By David C. Bowman, CFP®
Updated on January 23, 2019 with current information. After reviewing this information, you should be asking yourself, what’s your game plan to work with the Gen-X crowd?
The average financial planning client is somewhere around 62 years old. How does that compare to your client base? Maybe you don’t track that figure in your practice, but a growing consensus in the profession suggests you may want to look into it.
Traditionally, Baby Boomers (ages 55-74 in 2019) have been the focus of those in the financial services community who manage assets – and for good reason. This group is the wealthiest in terms of financial assets – $17 trillion in 2015 compared to $11 trillion for the Silent Generation, $4.6 trillion for Generation X, and a measly $1.4 trillion for Millennials. And until 2016, they were also the largest generation at just under 75 million people.
So, why should you care if all of your clients are trying to decide when to take social security or what to do with it? Well, consider this: Gen X financial assets are expected to nearly quintuple to $22 trillion in just the next 13 years. How’s that for a growth plan? And what do we expect to see from Boomers over that same period? The Deloitte Center for Financial Services projects they’ll peak out around $26 trillion in 2029, about a 59% increase.
Gen X (ages 39-54 in 2019) is about to get a lot wealthier for a few reasons. For starters, they’re now entering their peak-earning years and nudging out Boomers in the highest-paid positions. They’re gearing up for the highest-savings period of their lives to prepare for retirement. When they seek out advice on how to invest that money, most are likely to be in relatively high-equity allocations for the next 10-25 years while they can and should invite the risk-return tradeoff.
This cohort is also shedding the last of its student-loan debt freeing up cash flow around the same time they’re inheriting substantial windfalls from the foregoing generations. Are you thinking about running that average-age report yet?
Let’s look at the value pitch to a Gen X investor. While Boomers aren’t really interested in your disability insurance or life insurance analyses, now is the time for Gen X to be tightening up their risk management if they haven’t already. You’ve gotten really good at advising on creative senior housing options, long-term care insurance, and gifting plans? Good, because this sandwich generation is going to be looking to someone to help them talk about those things with their parents.
At the same time, they’re positively freaked out about how they’re going to pay for their kids’ educations. If you want to set yourself apart, try leading with the statement that you specialize in helping folks save bundles on college-purchase decisions.
You may not be hearing planners complain about how their legacy clients aren’t cutting the mustard yet, but if you want to grow your assets over the next 10-20 years while efficiently serving a more tech-welcoming client in a similar life stage who is desperate for good advice and values all of the tools in your tool belt, Gen X will be tough to beat.