Advisers surprised by the fact that there are now more affluent Generation Xers than Baby Boomers missed some obvious warning signs, according to “Generational Changing of the Guard,” a research report published by Ipsos.
The report findings are drawn from the 2015 Ipsos Affluent Survey USA, which reveals that “for the first time ever, the affluent population of the United States has more Generation Xers than Baby Boomers, signaling a changing of the guard.”
The survey defines “affluent adults” as those living in households with at least $100,000 in annual combined income. About 23% of American households meet that hurdle, Ipsos finds, with a median income of $145,000 and a mean income of $227,000.
Currently, 37% of affluent investors are in Gen X, aged 34 to 50, compared to 33% who are Baby Boomers, aged 51 to 69. Millennials already make up 25% of the category, while “seniors,” or those over age 70, make up just 5% of the affluent U.S. population.
According to Stephen Kraus, chief insights officer at Ipsos, the U.S. is seeing “a true changing of the generational guard in the affluent population. Long over-looked and under-estimated, Gen Xers now outnumber Boomers among affluents.” Matching other recent research, Ipsos finds affluent investors often see a strong confidence boost when working with an adviser, highlighting the opportunity available in servicing this segment of the U.S. population.
The data shows Generation X is not only the largest age group in the affluent population—it is also “more multi-faceted and less monolithic than some might expect.”
“Across many measures, younger Xers act more like Millennials, while older Xers are more similar to Boomers,” the report suggests. “In particular, age 40 appears to be something a tipping point.”
Xers under 40 are far more interested than older Xers in social media, for example, and they follow different entertainment trends than older Xers. In a particularly telling example, 74% of younger Xers “prefer to stream music online instead of buying CDs or downloaded music,” compared to just 45% of older Xers.
From the adviser’s perspective, the research concludes that Millennials and Generation X are continuously becoming more important segments of the investing population, while the influence of Baby Boomers is waning. Still, affluent Boomers, with $913,000 in median household net worth compared with $552,000 for affluent Generation X and $516,000 for affluent Millennials, remain a key part of the advisory client landscape.