Why Financial Advisors Should Learn About Generations

FEATURE | Why Financial Advisors Should Learn about Generations

Why Financial Advisors Should Learn about Generations

By Lori Dorsey

inancial advisors play critical roles Table 1: The Generations in their clients’ lives, often serving Fas money managers as well as life Generation Birthdate U.S. Population coaches. They see clients through marriage, Traditionalists Before 1946 75 million child-raising, home-buying, new jobs and Baby Boomers 1946–1964 80 million job loss, caring for aging parents, the loss of Generation X 1965–1979 60 million loved ones, and other high-emotion transi- Millennial (aka Gen Y) 1980–1995 82 million tions. The relationship between an advisor Gen Edge (aka Gen Z) 1996–present TBD and a client is personal, so it’s vital for advi- Source: Lancaster, L., and D. Stillman. 2014. BridgeWorks BridgeBuilder Manual [Training Certification] BridgeWorks, sors to understand the person on the other Minneapolis, MN. side of the table. Who Are the Traditionalists? often spending whole careers with the According to one study, nearly 90 percent of Traditionalists are a generation of 75 mil- same company. prospective heirs say they will move assets lion people born before 1946. They have to another firm once they inherit.1 That is experienced their fair share of hardship, Self-sacrifice. Helping their families recover an ominous statistic for financial advisors. enduring the aftermath of the Great from the Great Depression and supporting We believe, however, that understanding Depression followed by World War II and their country in World War II and the generational personalities can help advisors the Korean War. No strangers to sacrifice, Korean War required near-constant self- retain these assets and perhaps even gain traditionalists know how to make do with sacrifice during traditionalists’ formative market share during what may be the largest what they have. They are fiercely loyal to years. When traditionalists were young, their wealth transfer in U.S. history. family and country; their patriotism is a families donated, rationed, and worked their badge of honor. As their generation’s name fingers to the bone to support troops over- What Creates a Generational implies, they believe firmly in family seas and put food on the table at home. For Personality? values, organizational structure, and rules traditionalists, putting collective needs When we look at generations, age is just a of formality. above individual needs is second nature. starting place. It’s crucial to consider the events and conditions of each generation’s Traditionalists are not new to financial Respect for authority. Questioning authority formative years. During these years— advising. As a generation known for being was out of the question for young traditional- roughly the teenage years—people are frugal, traditionalists long have sought pro- ists. They grew up in a time of uncertainty, impressionable and coming to terms with fessional help to make sound financial deci- and they trusted their superiors’ leadership. the world around them. Consequently, sions. As you continue to work and interact Traditionalists put their heads down, followed what’s happening during a generation’s for- with traditionalist clients, keep the follow- the rules, and reaped the fruits of their labors. mative years has a profound and lasting ing defining traits in mind: A proper traditionalist remained polite yet impact on general views and behaviors. We strong-willed through tough times. For those explore the unique personality traits of the Loyalty. Traditionalists are loyal. They were who served in the military, falling out of line five generations listed in table 1 and what loyal to their country during war efforts. was an act of defiance that threatened every- those traits mean for financial advisors as They are steadfast in their devotion to fam- one’s safety. they build and maintain relationships. ily and family values. They are faithful to their favorite brands; for example, growing Building Stronger Connections Meet the Traditionalists up as a traditionalist, there was no doubt with Traditionalist Clients Traditionalists are also known as the great- about whether you belonged to a Ford fam- • Take your time: Polite small talk is est generation, the silent generation, the GI ily or a Chevy family. In adulthood, tradi- important when communicating with generation, and Depression babies. tionalists have shown loyalty to employers, your traditionalist clients. They’ll take the

