When I asked, “What can you do that’s most helpful to Gen X clients?” the emphatic answer was cash-flow analysis. The conventional plans skip over current cash flow and forecast savings for retirement with pie charts and line graphs that draw attention out 30 years. The consumers I interviewed showed frustration with this approach. They don’t believe the generalized forecasts and assumptions, and they care about living better today as much as being OK in the future. They want to know: How can they both live well and save?
All the Gen X advisors said cash-flow concerns are a primary reason prospects come looking for help. As Pitts put it, “we have to focus on the next 30 days—how to pay the bills. Then the next 90 days, then a year, then three years. Only then can we connect the cash-flow conversation to retirement planning.”
To Gen X, budgeting is an unrealistic, negative experience. As one woman put it, “Even the government has given up balancing its budget!” In contrast, the language of cash-flow planning is more comforting. Automating savings—through 401(k)s, health-savings accounts and other tax-advantaged vehicles, as well as other money set aside for liquid savings—makes things simple. When you know what your cash inflows and mandatory cash outflows are, the leftover is free cash flow.
Consumers said a truly personalized cash flow plan and a “financial wellness” approach to spending free cash flow were what they needed but couldn’t find from average advisors.
Tailor Your Business Model
A big conundrum for Gen X is that when they need help the most, their portfolios may be too small to generate much interest from AUM-based wealth managers. RhineVest has a bold, transparent approach to pricing—planning as low as $65 per month, which is akin to a gym membership, and investing starting at 80 basis points. XY Planning and Cypress also offer a competitive retainer pricing option for planning, while Prio and Blackwell Boyd negotiate minimums and pricing to accommodate smaller clients.
The point is each of these firms lowers the barriers to entry to reach Gen Xers, many of whom may have high wages and net worth but modest investable assets, for now.
Beyond pricing, the successful firms have sincerely listened to their clients and shaped their offering to fit into the Gen X lifestyle. Speed and convenience matter to people juggling work, family and a hectic life, so smart technology is a must. Advisors commented that financial planning software providers must expand collaboration tools, as the generation that grew up with Game Boy expects nothing less.
Why It Matters
When 12 of the 20 advisors I interviewed said their firms were solidly focused on boomers over younger generations, that was depressing. To me, fiduciary responsibility extends to doing what’s right for all consumers. But maybe that’s just my soapbox. Beyond doing the responsible thing, the business reasons for focusing on Gen X are compelling.