Few financial services companies acknowledge Generation X’s (born between 1965 and 1980) most troubling financial planning concerns, according to a study from Weber Shandwick, a communications strategist for financial services companies.
Weber Shandwick observed that often when financial services firms do segment investors and retirement plan participants by generation, they tend to focus on Millennials and Baby Boomers, but not on Gen X, making it an important opportunity for the industry. “They don’t have the numbers and the wealth compared with Boomers and even Millennials,” says Brooke Worden, senior vice president of financial services at Weber Shandwick.
One significance of age 50, she tells PLANSPONSOR, is that people become eligible for membership in AARP, which caught Worden, herself a member of Gen X, by surprise. “It will probably catch a lot of others by surprise,” Worden says. “Retirement is not as far off as we think.” The point of the study is to shine a spotlight on the immediacy of retirement for Gen X.
The study, “Leveraging the Gen X Retirement Market: From Overlooked to Opportunity,” found that Gen X is an engaged group of workers and investors who are doing many things well. But, Worden emphasizes, there is a significant problem that plan sponsors and advisers can help with: “They don’t feel prepared,” she says. “They have significant anxiety around their level of preparedness. They are pretty financially savvy, but they have a high level of anxiety about whether it will be enough.”
Their anxiety is driven higher by the need to account for long-term health care costs in retirement. “I would characterize it as a generational blind spot,” Worden says. This generation is trying to take care of their current health, paying attention to exercise regimes, and the need for a healthy diet and adequate sleep, but all these present a challenge because Gen Xers are so pressed for time.
Between work, children, and possibly caring for aging parents, it is hard for them to find the time to take care of themselves physically. But the desire is there, she says. “They want to prevent catastrophic health care events.” The subject causes much more anxiety than other parts of preparing for retirement.
Worden adds that in addition to trying to save for retirement, Gen X may also be trying to save for children’s college expenses.
Helping Gen X Focus on Retirement Planning
Retirement plan sponsors should try to make saving for retirement as easy as possible for Gen X. “I think simplicity is key for this generation, because they are so time pressed,” Worden says. Automatic features in a plan, such as auto-enrollment and auto-escalation, are important. And the addition of advice through plan design is also important to help them take control of their financial lives.
Auto features mean one less thing for plan participants to do. “It adds to the simplicity to be able to set it and forget it,” Worden points out. She says she does not like the word “forget,” but that being able to automate positive behaviors and adding advice components so that Gen Xers can continue to monitor plan performance is an effective combination.
“Gen X members like scenarios and projections,” Worden notes, especially when the examples provide relatable images. “That is an effective way to build trust—it reinforces that the plan sponsor is speaking to them as a Gen Xer.”
Any images that may resonate with a Boomer audience—an older couple strolling on the beach, or a picture of a lighthouse—are unlikely to be relevant, Worden says. “It’s attractive, but I don’t relate to it as a Gen Xer. It doesn’t seem realistic. That’s not me. That’s not my generation.”
In part because Gen Xers are still solidly engaged in raising families and possibly sandwiched between the financial demands of other generations, she feels the image of a multi-generational family could resonate in communications and targeted messages. “Maybe a family sitting around a kitchen table, or a family in a car,” Worden says, “a multi-generational family, with members of Gen X relating to older parents and children at the same time.”
Plan sponsors and advisers should aim for accessible communication. Simplicity and authenticity are not enough. The messaging should be accessible in a variety of channels, Worden says: “Digital, mobile apps and devices,” she says. “I think that is very important to Gen X. Some may prefer more traditional, in-person session at the worksite, but others may not.”
Worden feels the industry faces a challenge in responding and communicating with these new participants in ways that it hasn’t previously. “They may be too time-pressed to participate,” she says. “They want something served up when it is convenient for them; like a YouTube video they watch at night when the kids are in bed, or some kind of on-demand education they can access over a weekend.”
As well as leveraging technology to the fullest extent, she says that another component is looking at participant segments with a fresh eye. “The world has changed,” she says. “The industry is not speaking to Gen X in a unique, distinct way, but this means plan sponsors have an opportunity to build trust with them. They are very hungry and open to being reached—they know it’s important and they are a sizable wealth segment they lack confidence; they want help they are very receptive. But it has to be relevant.”
“Leveraging the Gen X Retirement Market: From Overlooked to Opportunity” is here.