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. 

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.

“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