Retirement advisors work with many age groups, and they all have different preferences. What works for a baby boomer may not be right for a Gen Zer or a millennial. How can wealth managers advise all of them? Nicole Cope, head of Ally Invest Advisors, has some tips. In a wide-ranging conversation, she talks about the benefits and challenges of working with every generation of Americans and how to help guide each one to a secure retirement.
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Nathan Place (00:09):
Well, hello and welcome to Leaders. I'm Nathan Place, retirement reporter at Financial Planning, and today we're talking about retirement advising across generations from baby boomers to Generation Z. It's a tricky topic because no two generations are exactly alike, but they all need to retire someday. Fortunately, we have an expert with us today. Nicole Cope, senior director of Ally Invest Advisors. Nicole, welcome.
Nicole Cope (00:36):
Thank you, Nathan. Thanks for having me. It is a very interesting topic.
Nathan Place (00:41):
Yeah, absolutely. Yeah. Thanks so much for being with us. So I'll just get us started here. I'll dive right in. I think it's common knowledge that as a financial advisor you should give different advice to different age groups, but it's not just a matter of the advice, it's also how that advice is delivered depending on the generation. So can you tell us a little bit about why it's so important to take a different approach to advising each generation?
Nicole Cope (01:09):
Absolutely. So I think today I'm going to speak in some broad generalities. We'll talk about generational. Each person is independent within that generation. However, with that being said, you're absolutely correct. There's no one size that fits all. When we think about how we approach our clients, especially when we look at the generational differences in planning, it's just something that's forgotten now. And so as we think about all of this, what we're going to come back to, I think Nathan is some core values. So if you look at each generation, there's some core values and I think what you'll see is there's a thread between them all. However, there's some stark differences between them all as well. And so if we start with our baby boomers, some of the core values that they hold dear is really optimism. They're accustomed to change. You'll think about the time and period they grew up in.
(02:04)
They also look for consensus and achievement. So as we move along in this conversation, I want you to reflect back or the audience to reflect back a little bit on that. Then if we move into the Gen X, there's about 65 million of these folks, so they're not as represented as the other generations. However, some of their core values are really around realism, autonomy. You'll often hear from Gen X that they're very independent, they seek flexibility, but on the flip side of that, they also want balance within that flexibility. And then our millennials, there are our largest generation right now. There's about 72 million millennials out there, and they're really about individualism. So self-expression, diversity, open-mindedness, and some community aspects to that as well. And then lastly are Gen Z, and there's about 68 million of them. So while not as large as the baby boomers or the millennials a fair amount, and there are digital natives, so they really value hyperconnectivity, very politically aware, and also they have a very high entrepreneurial spirit. So a side hustle for a Gen Z is nothing that's just very commonplace for that generation. However, if you look at while there's differences in what they value, I think their motivation is very similar. So they all want autonomy, they all want purpose, and they all want mastery as they seek motivation in achieving goals.
Nathan Place (03:48):
Right, right. Yeah, it's interesting how those different core values are different in some ways obviously, but there's also, there are certain themes that seem to come up again and again, sort of autonomy and independence being a big one of 'em. Another difference between these different generations is history. Different things were happening in the country and in the world as these groups were growing up. Can you talk a little bit about the differences there in terms of how that affected these generations' views of finance?
Nicole Cope (04:20):
And so we'll start again. Absolutely. I'm a big proponent of understanding when people's why and a lot of times their why and the way the relationship they have with money is actually developed in those defining years. So one thing that our advisors do is they talk a lot about the client's money story. And so what that really is, what was money thought about in your household when you were young, because it often informs the way you think about money today impacts the way you make decisions. So if we use that as our anchor point for this, some of the defining moments for the baby boomers, Woodstock, right? Woodstock is huge, JFK assassination, moon landing, civil rights. So a lot of upheaval. However, a lot of commonality of we can all come together to achieve something.
(05:16)
And it's funny that is also represented in some of those core values around achievement and community. So those defining moments really impacted this optimism when they think about finances. There's a lot of optimism associated with how baby boomers typically think about finances. However, if we move to the Gen X, they're a little bit different. So they were really the first latch key generation or generation where divorce became very prominent for them in their formative years. Inflation was also big. So early eighties, think of oil embargo inflation, and that really impacted some of their beliefs around stability of the financial markets. They saw their parents suffering through some of that inflation. They remember those things. So as they think and approach the financial markets, it's with a little bit of healthy skepticism. Then when we move into our millennials, they came of age during the first Iraq war.
(06:27)
They were also the first generation to experience school shootings. Nine 11 happened to them during their formative years as well as the rise of technology. So when they think of that, they take that into the way they think about their finances while they're skeptical, like the Gen Xers, what they're faced with now is though debt. So they have a lot of debt that they're worrying about and it impacts, and they saw it with their parents. They saw 2008 and they may have seen layoffs with their parents and people struggling with the mortgages, et cetera. So they take a lot of those kind of debt concerns into the relationships with financial planning. And then our last generation, gen Z, these folks, they're defining moments. They're a lot more recent. So a lot of us might remember them and think about the impact they may have had.
(07:25)
So recession they came through 2008, they're also our first generation and we'll get why this is interesting here in a moment. That really took climate activism to heart. And so that might be something that would never be a conversation that typically would happen between a client and an advisor, which may come into the conversation now with advisors. They also were here during the first African-American president. So diversity is really important to them. And when they come into financial conversations, they seek diversity, they seek values based investing. And so those were definitely defining moments. Those defining moments also really impact how an advisor can engage successfully with those generations. And so for our baby boomers showing an appreciation for all the energy and hard work that they put into building their nest egg and building their financial future because a very long way with that client base, our Gen Xers for those folks, the suspicion is there. So if it's an advisor, you find yourself using jargon that is going to raise their red flag. So we need to engage them in a jarred way. We also have to allow them flexibility. Remember this is the generation that likes autonomy, and so if we provide them a rigid script to follow or plan to follow, they're going to push back a little bit on that. So you have to allow them a little bit of that flexibility.
