Falling between two vast generations and often ignored by researchers and marketers, a new white paper suggests that Gen Xers should not be overlooked, as they are accumulating wealth at relatively high levels.
“Gen X Investors: The Pressure is On,” the Spectrem Group’s latest white paper, examines the decisions Gen X investors make regarding investments as well as their communication preferences with advisors.
The paper emphasizes, for example, that Gen X investors have moved beyond the exploratory phase of younger investors but are not as settled financially as Baby Boomers. As such, they still have many questions about their financial future and are more demanding of answers, because they feel they are running out of time to get their details finalized.
“Gen X investors are at the stage of their financial and investment history that they need to start seeing results, settling issues and determining outcomes so that they can become more relaxed in their investment outlook,” the paper states.
Data for the white paper was gathered from a series of six surveys fielded during 2018, with an average response of 167 Gen Xers who had a net worth between $100,000 to $25,000,000, not including their primary residence.
As to their investment resources, the paper notes that 55% of assets belonging to Gen X investors are investable assets, and among those, 21% are in professionally managed accounts. Somewhat surprisingly, only 12% of Gen X investor assets are in defined contribution plans, with another 12% comprised by their principal residence, according to the findings.
Gen Xers also appear to have modest investment expectations of their advisor. Spectrem notes that a majority (61%) believe their financial advisor should provide a return of least 2% above the market average and 37% expect at least 3% above market average.
Top Concerns
Gen X investors are not old enough to be worrying about their personal health yet, so they are more likely to be concerned about economic issues that impact both their earning and savings, the report further explains.
When asked about personal concerns, maintaining their current financial position was the top concern at 52%, followed by being able to retire when they want (49%) and maintaining their personal health and that of their spouse, both registering at 48%. By comparison, financing the education of their grandchildren was at the bottom of the pack at 19%.
Gen X investors also have a high level of concern regarding the fund they have for retirement lasting throughout the rest of their lives. When asked how worried they are about depleting their retirement funds too early, on a scale of zero (not worried at all) to 100 (very worried), the average level of concern among Gen Xers was 48.77, compared to 33.90 for all respondents.
As to portfolio decision-making, Gen X investors were the most likely, based on age segmentation, to believe the recommendation of an advisor was responsible for their investment decisions (62.25 on a 100-point scale) and to point to the contributions and advice received from financial commentators (59.04). Interestingly, they also were the least likely to think a company being based in the U.S. mattered. Overall, the performance of the investment and the future potential of investments were the top influencers at 72.87 and 72.19, respectively.
Communication and Social Media
Spectrem also found that 41% of Gen X investors say they would consider changing their advisor if the person did not return phone calls in a timely manner. That was the most popular reason for considering a change, followed by “not providing good ideas or advice” (38%) and “not being proactive in contacting me” (34%), the paper notes. Additionally, 34% said a slow response to e-mails would cause them to consider changing advisors.
Interestingly, communicating by text appears to be outpacing email. According to the findings, 28% of Gen X investors communicate with their advisor via text — a higher percentage than those who communicate via e-mail (20%). Still, 57% of respondents said they don’t communicate using either method.
Asked to place their interest in texting their advisor on a 100-opint scale, Gen X investors on average rated their interest at 49.94, which indicates a “mild interest among most investors,” Spectrem noted.
When asked the same question about being able to video-chat with an advisor, the overall interest level was at 41.87, suggesting that some investors have a relatively strong interest in that platform, the firm further observed.
