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Generation X

Editor's Letter: October 2017

Whither Gen X?

There is a statistic buried in a recent research report from PriceMetrix that carries a dire portent for the financial advisory industry.

The portion of assets under management among financial advisors that belong to clients from Generation X, those born between 1965 and 1984, has not budged for the past several years. It has remained steady at around 7 percent.

This is not another admonition about how advisors need to better serve younger clients. There is too much of that in the industry press and marketing materials as it is.

It does suggest that the value financial advisors bring is not readily apparent to those who, arguably, are most in need of advice.

As Patrick Kennedy from PriceMetrix told me a few months ago, “There has been no difference in client composition … over the past several years. With Gen X in particular, these are folks who are in their 50s. They are a lot closer to retirement than graduation.”

Numerous surveys spell out this need. According to research by Allianz, more than two-thirds (67 percent) of Gen Xers believe targets for how much they need to retire are “way out of reach,” compared to 49 percent of baby boomers. Sixty-four percent of Gen Xers feel “bogged down with uncertainty” when planning for retirement.

Which begs the question, why aren’t those feelings of uncertainty and unpreparedness translating into more Gen Xers seeking out advice?

Trust has a lot to do with it, I think. Gen Xers live between uncertainties and distrust in a way that baby boomers don’t. Gen Xers have the need for advice; they just don’t trust the people they have seen who are in a position to provide it.

Michael Kitces has written repeatedly about the inherent conflict advisors have with their platform providers, be they independent broker/dealers or custodians. The fact is that advisors don’t really need to implement tools and practices designed to bring in younger generations of clients; the platform providers push that agenda because it is better for them to keep money on the platform, not because an advisor needs to have non-baby boomer clients to have a thriving practice. Without younger generations, it may not be a sustainable practice beyond the professional life of the advisor, but how many financial advisors are hoping to build sustainable businesses beyond their working years anyway?

Where does that leave younger generations of clients, including Gen Xers? There will be some who find advisors, most likely advisors in their own age bracket, and I suspect most will gravitate to digital tools when the time comes. They may want a human financial advisor they can talk to when they need to, but they won’t necessarily want to “build a relationship” with them; they’ll want someone at a call center to get quick hits of information and reassurance, not someone who is going to pester them to schedule an in-office meeting.

Advisors who try to convince post-boomer clients of the value of their traditional business models are coming up short, and the solution is not just adding a robo offering to your conventional practice, despite what your platform provider says.

I’d like to hear your thoughts: Will the advisors who want to thrive in the post-boomer era need to look and act radically different than what we are used to? If so, what does that look like? Feel free to email me at [email protected] with feedback on this or any other issue.


David Armstrong


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