Generation X has been dubbed “the forgotten generation” in recent years because so much attention and headlines have been devoted to the generations that have come both before it (the baby boomers) and after (millennials).
That point was amplified earlier this year when an image from a CBS News broadcast depicting a list of generations – starting with the “Silent Generation” (those born before 1945) and spanning through to “Post-millennials” (those born after 1997) – went viral on social media. Notably missing from the list was Gen X (those born between 1965 and 1980).
The image sparked playful chatter online, with many noting that Gen X is far too often left out of discussions when generation-specific trends and challenges are brought up. Thus, it’s of little surprise that this demographic has become the “forgotten opportunity” for financial advisors, according to a recent white paper from Cavanal Hill Funds of Columbus, Ohio.
This generation faces multi-faceted economic challenges, yet remain “underserved” by the financial services industry, the report argues.
“[Gen X] is forgotten because it’s complex,” says Kevin Gebert, president of Greenrock Financial Group Inc. in Surrey, B.C.
Mr. Gebert, a Gen Xer himself, works with several clients from his own age group. He says those in their 40s and early 50s are at an age at which they’re most likely to experience transitions in their lives that interrupt their financial well-being – such as undergoing a divorce, sending their children to university and supporting their aging parents.
“This age bracket is a sour spot,” he says. “You have all these variables that could be happening from a statistical standpoint.”
But the numerous financial drains that make Gen X such a challenging demographic to assist are, in many cases, the exact reasons Gen Xers don’t seek help.
“They don’t have a lot of money to be spending on a financial planner,” Mr. Gebert says. The irony is Gen X is a demographic that requires holistic financial planning and careful treatment – and is one that many advisors are missing out on.
One of the most common financial events in the lives of his Gen X clients is divorce. Mr. Gebert helps many clients in their mid-40s and 50s split their assets, sell their shared houses, manage their legal bills and buy new property under the federal government’s new mortgage stress test.
As someone who recently went through a divorce himself, working with clients going through this life transition should be treated with “empathy and sympathy,” he says.
“It’s kind of like, ‘Okay, the kids are 12, we have our careers, our mortgage and, all of a sudden, we have to sell the house, downsize and start over again’,” Mr. Gebert adds.
For advisors, taking a sensitive approach is valuable for clients at any stage of their lives, but is perhaps most vital for Gen Xers who are experiencing the stresses of their own life transitions on top of those of their family members.
Unlike most baby boomers (whose children are likely well into adulthood) and most millennials (who have either just started families or have yet to do so), many Gen Xers are in the throes of funding their children’s transition into adulthood – either paying their university tuition or supporting them as they enter the job market and learn financial independence.
Peter Ficek, founder of Terra Firma Financial Inc. in Calgary, says this is the most frequent difficulty his Gen X clients face – and the uncertainties facing children of this age range mean they could become responsible for dealing with emergencies in their children’s lives at any moment. The best strategy for accounting for these uncertainties, he says, is to work them into a comprehensive financial plan.
“The comprehensive financial planning process allows for insertion of ‘what if’ scenarios,” Mr. Ficek says. “We can do ‘what if’ scenarios to see what would happen if a child needed help with a down payment on a house and how this would impact [clients’] ability to save for their own retirement.”
Mr. Ficek says he uses software to conduct a financial needs analysis for couples juggling various responsibilities, taking cash flow, retirement planning, risk management, investment management, tax management and estate planning into account.
He also uses this process to account for expenses Gen Xers might face in supporting their aging parents.
“Gen Xers are the sandwich generation,” Mr. Ficek says. “A comprehensive financial plan will include all of the aspects of a Gen X couple’s financial lives, including looking after their children and their parents.”
On top of coping with financial strains coming from multiple directions at once, many members of Generation X are dealing another notable financial challenge: paying down debt accumulated over the course of their lives.
Orlando Lopez, a certified financial planner with TD Wealth Financial Planning in Toronto, says that given the greater access Gen Xers have had than most millennials to large lines of credit, yet having had less time to pay off their debt than baby boomers, many have difficulty managing their day-to-day expenses.
Although Mr. Lopez used to try to teach clients to track their expenses closely, he’s learned to take a simpler approach.
“I no longer try to [get clients to] track everything because it almost never happens,” he says. “I can send them all the Excel [spreadsheets] in the world, but I’m going to get nothing back in terms of data. I have to be realistic.”
Rather, Mr. Lopez works with these clients to pare back spending on non-essentials by helping them establish a simple, realistic budget and lower the credit limit on the credit cards they use for daily expenses, reserving credit with higher limits for major expenses only.