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Many advisors are seeing the writing on the wall and are increasingly focusing on either converting Gen X prospects into clients or putting in the work needed to keep baby boomer heirs that are Gen Xers on as clients when their parents pass on.
Those are positive moves and if you’re an advisor that’s not doing either of those things, put them on your list of business-related new year’s resolutions because Gen X needs the help of advisors and a lot of it. Some of those reasons, including the demographic’s retirement crisis, are readily apparent. Others not so much.
For example, Gen X’s status as “the bridge generation” often goes overlooked by society at large and the financial planning community. In this context, bridge generation means many Gen Xers are still young enough to have one or both parents alive and old enough to have families of their own. Said another way, it’s not uncommon for some Gen Xers to be contending with financial burdens pertaining to their parents and their children.
Obviously, both obligations are important and clients want to be able to meet both with the needed resources, but for the purposes of this piece, the focus will be on the importance of finances as it pertains to Gen X parenthood.
Gen X Parents Prepping for the Worst
One of the more concerning financial themes that’s emerged over the past decade or so is the phenomenon of parents assisting adult children. Regardless of the generation, when parents are doling out cash to adult children, they jeopardize important issues such as retirement security and long-term care planning.
Specific to Gen X, 25% of this group believes they’ll be supporting their kids into adulthood, according to a recent U.S. Bank survey. Part of the problem is that while Gen X came of age at a time when issues such as equality and women in politics/the workforce gained significant prominence, this generation’s views on money conversations are far from progressive.
“The survey also found that the majority of Americans would rather discuss who they are voting for in the upcoming presidential election than their personal finances, and that many people might not be truthful with their partner about money – driven by feelings of shame and embarrassment,” notes U.S. Bank.
One way of looking at the above is that advisors should encourage Gen X parents to engage in candid conversations about money and investing with their kids. Think something better than “money doesn’t grow on trees” and something less revealing than specific inheritance or salary data.
Signs of Progress
The good news for advisors is that they’re not starting from scratch when it comes to helping today’s parents, Gen X or otherwise, engage in money conversations with their kids because many are already doing so. Many are being proactive in terms of presenting their kids with ideas for college major and career choices that can foster financial independence.
“Today’s parents are also more likely to say they’ve had conversations with their children about how to choose a career path that aligns with their child’s financial goals – a discussion they may not have had growing up. (65% of parents discussed this concept with their children when they were growing up, while only 41% of Americans recall discussing this concept with their parents when they were growing up.),” adds U.S. Bank.
The point: Although things are trending in the right direction, advisors should encourage Gen X parents to have candid financial conversations with their children and give them the tools needed to make that happen. Think of it as empowerment over dependence.