Journal of Financial Planning: September 2017
Anthony Stich is vice president of global marketing at Advicent, where his goal is to develop a team of marketing leaders to grow Advicent, a leading provider of SaaS technology solutions for the financial services industry, into a global brand.
Before our profession witnesses the substantial influx of investable assets from the generational wealth transfer, there is still work to be done—especially with the “forgotten generation.”
Unlike the baby boomer and millennial generations, Generation X is rarely talked about. This cohort is smaller than the other two, and seemingly quieter. Considering that they are on the front end of the wealth transfer and are currently in a “retirement saving mindset,” it is important to discuss their financial technology needs; but first, a little background on Gen X.
Defining Generation X
Generation X was born between the mid-1960s and the early 1980s. What makes them really interesting and germane to this column is their exposure to technology. You see, when people in this generation were children, they grew up experiencing both ways of life—one before, and one after technology.
This generation, believe it or not, will be the last group of individuals who commonly used a phone that still required a cord, as the cordless phone did not become prevalent to the mass market until the 1980s. Generation X will be the last generation to remember school without computer classes (some readers may remember “Oregon Trail”) learning to write and type alongside each other.
Generation X were commonly latchkey kids, coming home alone when they returned from school. This alone time was caused by the proliferation of divorces (the U.S. divorce rate peaked in the 1980s) as well as an increase in women entering the workforce.
Last but not least, Generation X personally experienced the financial impact of the 1990s recession, the Enron scandal, and the dotcom bubble.
What can we extrapolate from these particular data points? First, Generation X witnessed rapid innovations after first experiencing a world without technology. Second, Generation X is individualistic—ready and willing to go it alone. And third, Generation X does not trust the market and has seen first-hand the devastating impact of poor financial decisions, some outside their control.
Now that a picture has been painted of the typical Gen-Xer, it should be easier to understand how to work with this type of client, as well as what technology they expect.
The Forgotten Generation
Generation X feels ignored by the financial advice industry. Due to the size and service level expectation of baby boomers, there was never much time to attract and nurture the next generation. And with the wealth transfer on the horizon, all of the pundits are speculating on how to appeal to the elusive millennial generation.
But what about Generation X? They have been ignored and are likely using a tool like Personal Capital to keep track of their half-dozen 401(k)s that were rolled into IRAs (insert Bart Simpson-esque sarcasm here), and with limited direction regarding their retirement. Considering this, the approach should be about what technology your firm can provide, but also your ability to provide sufficient, but not overbearing, attention. While Generation X does not require much guidance (think latchkey), they will still appreciate access to a financial professional.
If my postulation about this generation is true, they do have high expectations around the technology you offer (your technology is competing against robo-advisers for this generation) so be prepared to demonstrate your offering—one that is on par with the user experience they have come to expect.
It is important to note, however, that Generation X recalls the time before the ubiquity of technology, and they tend to have more patience than millennials when it comes to technology. Generation X will choose the better advice firm over the better technological experience, as long as the offering is close in both user experience and depth of ability.
Technology for Unique Needs
The financial technology you offer Generation X does not need to be best-in-breed, but rather something that is visually appealing, easy to use, and available anytime. Ultimately, a client portal is a must (think go-it-alone); account aggregation to see all accounts is a must (think a half-dozen IRAs); and frequent updates to financial progress is also a must (think dotcom bubble). More importantly, though, is access to you—the financial adviser.
While Generation X will go it alone, and many Gen-Xers actually prefer to be engaged with minimally, they do want to have access to their adviser, a knowledgeable expert, whenever they wish. This final requirement—access to an adviser, but not a call-center—is also the silver bullet against the robo-adviser.
In addition to the user experience, a good library of materials should be made available. Considering how they are going it alone at this point, in addition to their experience using the Dewey Decimal System as well as Google, giving them access to appropriate content is important. However, the type of content and how it is delivered is not as important.
Articles and emails on a relatively frequent basis are a must-have; social media and blogging are a nice-to-have. Using a marketing communication technology can answer this expectation well, both through content curation but also efficient and targeted distribution. In short, if your practice becomes a resource for knowledge, this bodes well with latchkey kids.
Win and Maintain Their Loyal Business
Ultimately, it is not just about technology with this generation. Generation X requires good technology coupled with a personalized experience available when they want it. This is due to their early-life experiences that drove them to having an individualistic mindset and their formative years that included financial market uncertainty (and seeking out advice on their own).
This generation has now begun planning for their retirement, often after years of neglect, and will expect an experience on par with robo-advisers but, more importantly, one that provides personalized advice and the knowledge to back it up.
Your technology stack should actually be more of an “offering stack”—one that includes great, collaborative technology, relevant information resources, and personalized advice available on demand.