Connecting with Gen X: The Clients of Tomorrow

Posted by Kol Birke, CFP

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January 26, 2016 at 10:00 AM

connecting with Gen XGeneration X (Gen X)—people born between 1965 and 1979—fall squarely between their baby-boomer parents and Generation Y (i.e., the millennials). In general, they exhibit qualities from each of these generations, and as a result, there is no all-encompassing magic solution for developing long-lasting client relationships with this group. Rather, it is critical to meet them where and how they want to be met, and it necessitates a new type of flexibility in your service offerings.

But how do you go about connecting with Gen X? To help answer this question, let’s start with an exploration of how your current (older) clients talk to their kids about money.

Let’s Talk About Money

When it comes to talking to their children about money, your client base likely fits into three groups: open, reluctant, and closed.

1) Open clients. These clients have educated their children about money and probably talk fairly openly with them about it. They may not need nudging but could use a checklist of age-appropriate topics to ensure that they’ve covered all the bases. With clients in this group, you could offer to have some “light” conversations with their children to help ensure that they are on the right track.

These are the clients with whom to start because they’ve already laid the groundwork for you. Your job is to figure out what help your clients think their children need. What are they nervous about? What reservations have they expressed regarding their children? Finding ways of responding to those needs will help you add value to your client relationships.

2) Reluctant clients. These individuals know at some level that they should—and will eventually need to—have financial conversations with their children. But something is holding them back from doing so, be it a fear of letting their children know how much they may be passing along or of potential conflict or tension between them and their children. These clients will take a bit more hand-holding, but the rewards can be huge.

In addition to forming relationships with their children—which essentially makes you the logical advisor to them in the event of an inheritance—providing this service makes you unique among your clients’ friend groups. Leveraging the situations properly can result in increased referrals to your ideal clients.

3) Closed clients. These clients are just not interested in talking with their children about money; however, they may be very interested in you meeting directly with their children, as long as they don’t have to be involved. These clients will often transition to the “reluctant” group at some point in their lives, so be on the lookout for them to open doors and then provide the support they need to be successful in having these conversations.

Making Connections

Once your clients have made meaningful introductions—or if you’re targeting Gen X clients directly—how do you actually make connections with them? To effectively connect with anyone is to meet that individual in his or her comfort zone. So, devote some time to figuring out what that zone is. In doing so, here are a few things to keep in mind:

  • Gen Xers are well-educated, value their individuality and independence, adapt well to change, and are comfortable with technology.
  • They value hard work, but they “work to live” (as opposed to their parents, who “live to work”).
  • They do not want to be told what to do; instead, they want concierge guidance, clear goals, and the ability to manage their own time. Ultimately, they want to feel as if they have solved their own problems.
  • They appreciate relevance in your communications. Examples might include showing them how much to put away for their children’s college fund or identifying which schools in their district have the best standardized test scores. Sending generic or irrelevant information will weaken your relationship with them.
  • E-mail is their preferred method of communication.
  • They use social media. According to a recent study, 81 percent of Gen Xers have a Facebook account, 48 percent have a Twitter account, and 57 percent use Google+.

So, what’s the bottom line? Assumptions about marketing to the generations—for instance, that only digital works for younger generations and only print for older consumers—are often incorrect. What’s most important is to stay on top of trends, test different methods, and trust your observations regarding what works best.

Create a Scalable Service Model

One of the primary goals of effectively servicing your Gen X clients is to capture the eventual wealth transfer from their parents (i.e., your older clients). But you need to profitably serve your Gen X clients’ needs in the meantime.

Fortunately, as your clients’ children likely have fewer assets than do your current clients, they often have simpler needs. And they typically prefer ad hoc over regular interaction. As such, your current service model and expectations may not be the right fit. It may be worthwhile to create a more scalable service offering for these Gen X clients. This may include hiring a junior planner, offering fewer services (with hourly fees for additional work), and automating client touch points.

In terms of automation, for example, imagine:

  • A blast newsletter that lets everyone in your “tax-efficient growth model” know that you’re always watching over their investments and that you’ve decided to remove ABC Fund and replace it with DEF Fund for X reasons
  • A blast e-mail in early December that reminds everyone to make their charitable contributions for the year
  • An e-mail, targeted to your younger investors, highlighting a new smartphone app that they can use to track their budget

Clients of Tomorrow

Of the younger generations poised to become the clients of tomorrow, I think you may find Gen X to be a business opportunity you shouldn’t ignore. The driving goal is to find ways to maintain a meaningful connection to or relationship with these younger investors while not spending too much valuable time on each interaction. Sound impossible? Remember, relationship expectations are shifting, as are the ways you can connect with younger investors.

What methods have you used to target Gen X clients? How do their financial planning needs differ from those of older clients? Please share your thoughts with us below.

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