Client Service December 7, 2016

Providers Should Shift From Sole Focus on Baby Boomers

The 35 million households of Generation X currently control more than $5.7 trillion in investable assets, yet they remain a “relatively underserved segment” of the investment advisory marketplace. 
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A new research report from Cerulli Associates, “Overlooked Gem? The Underserved Generation X,” finds that Gen Xers have received far less attention from financial services providers than members of the Baby Boomer generation.

And it’s not just individual investors who are losing out as a result; by structuring their offerings with only the categories of “Baby Boomers” and “Millennials” in mind, many providers are overlooking the fact that Gen Xers average more than $160,000 in savings each. People in this age range have distinct financial needs and goals from either Baby Boomers or Millennials, Cerulli asserts.

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“During the past decade, financial advice and product providers have made it a priority to focus on the Baby Boomer generation. Rightly so, households in this segment average more than $400,000 of investable assets and control more than $9.5 trillion,” states Scott Smith, director at Cerulli. “On the other hand, the rise in digital advice platforms has caused providers to pivot attention to the ‘Next Big Thing’ in investing: Millennials.”

Focusing on Millennials is positive for the long-term future, according to Cerulli, but the real sweet spot today for advice providers looking to build a base of younger clients could be Generation X. The generation includes some 35 million member households currently in control of more than $5.7 trillion in investable assets.

“While their assets are increasing, many of these portfolios are tied up in employer-sponsored retirement plans that limit their appeal to traditional advisory channels,” Smith notes. “Instead of viewing these as challenges, forward-thinking advice providers need to embrace Gen X to reinforce the true breadth of their value proposition with respect to comprehensive wealth management.”

According to Cerulli, reviewing existing retirement plan assets and helping define long-term goals can both serve as useful entry points into the discussion of comprehensive wealth management with Gen X.

“Many of the households in the Gen-X segment are entering the most complex segments of their financial lives,” Smith explains. “Insights from a comprehensive financial planner to weigh the complete financial impact of decisions they face would greatly benefit Generation X.”

Given that the majority of Gen-X households believe it is important to have a written financial plan, and looming regulations will increase the importance of comprehensive planning in wealth management relationships, the Cerulli research concludes it is essential that advisers and providers optimize their platforms to address the needs of younger clients.

Information about obtaining Cerulli Associates reports is available here. 

Client Service December 6, 2016

Client Visions of Retirement Include Fears and Hopes

World travel is a classic goal cited among many workers envisioning their retirement, yet few of today’s retirees say they can afford such luxuries.
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According to a recent RBC Wealth Management poll, three in five Americans age 50 and older say world travel is an important retirement goal, but more than half express concern about the potentially prohibitive cost. 

“Everyone is worried about whether they will have saved enough to fund a comfortable retirement,” observes Tom Sagissor, president of RBC Wealth Management U.S. “The closer people get to retirement age, the more they begin to look at needs versus wants. Often times, because of fear, the needs win out, putting bigger dreams like a trip to Greece or Beijing on hold.”

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And yet, with the advent of the “global sharing economy,” the RBC research argues travel may be more within reach for the current generation of retirees than ever before. “Vacation home rental sites, local car sharing and even bike and sports equipment rental sites are making it easier for people to escape and explore new destinations for less,” the research explains. 

“More and more clients are coming to our advisers for help in learning how to use the ‘shared economy’ more strategically in retirement,” says Griffin Geisler, manager of the Wealth Center at RBC Wealth Management U.S. “While it’s a trend started namely by Millennials, Baby Boomers in or near retirement can certainly stand to benefit.”

Whatever a given worker’s aspirations are for retirement, the RBC poll makes it clear that early planning and a solid long-term savings commitment are absolutely essential for achieving challenging financial/retirement goals, such as world travel. 

Personal health is another major barrier that can get in the way of retirement goals, the poll results show. Nearly one third of Americans suggest their own personal health or a loved one’s health could likely prevent them from traveling abroad during retirement—roughly the same number who say the cost of medical insurance is already a burden. At the same time, 15% are concerned about their ability to maintain insurance coverage if they get sick or injured.

Additional findings and information are available at www.rbcwealthmanagement.com. 

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