How Advisors Can Get In With Gen X

As boomers grow older, there is a $30 trillionasset transfer coming up when they pass their fortunes on to their heirs.  On one hand this is good for advisors because those younger generations will likelysearch for assistance in managing those sums of money.  On the other hand, there’s a big risk that advisors will lose assets under their management if Gen X heirs take their inheritances elsewhere. 

In order to avoid losing Gen X clients, advisors need to understand two common roadblocks for Gen X’ers, and change their approach accordingly. To reach Gen X, they need to relate tothe generation’s increasing financial responsibilities, economic uncertainties,rising costs, retirement, and working with financial professionals.  A recent research report identified acouple of roadblocks that Gen X’ers face when they are planning for retirement.

Roadblock #1: Gen X’ers struggle with money managementand need an adviser who gets them and understands their challenges.

Gen X investors know they need to save more, butlack the basic financial management to achieve this.  Some Gen X’ers are struggling with caring for their childrenand their aging parents simultaneously, and some are even opting to raid theirretirement funds to pay for their children’s college education. 

When Gen X’ers inherit wealth from the boomers,they may not struggle with these concerns, but they will remember who helpedthem when they did.  If financialadvisers start the relationship early, include the future heirs inconversations with their parents, and pass on tools that will help them copewith their struggles, Gen X’ers will remember that support. 

Roadblock #2: They lack confidence and knowledgeabout investing and don’t know how to evaluate their options.  If Gen X’ers do not have a strongrelationship with their parents’ advisor, research indicates that Gen X’erswill dump the parents’ advisor and go forward alone. 

To minimize this risk, advisors should positionthemselves as the missing link that Gen X’ers need to avoid an economicdownturn.  It is most effective tostart years before the transfers of wealth occur.  

See Liz Davidson, Advisors& Gen X, Pt. 1: Retirement Planning and Wealth Transfers,AdvisorOne, Sept. 4, 2012.  

Special thanks to Jim Hillhouse (ProfessionalLegal Marketing (PLM, Inc.)) for bringing this article to my attention.