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Send a note congratulating them on a Table 2: What Makes Each Generation Unique grandchild’s graduation or ask about Generation Key Events + Conditions Values their hobbies during a meeting. As a radio integrity generation that remembers how the cor- the Great Depression social tranquility ner grocer knew every customer’s name, Social Security tradition your traditionalist clients appreciate World War II loyalty Walt Disney family such gestures. Traditionalists Jackie Robinson work ethic automobiles discipline Meet the Baby Boomers Life magazine Baby boomers are also known as boomers, Sputnik Korean War the me generation, and generation Jones. booming birthrate work ethic Who Are the Baby Boomers? television youthfulness Watergate luxury Baby boomers, born between 1946 and Vietnam war professionalism 1964, are an influential generation. Because civil rights movement novelty Baby Boomers of their generation’s large population— women’s rights movement individuality peace sign health approximately 80 million—they have the Beatles effected great change. They grew up in rela- moon landing tive prosperity, which gave them time and stagflation space to reexamine the status quo. latchkey kids trust Unsatisfied with what they saw, they video games transparency rebelled against their parents’ deference to Michael Jordan independence authority and questioned those in positions music videos opportunities 24-hour media work/life balance of power. Boomer youth culture helped fuel Generation X Challenger explosion family civil rights, women’s rights, and anti-war missing children on milk cartons growth movements. Later, when boomers flooded personal computer the workforce and faced steep competition dot-com boom and bust AIDS epidemic among their peers, they sharpened their competitive edges to stand out from the participation awards integrity reality TV innovation crowd. Reinvention is a central boomer The Simpsons collaboration characteristic. As youth, they reinvented computer games entertainment social structure and modern music; as social media customization Millennial (aka Gen Y) adults they reinvented what it meant to be a upgrade cycle choice homeland violence speed competitive worker. They continue to rein- globalization vent every life stage they touch. the Great Recession self-esteem movement Baby boomers are an incredibly important the Great Recession efficiency segment of an advisor’s client base. They cyberbullying transparency control much of the country’s wealth, and as global competition security Minecraft inclusivity they start to retire—whatever that means Netflix personalization for them—they need advisors who can be Gen Edge (aka Gen Z) YouTube flexible. When working with boomers, allow visual communication the following traits to guide your efforts: citizen journalism ISIS same-sex marriage Optimism. When a generation has accomplished as much as baby boomers time to get to know you, and you should Don’t eschew formality because it’s have accomplished, optimism comes natu- do the same with them. Don’t make them passé with your younger clients. Show rally. During boomers’ youth and young feel like a meeting is just checking a box traditionalists respect by displaying adulthood, the country teemed with off your list. Be fully present. proper etiquette in your interactions accomplishments—from the moon land- • Brush up on your etiquette: Tradition- with them. ing to economic prosperity. Boomers alists have followed the rules since they • Add a personal touch: When possible, go gravitate toward idealistic and optimistic were young; formality and respect are the extra mile to personalize your com- communication that echoes their glass- integral parts of their social order. munications with traditionalist clients. half-full idealism.

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Competitiveness. Suffice it to say, there are than their boomer predecessors. As Xers Independence. As Xers were growing up a lot of boomers. Because of their great came of age, the world seemed to be com- the divorce rate tripled. They grew com- numbers, they’ve had to compete with one ing apart at the seams. They watched as fortable returning to empty homes after another their entire lives. Younger boomers media coverage showed government, reli- school to organize their own time, which especially learned that to compete they gion, marriage, family, and other revered meant doing homework independently and needed to be the very best. That competitive institutions getting called into question. microwaving frozen dinners. To spare their edge filtered beyond the workplace as boom- Some Xers themselves feared becoming the children similar experiences, many Xers ers jockeyed for the best house, the nicest missing kids on milk cartons. Because of value and prefer efficient, independent car, and the most exotic vacations, leading to the uptick in divorce, many Xers lived in work so they can focus on family and other the phrase “keeping up with the Joneses.” single-parent households and became adept personal endeavors. at organizing their own lives. They learned Youthfulness. Unlike their traditionalist independence and found community in Building Stronger Connections parents, who kept their heads down and shared pop-culture affiliations ranging with Xer Clients did as they were told, boomers were rebel- from Madonna to Michael Jordan. Upon • Lose the schmooze: If you schmooze lious in their youth and have maintained a entering adulthood, Xers have demanded your Xer clients or prospects, they will “reinvent, reimagine, redefine” attitude. work-life balance and workplace efficiency. think you’re hiding something. Are you a skilled, well-seasoned advisor who is Building Stronger Connections From a financial perspective, Xers have got- going to help them grow their wealth? with Boomer Clients ten the short end of the stick. They’ve been Lead with your value, not your cocktail- • Keep it simple: Boomers are busy. buffeted by multiple recessions and are the hour conversation skills. They’re supporting adult children, either generation that has struggled most to • Be an asset, not an expert: Generally, financially or emotionally, and dealing recover from the Great Recession. They Xers don’t trust others to act in their best with all the stress that comes with their need advisors who can be strong allies as interests; whether at work or in an advi- leadership positions. Don’t overcompli- they continue on the road to recovery and sor’s office, they depend on themselves. cate your communications with them or begin planning for eventual retirement. The In short, be sure to work with your Xer book extended meetings. Simplify. best way to communicate with this efficient, clients, not for them. And don’t forget to Highlight must-read information in let’s-get-down-to-business generation is to be transparent every step of the way. e-mails, use sticky notes to flag import- appeal to the following prevalent Xer traits: • Focus on results: Xers are a cohort look- ant pages in documents, and send agen- ing for proof. Avoid preamble or bela- das before meetings. Skepticism. During Xers’ formative years, bored explanations of your systems and • Don’t make assumptions: Making CNN’s 24-hour news covered everything processes. Instead, focus on proving assumptions is a surefire way to alienate from Tonya Harding and Nancy Kerrigan yourself through results. For this genera- your boomer clients. Don’t assume they to corrupt corporations and lying presi- tion more than any other, the proof is in don’t care about technology, because dents. It was easy to get the idea that noth- the pudding. many of them are techies. Don’t assume ing was good and everything was bad, and they’ll retire, because many are consider- Xers had every reason to believe no one Meet the Millennials ing second careers or working part-time. would watch out for them except them- Millennials are also known as Gen Y, Focus on asking the right questions to selves. They responded by becoming a echo boomers, and nexters. discover a boomer client’s next move. generation that leads with questions. Their • Be proactive about boomer heirs: Boomers default position is skepticism; trust comes Who Are the Millennials? can be nervous about talking about later and must be earned. Millennials are a diverse cohort of 82 mil- money with their kids. Be proactive about lion born between 1980 and 1995. They’ve the option to invite children into both Resourcefulness. Because of their skeptical experienced a lot of fast-paced change in conversations and meetings. Your boomer natures, Xers have learned to be resourceful. their lifetimes, especially technological clients will secretly—or not so secretly— They watched hours of infomercials selling change. From Internet access to cell phones, be relieved that you’re taking the lead. products that didn’t work. They grew up computers, and social media, technology when the salesperson had access to all the has been continuously improved, stream- Meet the Gen Xers information—not the buyer. Today roles are lined, and upgraded. For millennials, Gen Xers are also known as baby busters, reversed and information is easily—and upgrade cycles have been a constant con- the slacker generation, and post-boomers. quickly—gathered online. Xers are taking full dition. They also lived through some advantage and have become excellent watershed events during their teen years. Who Are the Gen Xers? researchers. They do their due diligence September 11th left Americans questioning Gen Xers, born between 1965 and 1979, before buying a product, committing to a their safety, and growth in the number of experienced a very different upbringing service, or picking the right financial advisor. school shootings contributed to uncertainty

