I recently attended the Financial Planning Standards Council’s Vision 2020 Symposium at the Old Mill in Toronto. One of the speakers was Seth Mattison of Bridgeworks LLC in the US, whose topic was "Bridging the Gap - Strengthening Relationships with Four Generations".
Each of the four generations now in the investing world have differing characteristics and needs when it comes to their wealth management.
The Traditionalists, were born before 1946, and number about 4.6 million in Canada and 75 million in the US. They grew up in a world of major conflicts, but not on home soil. There was no instant access to information provided by technological advances, but they now have the time, energy, and money to experiment - often at the encouragement of their grandchildren. They often map family trees or record their memoirs to leave a legacy for their family. When it comes to working with a wealth manager, they are loyal, but expect to be shown appreciation for their loyalty by spending time with their advisor and having opportunities to attend events and meet people.
The second group is the Baby Boomers, born between 1946 and 1964. They represent 9.6 million in Canada and 80 million in the US. Television brings the world into their living rooms. They are often two personalities - the buttoned-down, successful executive or professional, who is competitive, hard-charging and idealistic. But when they let their hair down, there lies a hippy who loves to let loose. But this group is time-starved - often the sandwich generation dealing with aging parents and millennial kids. US statistics show 1 in 4 boomers spend 21 or more hours per week caring for aging parents. Because they are so time crunched, they are looking for easy solutions to their wealth management needs. They are interested in a more holistic approach to help them deal with the issues, such as aging parents or estate planning, that are top of mind. As an advisor, it is important to not demand much of their time and keep it simple. This is my demographic group and I'm dealing with an aging mother and a disabled sister, so understand the time it takes.
The Generation X group, born between 1965 and 1981, constitute about 8.1 million in Canada and 60 million of the US population - a smaller group, in part from the introduction of birth control in the Boomer times. They have seen the world through access to 24 hour news, where the truth of the story gave way to who could get it on air first. Theirs was a world where they were exposed to scandals and lies, marriage breakdowns, parents whose loyalty to their employing institutions was rewarded with layoffs. Consequently, they became skeptical, entrepreneurial and independent. They have a strong "BS" meter, and want transparency and authenticity from their advisor. An advisor must be willing to prove the value brought to the table and explain the fine print. There must be an in interest in working with engaged clients and to be a resource and not a "salesperson". (Okay, this is Justin's demographic - think it sounds like him?)
And the final group is the Millennials - born between 1982 and 2000 - and making up 8.6 million in Canada and 82 million of the US population. This group has grown up with technology and is used to a fast-paced world of change. (Imagine, the storage capacity of the Commodore 64 represents one Tweet in today's world!) Violence has been closer to home for this group - 9/11, Columbine, the Montreal Massacre. In their relatively short lifetimes, they have seen the .com bubble burst, the turmoil in the markets following 9/11, the contraction of the workforce during recessions, as well as the burden of the cost of education, which has increased three fold since 2006. This has led to frustration and blame for their current situation, as well as a sense that money is scary. They have not yet developed an understanding of their personal finances and can feel overwhelmed. They collaborate with family and often look to parents for help. They need coaching and encouragement to break their financial world into realistic, bite-sized pieces - they don't want to hear about saving $2 million for retirement when they are trying to figure how to pay down their student loans or buy a house. Not to mention that they may not yet know what an RRSP or TFSA is. They must be encouraged to understand the importance of beginning their financial planning at an early age, while having it presented in manageable and reasonable ways. They enjoy working within a community - either virtual or "coffee shop" environment - and will likely develop a sense of loyalty to advisors who are approachable and willing to coach them in the early years. This is Shannon's group and I can see a number of these traits in her - particularly a comfort with technology and sense of community.
Whether you are a potential client looking for an advisor or an advisor looking for clients, it is important to consider generational issues when determining the most appropriate fit.