It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
By Cyril Tuohy
Ameriprise Financial advisor Michelle Young has a few words of advice for other advisors looking to serve Generation X women: Keep it simple.
The more advisors throw at their clients in terms of financial planning or investments, the more they risk turning off Gen X women — many of whom have careers, family and enough extracurricular duties to make your head spin.
“Make it simple for them, tell them they don’t even have to bring anything,” Young said in an interview with InsuranceNewsNet.
By virtue of their age group, Gen X women, born between the mid-1960s and the late 1970s, face hurdles and challenges that other generations have either experienced and dealt with, or have yet to face.
A recent Amerprise survey of women and finances found that 42 percent of women ages 35 to 54 have seen “a significant decrease in assets” in the last five years as these women have experienced divorce and unemployment, or have come under pressure from financial obligations like funding a college education or caring for parents.
That compares with 29 percent of older women who experienced a decrease in assets in the last five years, and only 24 percent for younger women who faced the same predicament, the Women and Financial Power study found.
Advisors, Young said, need to make sure they are flexible with Gen X women. Many have tried to work with advisors before, and many others are doing basic planning from contributing to their employer-sponsored 401(k) to taking out insurance.
As a result, Gen X women have experience with advisors and are familiar with how advisors work and what advisors are looking to accomplish.
“But they have not tackled long-term goals,” said Young, who is based in Edina, Minn. That means many Gen X women clients haven’t put enough aside for their children to attend college, or to retire at age 65, “even though they want to.”
There’s more good news with regard to Gen X women in that many are familiar with some of the tools and strategies to help them, and many are willing to take control of their finances to a greater degree than women of the baby boom generation, she said.
When clients come for help, Young added, many have contributed to employer-sponsored 401(k)s, have started a 529 college savings plan and have set aside some cash reserves.
“They are lacking in budgeting, they don’t know where the money goes or they’re too busy to have a conversation with their spouse,” Young said. That’s where advisors can have an immediate impact on Gen X women.
Some clients make “very good money, but budgeting is the least of their priorities,” so it’s important to set aside enough in savings first and then start to build a plan to track where the funds are going, Young said.
The survey, conducted online by Artemis Strategy Group on behalf of Ameriprise from March 6 to 24, queried 2,010 U.S. women ages 25 to 70. Of the 2,010 women polled, 802 belonged to Generation X, or were between the ages of 35 and 54. This group had a median of $129,300 in investable assets.
For all the activities with which Gen X women are involved, this generation of women is the least likely to take financial action – whatever it may be – compared to older and younger women, the survey also found.
Nearly two-thirds of Gen X women said they were afraid they weren’t saving enough for future financial needs, 30 percent don’t feel in control of their finances and 41 percent don’t have a financial plan, the survey found.
That’s partly why Young, a certified financial planner, recommends that advisors keep things simple for Gen X women.
The more complicated aspects of investing and financial planning can come later, when Gen X women have more time, their children on their own and some areas of Gen X mothers’ lives can be lived on cruise control.
Hectic lives affect people in different ways, Young said, and many of her Gen X women clients would rather hire a professional to help them plan. Clients know goals get accomplished when professionals are involved.
Some clients find discussing money very difficult and have a hard time confiding in advisors. For others, it’s just another business-oriented transaction. “It depends on the person and what they’ve been through,” she said.
Financial issues surrounding divorce remain among the most painful to talk about for some clients, Young said.
A regret of many of her Gen X women clients is that they got started too late with savings and financial planning. “If they've waited until later, they regret not doing enough earlier or looking at the financial picture earlier,” Young said. “There are so many missed opportunities, and they know that and they feel responsible for it.”
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
© Entire contents copyright 2014 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.