It’s no wonder an often-cited Pew Research article referred to Generation X as “America’s neglected middle child.” This is the population group comprising people born betwen 1965-1979. The youngest of this generation will turn 39 in 2018, while the oldest will celebrate their 53rd birthdays this year.
Wedged between the baby boomers and the millennials — and being the least populous generation of the three — Gen Xers don’t always garner as much attention as the wealthier boomers and more numerous millennials. However, advisors who understand the unique challenges and communication preferences of Gen Xers may be well-positioned to help meet these clients’ needs in 2018.
Not every Gen X consumer is cut from the same cloth. As in dealing with members of any generation, it’s vital to address each client’s individual circumstances. But many Gen X consumers face similar, daunting challenges.
A savings shortfall. As Gen Xers advance in their careers, upgrade their homes and take on additional family commitments, they may face a plethora of new financial hurdles for which they’re unprepared. Over the past nine years, Gen Xers’ salaries have stagnated. This age group also has the highest number of underwater mortgages than any other generation, according to the Manhattan Institute. Many Gen Xers aren’t saving enough to resolve their short-term dilemmas, much less prepare for retirement and leave a legacy.
Consider that parents may spend more than $181,000 on tuition, room and board for just one child’s education at a four-year private college, according to a 2017 report by the College Board. Furthermore, some Gen X parents are still paying off hefty student loans they incurred during their own educations.
Student loans weigh far more heavily on members of Gen X because getting a four-year degree cost them a lot more than it did their parents. As a result, savings have suffered. Although experts recommend that, by age 45, you have four times your salary saved, not many Americans are on track.
In fact, Gen X parents are saving even less than millennial parents are. NerdWallet’s analysis of recent Harris Poll research found that the lower savings rate of Gen X moms and dads, compared with millennial parents, could set Gen X up to retire with savings that lag those of the millennial parents by more than $400,000.
A rising divorce rate. Savings among Gen X also may be negatively impacted by the divorce rate in this cohort. The divorce rate for Americans younger than 50 is approximately twice as high as it is for adults 50 and older, according to Pew Research. Furthermore, the divorce rate for adults ages 40-49 has risen since 1990.
A life insurance gap. Although Gen Xers are more likely than millennials to own life insurance, they also are more likely to acknowledge being underinsured, according to LIMRA. And the gap between needs and ownership probably won’t close anytime soon, as Gen Xers told LIMRA they don’t receive periodic policy reviews as frequently as they would prefer.
A lack of confidence. LIMRA also found that only 39 percent of Gen X consumers have high expectations of their retirement. Compare that with the 58 percent of millennials and 43 percent of nonretired boomers who feel the same way.
Despite the challenges Gen Xers face, it may not seem easy to connect with and serve this age group. After all, they’ve been called skeptical. Many were latchkey kids or children of divorce. Others became highly self-reliant by necessity. Gen Xers are people whose mindsets were shaped in part by scandals (from Watergate to Enron), inflation and a culture of distrust of authority. They were inundated with TV commercials as kids and don’t want to be pushed to buy today. Following, however, are several ways to foster effective engagement with Gen X.
Start with their parents. Ask your boomer clients about their Gen X sons and daughters. Find out whether the parents will give you a referral. With wealth potentially passing someday from the parents to their children, you have the opportunity to serve both generations, and the parents’ endorsement may help jump-start a conversation with their offspring.
Initiate research. Gen Xers are the most active cybershoppers, having made more online purchases over the past year than any other age group, according to a recent KPMG report. These consumers make buying decisions based on facts, data and reviews, all of which are readily available online. To reach them, you must support their needs and substantiate your claims with research and a variety of unbiased sources.
Give control. Gen X consumers prefer to be in the driver’s seat when it comes to making decisions. Provide multiple scenarios for them to consider. The ability to offer customizable products and flexible choices can help bridge barriers to fulfilling needs.
Explain worst-case options. Acknowledge Gen Xers’ lack of confidence in the future, and educate them about solutions that provide for “a way out” in case their needs change. For example, as appropriate based on each client’s circumstances, share details about life insurance products that offer a return-of-premium feature or have riders designed to provide access to an accelerated portion of the death benefit (with a corresponding decrease in the death benefit) in the event of chronic illness or longevity.
Be connected. Leverage technology to help serve Gen X comprehensively. Learn about new, carrier-provided, generation-focused online tools that — upon giving responses to just a few basic questions — can instantaneously suggest engagement strategies, provide insights and point to potential solutions.
Be succinct. Everyone is busy these days, but Gen Xers are busy “on a whole other level.” Many are working long hours in stressful management positions and also taking care of children and aging parents. Therefore, be brief, be brilliant and be gone. Cut to the chase, and focus on delivering results quickly.
A Call to Action
Clearly, the challenges facing Gen X are substantial. As a post on the LIMRA’s Industry Trends blog put it, “Gen X needs our products, services and support the most. They started their adult lives at a disadvantage, compared to the boomers, and many were adversely affected by the Great Recession. Their recovery has started, but they have fewer years ahead of them than millennials have to plan for their future and save enough. For the financial services industry, now is the time to pay attention to Gen X.”