The rise of the Xers: how can financial advisors prepare?

For many years, the financial services sector has seemed obsessed with two generations, known in English-speaking countries as the Boomers (born between 1946 and 1964) and the Millennials aka Generation Y (born between 1981 to 1996). How to help Boomers save money and then retire in their uniquely Boomer way has taken up headlines, alongside preparing to financially engage and educate Millennials as they have babies, buy homes, become higher earners, and inherit wealth. 

But wait. Did you notice that gap in dates? What about that awkward middle child, the Generation Xers (born 1965 – 1980)? Maybe I’m biased as an Xer, but I can’t help but notice a missing piece. 

The fact is, Gen Xers are in peak earning years. On top of that, they are poised to inherit the majority of wealth that will transfer households in the coming decades. 

Data on the total pending wealth transfer¹ varies by study and region. Recently, Cerulli updated their wealth transfer report for the US,² looking out until 2046. They estimate USD $72.6 trillion will transfer households, with an additional estimated $11.9 trillion donated to charities. Globally, Wealth-X’s 2021 report looks out to 2030 and covers only ultra-high and high-net-worth households, estimating USD $18 trillion will transfer.  

Any way you slice it, a lot of money will shift hands. Beginning in 2027, Gen X households will become the main inheritors of this wealth for the next 25+ years.

And research has shown that 80% or more of heirs have looked for a new financial advisor upon inheriting their parents’ wealth.³ In fact, 67% give the reason for leaving as the simple fact that they inherited the money. Reading between the lines: the inheriting generations seem deeply unhappy with the current financial advice experience. Can the industry change that trend with Gen Xers? 

Recommended preparations for financial services advisors and intermediaries  

Automate Onboarding and Use Hybrid Digital Advice 

Let’s start with technology. Gen X was the first generation raised with the personal computer. So while this cohort may not be considered “digital natives”, they have been using technology from a young age, the first generation to experiment with the internet’s possibilities. They expect a digital experience in all financial interactions. Moreover, with a few exceptions, humanity’s expectations overall around customer experience has been set by companies like Amazon, Apple and Alibaba. Stay tuned for a new blog post about this soon called Investor expectations for digital experiences are raising the bar.

Which makes the digital onboarding experience so important. Digitizing and streamlining fund transition, know-your-customer questions, and new portfolio establishment would help all firms, both those seeking to retain the inheritors and those hoping to capture new customers.

In short, onboarding in the wealth transfer to Gen X scenario is a pivotal turning point. According to Forrester’s Total Economic Impact study, conducted for FNZ, digitizing reduced time to onboard by a whopping 90%. This study also found that digitization helps with conversion, improves compliance and back office processes, and tremendously increases margin.

Read more on the economic impact of the digital shift in wealth management in the TEI (Total Economic Impact) study from Forrester™.

A digital onboarding experience must be followed by a hybrid financial advice model throughout financial planning and advice delivery. Provide a multi-channel, digital experience for accessing portfolios, financial plans, reporting and important real-time balances and returns, while also enabling Xers to access human advice. 

Integrate Impact Investing 

Also consider integrating impact investing into the technology stack. FNZ global platform data indicates that Gen Xers have almost the same percent of their investments focused on sustainability goals as Millennials, and if the demand continues to grow, firms will have a competitive advantage that provide transparent metrics on environmental, sustainable, and governance impact. Read more about sustainable investing in our blog Surfing the sustainable investing wave in rough seas.

Don’t Forget the Emotional Quotient 

Cerulli suggests that firms also focus on qualitative, behavioral activities to address this opportunity.² Such as having regular, multi-generational family meetings to discuss financial planning and providing more educational support. Remember to consider the psycho-social differences in generations during these activities. Educate the client-facing associates with an understanding of the Generation X history and psychology.⁴ This is a generation famous for being critical thinkers and known for independence – in fact, the first name for this cohort in the US was “latch-key kids” because they often let themselves in after school, before helicopter parenting was a thing.

So don’t be put off by skeptical and probing questions, that just means Gen X is “in the house”!

Get in touch with FNZ for help automating onboarding or improving the hybrid digital advice experience. Check out our customer stories to see how our customers have worked with us in these areas. 

FNZ was founded with a mission to use cutting edge technology to open up wealth – for end investors, working with financial intermediaries of all types. FNZ has created wealth’s growth platform - a global front-to-back wealth management platform.