As Generation X nears retirement age, and Generations Y and X near their peak earning years, financial advisors are beginning to face a generational shift in their serviceable market.
Each generation has distinct preferences for how they want to engage with a financial advisor and the planning topics on their minds today. Understanding these differences can help you tailor your approach to each generational cohort and deliver advice in alignment with how these clients prefer to collaborate.
Generation X Collaboration Preferences For Retirement Planning
Generation X, currently ages 44-59, have retirement top of mind. At a high level, they want to know if they’re on track to retire comfortably and what actions they need to take to prepare for a fully funded retirement.
Recent research from eMoney shows how financial planning clients want to collaborate with their advisor. Our results showed that for Gen X, there are a few specific places in the financial planning process where they want an advisor’s direct help (Source: eMoney Study—The Value of Collaborative Planning, June 2024):
1. Reviewing assumptions and estimates used to develop recommendations
2. Analyzing the current course of action for their plan
3. Reviewing initial recommendations, including different scenarios/options
4. Demonstrating competing scenarios/options and showing the impact of choices on the plan
5. Agreeing to new actions, services, or products needed to implement the plan
6. Developing an implementation plan/schedule for the recommended actions, products, or services
Unlike Generations Y and Z, Gen X wants an advisor to manage their finances for them (Source: eMoney Study—The Value of Collaborative Planning, June 2024). But to feel comfortable with this, they want to understand what assumptions are being made in the development of their plan. Explaining these assumptions is a simple but effective way to earn their trust and promote confidence in their retirement plan.
Gen X is also deeply interested in working with advisors to explore their current course of action, potential alternatives, and the individual impact of financial decisions. As this generation nears retirement, they’ll have a lot of decisions to make around retirement income, their desired retirement lifestyle, legacy planning, healthcare planning and more.
To cater to this preference, real-time, interactive scenario modeling will be an essential capability for advisors. As Gen X clients discuss their possibilities for retirement, financial advisors can visually demonstrate plan impacts as the conversation unfolds, helping these clients envision the way forward. Importantly, planning collaboratively like this also gives clients the opportunity to see, quite literally, the rationale behind financial advice, securing more engagement and follow-through with the plan.
When financial advisors can use planning technology to demonstrate the impacts of financial decisions and explore different scenarios, they can align closely with Gen X clients’ true goals and values, helping them move forward each step of the way.
Engaging Generations Y And Z In Retirement Planning Conversations
Unlike Gen X, younger generations want to have more involvement in the development and execution of their plan, balancing advisor meetings with self-service options for planning.
Advisors have a huge stake in meeting these demands: our research shows that millennials and Gen Z are most likely to report wanting to work with an advisor within the next year. On top of this, millennials are willing to pay significantly more for a financial plan than Gen X or even baby boomers (Source: eMoney Study—The Value of Collaborative Planning, June 2024).
Younger generations want advice and they’re willing to pay for it, but with stronger do-it-yourself (DIY) preferences, there are a few key differences in how they want to engage with an advisor:
Mobile/App Access: Millennials and Gen Z prioritize the convenience of accessing financial advice on their mobile devices or apps.
On-Demand and Self-Service: Both millennials and Gen Z exhibit a strong preference for self-service tools that empower them to handle certain aspects of financial planning independently. They appreciate platforms that provide real-time access to their financial data and options to execute tasks without always consulting their advisor.
Regular Life Updates: Gen Z, in particular, values providing regular updates on life changes to their advisors.
A digital-led experience is key in building relationships with younger generations. With much of their lives in front of them, they’re understandably interested in exploring all of their options. Financial advisors can do this for Gens Y and Z, while still catering to their DIY leanings, by giving them technology that allows for scenario modeling on their own time. A client portal with these capabilities can allow younger clients to explore all the scenarios they want, when they want, while also giving advisors essential insights into what’s on their minds. This is an impactful, low-touch way to offer an engaging digital planning experience.
While they have stronger DIY preferences, younger generations also want to work directly with an advisor, particularly in discussing life updates that impact the plan. Again, client portal technology serves as a client’s direct line of access to their advisor. In addition to accessing or updating accounts, a client portal allows clients to securely share and store documents, manage assignments or next steps from their advisor, and collaborate on their progress towards goals.
Frequent communication, updates, and DIY scenario exploration foster a more dynamic and collaborative planning process that younger generations prefer.
Adapting Collaborative Planning To A New Market
As Gens X, Y and Z increasingly accumulate wealth and seek out financial guidance, advisors need to find new ways of collaborating with clients, while being mindful of generational differences in advice preferences.
Using technology to collaborate with clients when and where they prefer can help advisors build productive relationships across generations.
Joshua Belfiore is manager of group product management at eMoney Advisor.