Sandwiched between two of the most talked about generations — baby boomers and millennials — is Generation X (defined as individuals born between 1965 and 1980). Today, Gen Xers are spending more, saving less and struggling with increased anxiety about retirement planning, protecting current levels of wealth, and the rising costs of healthcare.
Yet Gen X households will inherit an estimated $31 trillion over the next 25 years, according to Cerulli Associates, and as wealth accumulates, so does the need for financial advice.
The wealth management industry is on the brink of a massive transformation and advisors need to be prepared.
By 2030, at least 80% of advisors will offer goals-based advice and will “shed their role as investment managers and become more like ‘integrated life/wealth coaches,’” according to recent research by McKinsey.
To remain competitive, financial advisors need to evolve their practices and establish partnerships with specialists across multiple disciplines.
Property and casualty insurance is one area that is often overlooked in the financial planning process. Chubb data highlights, 77% of clients expect their advisors to provide support on P&C matters; however, only 28% do.
By partnering with insurance agents, advisors can solve for this “expectations gap” and provide a more robust risk management assessment by taking into account both investment and insurance-related risks.
Advisors need to be proactive and deliver a seamless client experience, especially due to this generation’s self-reliant tendencies. GenXers expect prompt replies, transparent interactions — and that advisors fully understand their unique needs, according to Cerulli.
Unlike other generations, many GenXers face increased responsibilities: caring for elderly parents, providing financial assistance to adult children and paying down debt — all while working full time.
Collaborating With Specialists
Annual client reviews are an opportunity for financial advisors and insurance agents to collaborate and provide GenXers with advice and solutions that address their specific needs. Life events, such as job changes, milestone birthdays and shifts in family dynamics, also trigger the need to reassess insurance needs.
By teaming up with an independent insurance agent, advisors are better equipped to proactively identify gaps, help their clients secure proper coverage, and stay on track.
Let’s take a look at some potential scenarios that could surface pockets of hidden risk and potentially derail retirement or other significant financial goals, if left undetected.
5 Opportunities to Optimize Coverage for Gen Xers
1. Marital Status: Client remarries and moves into spouse’s home. How is the client addressing insurance coverage across residences, vehicles and other personal property? Reassess liability coverage limits and the potential cost savings from consolidating policies with one insurer.
2. Career: Client receives a job promotion and makes permanent home improvements. Did the individual notify the insurer of the renovation and update dwelling limits to reflect coverage?
3. Living Arrangements: Client purchases a multigenerational home and starts caring for elderly parents. Will domestic help be hired? If so, explore employment practices liability insurance coverage and make sure there is insurable interest to ensure claim payouts to the correct people.
4. Milestone Birthdays: Client turns age 50 and is gifted jewelry or fine art. Has the item been appraised and insured against damage, loss or theft?
5. Wealth Accumulation: Client receives inheritance and purchases a second home. Where is the home located? Assess policy coverage and plan for climate-related risks that are not covered under standard policies (e.g., flooding, wildfires).
Planning for the expected and preparing for the unexpected is a collaborative effort.
Advisors — now is the time to establish partnerships with independent insurance agents and build relationships with Gen Xers before other advisors do. This is one opportunity that cannot be overlooked.
Fran O’Brien is division president, North America Personal Risk Services, Chubb. She can be reached at [email protected]