How to adapt advice to the differing needs of Gen X

They’re at the peak of their earning powers and older Gen Xers are nearing retirement.

It’s a time when the so-called ‘sandwich generation’ (aged between 43 and 58), which sits between the huge numbers of Baby Boomers and Millennials, needs to be accumulating wealth and planning for life after work.

The Ipsos Global Inflation Monitor finds just a third of Gen Xers in 29 countries are living comfortably. In Australia, they have the highest credit card debt compared with other age groups, and their super balances may not be healthy enough to fund an estimated 20 years of retirement – 38% aren’t confident they have enough money to retire.

Gen Xers are cautious, according to McCrindle Research, navigating a middle ground between risk and security. More than three-in-five Gen Xers (61%) prefer a conservative approach, prioritising steady progress while also being prepared to take calculated risks (39%) for great rewards. They’re also pragmatic and flexible and they arent as interested in leaving a legacy as other generations.

Despite the pressing need for a guiding hand with their finances - 83% of Gen Xers agree they could benefit from professional advice - as many as one-in-three are unlikely to consider it, according to a Findex study.

Cost, value and procrastination are the primary drivers, the research found.

Coaching for retirement

Meanwhile, almost half of those who have sought financial advice are looking for peace of mind they will have enough to retire comfortably. About a quarter of Gen Xers who seek advice have been motivated by friends or family, or have been offered advice through their work.

Jenny Brown, CEO and Founder of JBS Financial Strategists says that apart from financial advice, advisers have an important role in coaching their clients about life after work.

“It takes a real mind shift. With work no longer the focus, they need to think about what they want to achieve in the retirement phase. It can be really hard,” she says.

“Using up long service leave or annual leave by, for example, being paid for five days and working three or four, can be a good segue into retirement. But we need to help them find a purpose. You can't play golf five days a week. So, what else are you going to do?”

Beyond investment management

For those at the younger end of the range, Brown favours “smashing out the rest of the mortgage”.

“They’re almost free of school fees and they’re looking for other ways of creating wealth,” she says.

Her advice is “boring is good, it works”.

“Extra super contributions and quality assets are the tried and tested method. Yes, if they’ve got excess cash, they could potentially put together a gearing portfolio. But if they’ve still got a mortgage, don’t.”

And for those who have paid out the mortgage, Brown’s team advises investing the value of their mortgage repayments in additional super contributions or a share portfolio.

Brown notes that, since the COVID-19 lockdowns, clients are more concerned about enjoying life before retirement too. “We do a lot of planning to show clients options that help them to accumulate wealth for retirement as well as achieve the lifestyle they want now,” she says.

Steve Crawford of Experience Wealth agrees that advisers need to look beyond investment management for Gen Xers who want help defining their goals for living now and in retirement.

“We can’t just recycle our existing financial planning offers that have worked for their parents, being the Baby Boomers and the retirees. We can't just rehash that and expect that it's going to work for younger generations,” he says.

So, taking the time to understand Gen Xers’ needs and wants, and acknowledging that they may be different is a good start.