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and fear. Parents and teachers did their best Do something that matters. September 11th, generation to have a Caucasian majority2). to make millennials feel secure, encourag- Columbine, and the Oklahoma City bomb- They’ve never known the world without the ing them to share feelings and lean on each ings all reinforced that nothing in life is Internet, social media, or touch-screens, and other. Millennials today are acknowledged guaranteed—especially safety—and created they are lightning-fast curators of informa- as being a hyper-collaborative generation a generation that looks for meaning in tion. Edgers are replicating their Xer parents’ that values access and authenticity and looks everything: jobs, downtime, even how they traits and showing themselves to be practical, for meaning in their professional lives. invest their money. straightforward thinkers with competitive spirits who strive to win. Millennials still may be a relatively small Building Stronger Connections portion of your client base, but in the with Millennial Clients It will be a while before edgers join the ranks workforce they’re no longer the new kids • Don’t talk to them like they’re kids: It is a of your client base, but forward-thinking on the block. Many of them have been common misconception that millennials advisors will start making connections now working for more than a decade and have are still kids. Most are well into adult- with Xer clients’ children. Do not mistake ascended to leadership roles. Millennials hood and don’t care for suggestions to edgers for millennials. Edgers exhibit many will be recipients of the great wealth trans- the contrary. If they’re not up to par in of their Xer parents’ traits and will manage fer, and the oldest millennials are entering their financial literacy, help them catch finances with a sobered, practical approach. their peak earning years. As more millenni- up without making them self-conscious. Job security and financial security will be als join your client base, let the following • Access to you, not your admin: top priorities. Helping this generation will traits inform your interactions with them: Millennials are used to unprecedented be appreciated by their parents. When inter- access—to their parents, to people in acting with edgers, remember that they Collaboration. From a young age, millenni- positions of authority (think about the show these core traits: als learned the power of working with peers. ability to tweet at the president), and to Both inside and outside the classroom, they information. They want direct access to Pragmatism. Edgers are being raised by sought creative ways to connect. Whether you, not your support staff. Give your to-the-point, realistic Xer parents that aren’t through AOL Instant Messenger or Facebook, millennial clients your direct line and sugarcoating anything for their kids. Edgers millennials have been able to stay constantly return their calls promptly. are adopting the no-nonsense, practical atti- connected with peers since they were kids. • Customize their experience: As advisors, tudes of their parents and are showing They are comfortable with online commu- you already do this; it’s part of being a themselves to be practical rather than aspi- nity and frequently crowd-source the good advisor. Millennials will want you rational thinkers. Why go to a fancy out-of- decision-making process. Millennials to take this to another level. Do you usu- state college when you can have a fully believe their ideas and conversations are ally meet clients in an office? Why not funded education in your hometown? stronger when all minds come together. try a local brewpub instead? Learn about your millennial clients’ interests and Visual communication. Edgers have Tech-savvy. As technology has evolved preferences to better tailor the way you grown up on FaceTime, Instagram, and faster and faster, millennials have had to communicate and interact with them. Snapchat. Every communication is pep- adapt along with it. The Internet was treated pered with imagery—emojis, GIFs, memes, as a rare or special resource during their for- Meet the Gen Edgers photos. They’ve honed the art of communi- mative years, but Wi-Fi is now a baseline Gen edgers are also known as gen Z, iGen, cating through imagery rather than words. expectation. Millennials have flexed and the founders, digital natives, the selfie gen- FaceTime is their go-to for checking in adapted to every new social-media platform, eration, and the YouTube generation. with mom or dad. They document the day- music-file sharing program, and operating to-day with selfies shared across platforms. system thrown their way. Their exposure to Who Are Gen Edgers? Sometimes their texts rely more on emojis a constant barrage of new tools has made Gen edgers were born after 1996 and are still than the alphabet. “A picture is worth a them especially tech-savvy. in their formative years. Though their genera- thousand words” says it for this generation. tional identity is still developing, demogra- Search for meaning. Millennials are closely phers have identified some significant events Self-reliance. Some demographers refer to connected to their families, especially their that are shaping edger attitudes and percep- edgers as the YouTube generation because boomer parents. Raised during the self- tions. Edgers already have experienced quite a they seem obsessed with video-sharing. To esteem movement, they were encouraged to bit of turbulence: terrorism, the Great them, it’s a valued learning tool. YouTube is speak up and share their ideas. Millennials Recession, cyberattacks. They’ve also seen one of their go-to online sources for practi- view their parents as allies and in adulthood amazing milestones for our country—the first cal information—they can watch a tutorial continue to lean on them for advice, exper- African-American president, great strides in and immediately teach themselves a skill. tise, and even financial support. The mes- the LGBTQ community, and growing racial sage their parents told them over and over: and ethnic diversity (edgers are the final U.S. Continued on page 46 ➧

