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Demographics & Culture
High net worth Gen Xers: "Do-it-yourself" generation
Mike Van Wyk
October 28, 2018
Advisors: Gen Xers need your help. They just don’t want to ask for it.
Mike Van Wyk, Capital Group’s vice president of Customer Research & Insights, shared new research on the unique generational needs of high net worth Gen X clients. During his presentation, titled "Millennials to Boomers: Better high net worth planning by generation,” Van Wyk revealed data on Gen X and corresponding actions advisors might consider to serve them best.
Snapshot
- 70% of Gen X know they are Gen X
- But seven out of 10 Gen Xers don’t think they are unique as a generation
- Gen X’s self-identity is defined by their work ethic
They are…
Defined by family and work ethic
- Six out of 10 Gen Xers say being a parent is a very important part of their identity
- Gen Xers are two times more likely than Boomers to say their financial choices are influenced by family
- Gen X members trust themselves almost two times more than anyone else, including a financial advisor
- Work ethic is what Gen Xers think makes them unique
Laser focused on retirement
- 70% say retirement is their most important financial priority
Trying to go it alone
- Gen Xers are least likely to say they are conservative investors (45%)
- Just over 25% trust financial services
- Only half trust financial advisors
- Gen Xers are least likely to have a financial advisor
- Less than half think they will retire by their ideal retirement age
Gen X: Trust themselves first
Gen X persona: Do-it-yourselfers who need help but don’t want to ask
Meet a generation that wants to be shown, not told.
Many Gen X investors grew up as “latchkey children” and have been do-it-yourselfers since childhood. Gen X investors are unique because they are largely self-directed and trust themselves more than advisors.
There’s still opportunity for advisors. Gen X investors are highly curious, worried about their financial readiness for retirement and willing to tolerate volatility to find the best way to prepare for retirement. If there’s one guiding force for Generation X, it is family. Gen X is twice as likely as Boomers to allow family considerations to steer financial choices. Help Gen X do their own research and focus on long-term family goals, and you’ll win hard-earned trust with them.
Gen X action plan for advisors: Build trust.
The challenge is trust. Gen Xers are skeptical. Only a quarter of Gen Xers trust financial services and only half trust financial advisors.
Make family first. Look for opportunity in “moments of truth” like college planning, divorce and the sale of a house. These life events are acutely important to Gen Xers because they touch the heart of their family. Helping Gen Xers navigate these events is key to teaching them to value financial advice.
Be ready for an aggressive attitude. Many Gen Xers know they aren’t on track for their financial goals. They often respond with an aggressive investment approach. Half of Gen Xers say they prefer higher-risk investments with the potential of higher reward (+12% vs. Boomers), and they are the least likely generation to say that they are conservative investors.
Show, don’t tell. Their DIY attitude and natural skepticism means that they want to put some of their own effort into understanding and approving decisions. More than half of Gen Xers research investment opportunities themselves, more than other generations.
Ty Summerlin
Senior Wealth Advisor of HoyleCohen
Video
Schwab Impact Gen X
On Screen:
SELF RELIANCE
Ty Summerlin:
I think a lot of what your research indicates about Gen X is very true. They're very self-reliant. They tend to trust themselves more than anything else. And the way that we focus on building trust with Gen X is the same approach that we use with a lot of other clients, and that's just being curious because being curious tends to break down those barriers and allows us to build trust with someone who may be a lot more self-reliant really fast.
On Screen:
BUILDING TRUST
Ty Summerlin:
So, for us, we focus on being curious, asking the right questions, letting them know that we're not trying to sell them because the second a Gen Xer hears a sales pitch, you're done as an advisor. The conversation is closed. And a lot of our questions in that initial phase will tend to focus more on family, and when we tell them that we tend to act more like a family CFO, that seems to resonate a lot more than a typical financial advisor or a financial planner because they may have a lot of preconceived notions around what that is.
Whereas a family CFO ... Remember, these guys are busy. They're in their peak earning years. They're dealing with the CFO at the office all the time, and they view them as a collaborative problem solver and critical thinker. So, when we present ourselves like that and letting them know that we are here to just collaborate with them and help them as a guide and reference point and we're not trying to pitch them on anything, it tends to resonate a lot more than f- pitching ourselves as a typical financial advisor or a financial planner.
Ty Sumerlin, Senior Wealth Advisor of HoyleCohen, discusses his firm’s experiences working with Gen X clients
More in this series about HNW generations
High net worth Millennials: Savvy with high expectations
High net worth Boomers: Settling into retirement
HNW generations: By the numbers
An at-a-glance look at data that define your clients’ generations
HNW generations: Action plan
Enhance your effectiveness as an advisor by understanding your clients’ generation
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More about high net worth:
3 secrets of high net worth clients revealed
High net worth will soon look very different
Survey: What high net worth clients want
Sources
Capital Group Advisor Generational Attitudes Study, September 2018
Capital Group Investor Generational Attitudes Study, August 2018
Capital Group Wisdom of Experience Survey, December 2017
McKinsey Money in Motion Survey, 2016
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