They respect authority and, generally, take your advice. They have good jobs that pay well and let them accumulate scads of investable assets. All that liquid capital in a time of low interest rates sent them screaming into the equity markets. You just had to grab a mutual funds licence, set up shop, and collect the trailer fees.
Yeah, pretty soon you’re really gonna miss the boomers.
And how, because you’ll be stuck with the newcomers: Generation X. Those kids born roughly between 1962 and 1980 who stepped out of university into recessions and a job market crowded with baby boom yuppies who wouldn’t get out of the way or give them decent salaries.
While most have since done well for themselves, they carry the scars of those early failures into adulthood. And they’re going to carry them right into your offices—with long sleeves to cover the tattoos, and piercing holes starting to close—flop down in front of your desks, and ask for help.
An advisor with one eye on retirement might ask herself why she’d bother catering to a bunch of brokesters who don’t listen. Fair question. The answer is boomers are rapidly converting their assets into income vehicles, and numerous advisors have already created specialty practices catering to those needs. But not every planner can switch to that niche, so they’ll have to work with the remaining accumulators, fewer of which will be boomers. Like it or not, the clock is ticking. Wouldn’t it be smart to extend an olive branch to Gen X now, if only for the sake of that young advisor you’re grooming to take over?
Rob Kelland, director and associate portfolio manager at the Kelland Group with ScotiaMcLeod in London, Ont., points out the investment needs of X-ers aren’t “significantly different from those of any other generation.”
While some may be asset-lean now, over the long haul—say the next three decades—their goals and needs will be substantially similar to those of their predecessors. Provided they live within their means, save, and invest for the long term rather than chasing fads, they’ll eventually become good clients.
And, keep in mind many X-ers are the children, or younger siblings, of existing clients. Taking them on will help keep your practice in the picture when wealth transfers take place. Further, as a group, they’re always looking for the next cool thing and once they build up financial cushions, they’ll make good candidates for investments your more traditional clients reject.
Lastly, never forget not every X-er is broke—and as the labour market tightens up in the wake of boomer retirements, Gen X will move into management and up the salary curve.
Dig the New Breed
Due to the sheer number of boomers in the marketplace, a lot of advisor practices haven’t focused on X-ers.
Those wishing to accommodate the generation will need to make modifications, perhaps including adoption of a fee model for low-asset clients to ensure the firm receives adequate compensation for work performed.
Expect the transition from boomers to X-ers to be rocky. Client meetings won’t be as relaxed. “There is no deference. They’re not saying, ‘You are clearly the expert,’” says Alexandra Macqueen, a fee only financial advisor at The MoneyPower Group at Raymond James in Mississauga, Ont. “I have one client who in a perfect world would be doing his own investing, but he doesn’t have time. He will say, ‘I want you to put me in this and that.’ He’s not coming in and saying, ‘What do you recommend?’ ”
Out the window goes the explanation about how you’re holding a specific stock because it fills a hole in the client’s portfolio; that it’s part of a larger, long-term strategy. The client just says, ‘I don’t care. It’s my money.’
But sometimes that bravado masks insecurity, notes Scott Plaskett, CEO of Ironshield Financial Planning in Etobicoke, Ont. Unlike boomers, who saw steady increases in income after embarking on careers, X-ers did a lot of job-jumping post-university—and some persist in that pattern. That often translates into a lack of confidence about being on a success track; they see people just slightly older with far fancier toys and want them too, consequences be damned. “It looks like they’re doing well but they’re spending everything; there’s a BMW in the driveway, but it’s leased,” says Plaskett.