Gen X: An Untapped Goldmine For Financial Advisors

When it comes to targeting specific age demographics, the financial services industry seemingly focuses on two groups: baby boomers and millennials. By virtue of this emphasis, the mainstream financial press picks it up as well and many financial advisors do the same, tilting their practices toward boomers and millennials.

For reasons that are not abundantly clear, Gen X, defined as folks born between 1965 and 1979, is widely overlooked by the financial services community. Prescient advisors do not make this mistake. After all, 82 million Americans are members of Gen X. That is a lot of potential clients for your practice.

Simple math dictates ignoring any generation is a foolhardy move for financial advisors, but this is particularly true when it comes to Gen X. Think about the situation this: what is one of the things you most frequently hear about in relation to boomer and millennial clients? The massive transfer of wealth that is expected to take place from the former to the latter.

However, Gen X is almost always left out of this conversation. It's almost as if some financial services firms think Gen X's parents will not be bequeathing any assets and wealth to their children. That is patently false and a risky assumption for an advisor to make. Math confirms as much.

Boomers are defined as people born between 1944 and 1964. In other words, many older boomers, say the ones born between 1944 and the early to mid-1950s have children that are Gen X-ers, not millennials. And yes, there will be a sizable transfer of wealth from these boomers to their Gen X offspring.

Don't Miss Out

Last November, citing financial services research firm Cerulli Associates, CNBC reported that over the next 25 years, $68 trillion is set to change hands over the various generations in the U.S. However, that piece does not offer a breakdown of what generations will be on the receiving end of that transferred wealth.

That's not surprising. If the data don't support the “boomer to millennial” narrative, it's just easier for the industry and the media to leave Gen X out of the conversation. A more comprehensive review of the same data from Cerulli is offered by AARP .

It is estimated that of the aforementioned $68 trillion, $48 trillion will be moved by boomers to another generation and of that figure, $32 trillion is going to Gen X, or more than double the amount boomers will transfer to any other generation.

Position Accordingly

Advisors that have clients across multiple generations know that conversations differ among those demographics. Gen X's expectations and requirements are going to be different than those of millennials and it's important to not conflate these groups.

A good place to start is showing Gen X clients you have the ability to tailor strategies specific to this demographic. After all, many Gen X-ers aren't “feeling the love” from the financial services industry these days.

Additionally, remember that this generation is somewhat skeptical of Wall Street because even younger Gen X-ers can remember three bear markets – the October 1987 crash, the “tech wreck” earlier this century and the 2008 global financial crisis.

On the flip side, Gen X also remembers the go-go days of the 1990s and how stocks performed then, making some members of this generation more inclined to take on risk.

Bottom line: advisors have a lot to talk about with Gen X and it's a win-win for all parties concerned if those conversations start sooner than later. There's just $32 trillion riding on it.

Related: Why Your Clients Get Investment Advice From Odd Sources