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©© (2016) 2016 Investment Investment Management Management Consultants Consultants Association Association Inc. Inc. Reprinted Reprinted with with permission. permission. All All rights rights reserved. reserved. FEATURE | WHY FINANCIAL ADVISORS SHOULD LEARN ABOUT GENERATIONS

LEARN ABOUT GENERATIONS writing, or texting—shed the fluff and Lori Dorsey is senior vice president and Continued from page 8 get to the point. director of marketing at Ivy Distributors, Inc. • Be yourself: Just like their Xer parents, She earned a BS in journalism/advertising Their Xer parents and teachers have edgers see through a front of any kind. from the University of Kansas. Contact her at emphasized the importance of self-reliance, They don’t want you to use hashtags or [email protected]. and edgers have taken the lesson to heart. emojis unless it’s true to who you are. Endnotes Friendliness and informality are valued, 1. Pershing Advocates Focus on Attracting Gen X and Building Stronger Connections but authenticity is key. Gen Y Investors to Support Future Success (June 6, with Gen Edgers 2012), https://www.pershing.com/news/press-releas- es/2012/pershing-advocates-focus-on-attracting-gen- • Boost their financial literacy: Though Conclusion x-and-gen-y-investors-to-support-future-success. 2. J. MacKenzie, R. McGuire, and S. Hartwell, The their penchant for visual communica- Navigating generational differences can First Generation of the 21st Century, Magid tion and selfies makes them the butt of be tricky whether you’re speaking to a (2014), http://magid.com/sites/default/files/pdf/ jokes, edgers are more than selfie younger client (or prospect), chatting with MagidPluralistGenerationWhitepaper.pdf. machines. Don’t underestimate their a long-time client who might be older ambition or dismiss them as frivolous. than your parents, or working with some- Ivy Investments offers the GenLinkTM program to help financial advisors understand each generation, cement a loyal client Instead, tap into their practical and com- one your age. Each generation’s unique base, and capture assets in motion. petitive nature by offering them a head perspective formulates expectations and IVY INVESTMENTS refers to the financial services offered by Ivy start on financial literacy. interests when it comes to deciding who Distributors, Inc., a FINRA member broker dealer and the distrib- • Get to the point: You’ll see edgers text to trust with their finances. Adjusting your utor of IVY FUNDS® mutual funds, and those financial services or say “tl;dr”—too long; didn’t read. approach—based on your knowledge of offered by its affiliates. If your e-mails read like novellas—even generational tendencies—will be essential if they’re only a few paragraphs long— in serving your clients now and in the edgers won’t read them. Speaking, future. To take the CE quiz online, visit www.IMCA.org/IWMquiz

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