7 things every advisor should know about the slacker generation
Where am I going to get my next client?
It’s a common refrain that echoes in the minds of many advisors. As baby boomers continue to age, many advisors are trying to figure out where to go to find the next generation of growing assets. If you believe the headlines, you’d think every advisor should focus on the millennial generation for the next set of great clients. The problem with doing this? You miss out entirely on the opportunities within Generation X.
Generation X: The group of adults born between the early 1960s and the late 1970s
The definition of who is part of Generation X in Canada varies among researchers, but most agree the group (also sometimes called the "baby busters") is smaller than the Baby Boomers or the Millenials.1 However, it is a generation with plenty of purchasing power. According to recent research from Media Technology Monitor2, this group is relatively affluent, well-educated, and a major user of technology.
This tells me that advisors could benefit from marketing specifically to this generation.
Let me tell you a little about my generation: Generation X
Growing up in the 1980s and 90s, Gen Xers like myself saw the world transform in front of our eyes. From major events such as the end of the Cold War to the HIV epidemic, to the dot-com bust and the Great Recession, my generation has seen it all. Sprinkle in movies like Gremlins, The Breakfast Club, Ferris Bueller’s Day Off and Sixteen Candles, and you end up with quite the concoction.
As participation in the labor force increased, many of us came home after school to an empty house, and were forced to contend with entertaining ourselves and not getting hurt at the same time. Often, we stayed outside until the street lights came on, then went inside and watched our favorite TV shows. We hung out at malls and skating rinks, and our Facebook was the telephone with the really long cord. We grew up in the midst of a technological revolution, becoming the first generation to use keyboards rather than typewriters. We went from Betamax to VHS, and from Atari to Nintendo. Our generation was known for being so weird that baby boomers predicted we’d all end up as slackers when we reached adulthood (Slackers was actually a movie made in 1991). Little did everyone know how appropriate that moniker would become.7 things to know about the slacker generation
I’m attempting to generalize an entire generation here, so give me a little leeway. As a big fan of acronyms, here’s what I can tell you about Gen X:
1. Sandwich generation
Gen X is sandwiched in multiple ways. We’re sandwiched between the much-larger boomer and millennial generations. We’re also sandwiched between taking care of our parents as well as our kids. According to MoneySense magazine, the cost of raising a child in Canada until they are 18 is $253,950.3 Taking care of an elderly parent can cost another $3,300 a year, according to a study by the Canadian Imperial Bank of Commerce (CIBC).4 If you add saving for retirement on top of that, you can see why we’re all stressed and busy. So, don’t expect Gen Xers to come to a seminar or give their undivided attention on a conference call. The best way to work with Gen Xers is to meet with them individually, get referrals (yes, referrals!) and then quickly get to the point. While we’re a sandwiched generation often pressed for time, we really do need your help.
A sizable amount of the kids I went to school with were a product of divorce (including myself), but that’s largely changed in the decades since Gen Xers have grown up. Today, Gen Xers boast one of the lowest divorce rates of any generation—divorce rates in Canada have fallen since their peak in 1987 at nearly 400 per 100,000 population and in 2008 stood at half that rate.5 This means that if you’re trying to prospect Gen Xers, be sure to include the whole family in the discussion. Take it from a Gen Xer like me: If you want my sign-off, you’d better make sure my wife is on board as well.
Some people call us the MacGyver generation. If you don’t know the TV show I’m referencing, I feel badly for you. Unlike today, where many children seemingly play video games around the clock, our generation placed more of a value on outdoor play and creativity. A potato, after all, could become a clock in under five minutes.
Gen X was the first generation to experience a rise in women entering the workforce, leading some to also label us the latchkey generation. This term refers to the fact that many kids in the 80s and 90s went home to an empty house after school, and were given a key to the latch to get into the house. If something broke when our parents were gone, we didn’t ask for help, we MacGyvered it. These factors, combined with the technological revolution at the time, all forced us to become more adaptable. As an advisor, you need to understand that by-and-large, while many Gen Xers are independent, adaptable and readily use email for communication, they still may crave that face-to-face interaction.
