trendspotting | PLANADVISER January/February 2017

Forgotten Generation?

Providers focus on Boomers, when Gen X has $5.7 trillion in investable assets.

By John Manganaro | January/February 2017
Art by Meg Hunt

A new research report from Cerulli Associates, “Overlooked Gem? The Underserved Generation X,” finds that Gen Xers have received far less attention from financial services providers than members of the Baby Boom generation.

And it is not just individual investors who lose out as a result; by structuring their offerings with only the categories of “Baby Boomers” and “Millennials” in mind, many providers overlook the fact that Gen Xers average more than $160,000 in savings each. People in this age range have financial needs and goals distinct from either Baby Boomers’ or Millennials’, Cerulli asserts.

“During the past decade, financial advice and product providers have made it a priority to focus on the Baby Boom generation,” says Scott Smith, director at Cerulli. “Rightly so. Households in this segment average more than $400,000 of investable assets and control more than $9.5 trillion. On the other hand, the rise in digital advice platforms has caused providers to pivot attention to the ‘next big thing’ in investing: Millennials.”

Focusing on Millennials is positive for the long-term future, according to Cerulli, but the real sweet spot today for advice providers looking to build a base of younger clients could be Generation X. This group includes some 35 million plan member households currently in control of more than $5.7 trillion in investable assets.

“While their assets are increasing, many of [Generation X’s] portfolios are tied up in employer-sponsored retirement plans that limit their appeal to traditional advisory channels,” Smith notes. “Instead of viewing these as challenges, forward-thinking advice providers need to embrace Gen X to reinforce the true breadth of their value proposition with respect to comprehensive wealth management.”

According to Cerulli, reviewing  existing retirement plan assets and helping define long-term goals can both serve as useful entry points into the discussion of comprehensive wealth management with Generation X.