding of a loved one’s financial picture before that happens.

College decisions can be another sticky, yet important conversation. The average family is on track to save only 29% of the amount of college costs they intend to cover by the time their child graduates high school, according to the Fidelity Investments College Savings Indicator (August 2016). There can be huge differences in cost depending on the type of school, scholarships available and more. Encourage clients to think about what’s best for both their child’s education and the family’s overall finances — some balancing might be in order.

3. Be knowledgeable beyond money management

Nearly two-thirds (62%) of Gen X/Y millionaires in our Millionaire Outlook study said they wanted their financial advisors to provide more comprehensive services. One in three even indicated they’d be willing to pay more for an advisor who helps them make better health care decisions to manage costs more effectively[ii]. That means it’s crucial to expand your knowledge to diversify your value. Consider taking steps to offer comprehensive services, for example, outlining how you can help investors stick to a financial plan and reach their goals. A broader offering can be especially useful for sandwich generation clients, given the number of demands on their time and resources.

4. Be open to technology

We all know that Millennials tend to be tech-savvy and hyperconnected. This extends to their expectations for their financial advisors. In the Millionaire Outlook study, more than half of Gen X/Y millionaires said they would find a new advisor if theirs wasn’t using technology. But we know from our 2016 eAdvisor Study that six in 10 financial advisors are not using technology to the fullest. Work with your investors to implement technology that makes a difference to them, like offering more access to their information online or the option to video chat versus meeting in person.

5. Be empathetic

Debt, especially from student loans, is putting a financial strain on the sandwich generation. The Millionaire Outlook study found that nearly 70% of Gen X/Y millionaires have debt, versus only 40% of their Boomer counterparts[iii] — and that’s just looking at some of the wealthiest people in that generation. In the 2016 Fidelity Workplace Investing Participant Panel survey, more than a third of Fidelity retirement plan participants surveyed had student debt, and 80% of those said it delayed retirement planning.

Keep in mind that debt can add another layer of stress for someone already concerned with caring for both their kids and aging parents. Try to be empathetic to how demanding all of those stressors can be, while helping clients make the best possible decisions for their long-term planning.  Most importantly, understand that the dynamics of the sandwich generation are changing.

[i] 2017 Fidelity Investor Insights Study (aka The 2017 Fidelity Millionaire Outlook Study)

[ii] 2017 Fidelity Investor Insights Study

[iii] 2017 Fidelity Investor Insights Study

David Canter of Fidelity David Canter is executive vice president and head of the registered investment advisor (RIA) segment for Fidelity Clearing & Custody Solutions, a unit of Fidelity Institutional.


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