It’s my belief that no one in my generation believes anything they’re told. After all, much of what we were told growing up didn’t come true, and a lot of us have had a hard go of it since we graduated high school or college. This is why the trust but verify concept is very important to Gen X. In essence, this means quickly getting to the point when you communicate with my generation, and backing up your point with facts. From our vantage point, so-called experts aren’t actually experts—they only label themselves as such to establish credibility. This doesn’t fly with most Gen Xers. If you want our trust, show us, prove it to us and provide examples. Otherwise, the cynic in us will prevail.
Since we grew up in the decade of Six Sigma, many Gen Xers hold a university diploma–in Canada, 55% have a post-secondary certificate, diploma or degree.6 What this means for advisors is there’s no need to hold back the complex stuff from us. Go into detail and walk us through the various scenarios. We can take it. The more we understand how investing will help us accomplish our goals, the more likely, you, the advisor, will earn our loyalty. A financial plan for us is an absolute must! Make certain, though, that you work with us to prioritize which goal(s) are important.
Have you ever met a Gen Xer who doesn’t work hard? Coming of age in the 90s, and then witnessing massive layoffs in the tech-bubble burst of 2000, followed by the Great Recession circa 2008, my generation understands the value of hard work. We also understand that nothing is given to us—we didn’t earn participation ribbons or trophies in school. Our hobbies, by-and-large, are our kids and families. We must work smart because, simply put, we have no time to waste. As an advisor, you can capitalize on this work ethic by laying out a roadmap for Gen Xers to follow. It’s a virtual guarantee that we’ll work hard toward that goal.
Clearly, my generation needs to save more for retirement, as defined benefit pension plans have gone the way of the dodo. The median savings of a member of Gen X in Canada is $151,800, according to a recent CIBC study, with a whopping 37% of respondents not having saved anything.7
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Achieving retirement readiness goes beyond mere saving, though. It also involves having a well-defined plan, which few Gen Xers have. A CIBC study found that only 31% of Gen Xers work with a financial expert when planning for retirement, compared to 47% of baby boomers and just barely ahead of Millenials, at 26%.9
What, specifically, does this entail? The whole nine yards: plan reviews, analyzing savings and investments, looking at student loans and stock options, considering employee benefits, Registered Retirement Savings Plans (RRSPs), tax and estate planning, education funding, cashflow analysis, and government benefits and retirement-income planning. Planning should be an ongoing process that keeps us on track and focused on our desired outcomes.
We know that we probably don’t have enough money squirreled away—and trust us, there’s no need to hand out participation ribbons for trying. However, we will be first in line for baby-boomer wealth transfers. As the previous generation leaves the workforce, guess who’s up next? Yep, it’s us, the slackers.
Many advisors consider Generation X to be an afterthought. I consider this a giant mistake. My generation is savvy, adaptive, hard-working, complex and unique. Don’t make the mistake of ignoring us. Consider the S-L-A-C-K-E-R acronym and be better prepared to prospect this generation. Take it from me, a slacker to the core.
1 Statistics Canada, 2011 census (Generations in Canada)
4 CIBC Economics. "Who Cares: The Economics of Caring for Aging Parents." By Benjamin Tal and Royce Mendes. May 8, 2017
5 Statistics Canada. Crude marriage rate and crude divorce rate, Canada, 1926 to 2008
6 Statistics Canada, Economic Insights. "Economic Well-being Across Generations of Young Canadians: Are Millenials Better or Worse off?"
7 CIBC poll "Am I saving enough to retire?" Publication date: February 8, 2018
8 Poll was conducted between January 12-January 14, 2018 through an online survey among 1,523 randomly selected Canadian adults
9 CIBC 2018 Retirement Savings Poll