To better serve clients, advisors should be aware of differences both within and between the generations, according to several presentations and discussions at the 2018 Schwab IMPACT conference in Washington, D.C.
In opening the conference, Bernie Clark, Schwab’s head of advisor services, put generational planning at the forefront of the discussion by explaining how the custodian thought of each generation’s experiences with the financial crisis.
For example, the oldest mass generation in the U.S., the “silent generation” born before the post-World War 2 baby boom, escaped from the financial crisis relatively “OK,” said Clark, because they were already through the earliest stages of their retirements as the value of their investments began to decline.
The baby boomer generation, on the other hand, had seen “great times in the market, but lost a lot too. Most boomers, even today, felt that they don’t have the economic well-being to move into their post-work lives,” said Clark.
As the baby boomers transition to retirement and begin to spend down their assets, more advisors are focused on affluent members of younger generations who are waxing in both influence and wealth. But advisors should be aware that there are deep differences between Generation X and the millennial generation and their elders, said Mike Van Wyk, vice president of consumer research for the Capital Group’s American Funds, in a Tuesday presentation entitled “Millennials to Boomers: Better High-Net-Worth Planning By Generation.”
“Each of these generations are around 70 million people, so when you talk about them as a generation, you’re generalizing for a group of 70 million,” said Van Wyk. “My point of view is that it’s extremely useful to think about the generations, but only if you ground yourself clearly in the life experiences that these generations went through.”
Once you have an understanding of how people in different age groups experienced their formative years, he said, you can get a better sense of how they will navigate life changes.
For example, millennials, who are between 22 and 37 years old, have grown up through a period of rapid technological change in which the power of a home computer has shrunk down to devices that fit in pockets and on wristwatches.
Millennials also experienced traumatic political events, like the September 11 attacks in New York and Washington, D.C., as well as numerous school shootings, and tough market and economic events like the global financial crisis and subsequent Great Recession. More important, these things happened to them in their formative years, said Van Wyk.
Generation X, on the other hand, comprising those between ages 38 and 53, spent their formative years amid the development of the home computer. They also grew up in an era where a much larger portion of women were entering the workforce, so they’re at times referred to as “latchkey kids,” said Van Wyk.