(09:12)
Our millennials, because of where they are right now in their life too, you really as an advisor need to be clear of what you're requesting. They have a lot of pools on their time. They're probably starting families. They're in the oldest millennials, 40 or 41 now. So they're the high earnings peak of their career. So you have to be very clear at what you're requesting. Time is very critical for them. And any goal you're providing this generation, break it down into bite-sized chunks. So by that I mean what could they do in the next 90 days? So break down their goals and their asks in very small increments. And then our Gen Zs. Now this is something where I think some advisors will lean in engaging them and others are going to be like, I don't know, I don't know about this. Really appreciate for the Gen Zs to engage them and get them involved in the process.
(10:13)
You have to appreciate the importance that they place on wellbeing. So when you're providing advice for this generation, mental health conversations are norm. So they're very much about wellbeing. So as we're providing advice, as we're helping them set their goals, you're really going to have to less refocus on the dollar amount needed to get there and more about what is going to happen in their life and how's it going to impact them in a positive way. So different ways to engage them. However, all very important. And I think for any of them, there's commonality amongst them. It's finding the why, it's appreciating what went on in their formative years and how it may impact the way they think about money today. And then showing just different ways. I think this is a unique time in our history for advisors where they can have four generations in their practice and that's very unique. So they're going to have to shift and almost act as a chameleon for each to handle each one of these generations.
Nathan Place (11:20):
Yeah, yeah, absolutely. And the events you described are so different from each other going from the sixties to today. It's no wonder that these different age groups have different points of view. Great. And then another thing that separates them is technology. Obviously different generations are comfortable with different modes of communication, different sources of information about finance, as we talked about a little bit in our prep call, and this has an effect on what methods will work best for advising them. Can you talk about that a little bit?
Nicole Cope (11:55):
Yeah, so I think it's all about advisors getting a better understanding of where people are getting their information from. And so technology. And one great thing, Nathan, that I think as you and I sit here in two different parts of the country, having a conversation live to many people around the country. Yeah, good example. Covid really put a change the way we interact. I think everybody is now comfortable having a lot of more virtual engagements with each other. So I think that's one great thing that happened across all generations. People became much more comfortable using technology as a way to communicate, to collaborate, et cetera. However, where I want to take a step back from that is building the trust. So different ways that we can build trust as well as where we, understanding where we get our information, I think is going to vary for each generation.
(12:52)
So while Zoom is, or whatever application you're using in your practice, is the commonality amongst all baby boomers still kind of like that in person. So if an advisor has the ability and the flexibility to occasionally meet in person, the baby boom generation will, I think really appreciate that. They're also very much, they get their information from traditional sources. So the baby boomers will be the ones that will probably read any newsletter that an advisor sends out. They're going to get some of their information on Facebook, which is something I think advisors have to be aware of and we'll talk, I think about some of those ramifications. This generation will also be probably the first ones to raise their hand for any kind of educational type seminar that an advisor may have. Then if we move into our gen actors, the importance of being flexible with this generation is really important.
(13:55)
So they want the option, do I meet in person? Do I meet online? They probably will respond better to an email than a phone call. They also want to know that there's tools available to them through the advisor that they can use and interact with on their own, and then reach out to the advisor for support or validation of those responses. And they tend to get millennials, they're interesting, right? Or I'm sorry, the Gen Xers, they're interesting because they're kind of caught between two huge generations. So you'll see them kind of flex in and out of how they want to get that information. So they may go to social media, but they also may traditional ways that advisors typically communicated with their clients. Then if we move to our millennials, these folks, because they are very digitally savvy, they're very much time pressed at where they are in their life, they really want sophisticated tools. So they want to be able to play with what ifs or understand the impact of a decision on their long-term success. So they'll want sophisticated tools from their advisors. They also want to be able to track their progress over time. So any technology that an advisor can provide that will allow that generation to do that, it will be greatly appreciated. This is the first generation though, with our millennials where advisors might get a little uncomfortable with where they're getting their information.
Nathan Place (15:32):
Right, right. Yeah, tell us about that.
Nicole Cope (15:34):
Yeah, sorry.
Nathan Place (15:37):
Oh no, I was just saying tell us about that. This is an interesting topic.
Nicole Cope (15:41):
So this is the first generation that's going go to predominantly digital and not necessarily mainstream places to get that information. You will see with both the Gen Z and the Gen X, a lot of following of what's called a fin influencer. So financial influencer if you will. And while that is great for educational purposes, I think advisors need to be aware of some influencers and some Gen Z and Gen X folks maybe getting financial advice from somebody that knows nothing about their unique situation and they may want to take this blanket approach to advice. So for advisors, I think it's really interesting that I always encourage advisors to follow some of these influencers, ask their clients, where are you getting your information from? Where do you get education, financial education, aside from me being your advisor? And write down those influences that they're following because you could bring them back into conversation around what was it that you liked and what was it that you might want to think about differently based upon that client's unique situation. So I feel for advisors today, because they have to keep up with all of these places where people are getting information from and we through more so now than ever what is meaningful, correct, precise, good information to give and what do they need to dispel?
Nathan Place (17:24):
Right? So just to elaborate on that a little bit, how do you counteract bad information? If some Gen Z client, for example, or maybe not necessarily Gen Z, I don't want to stereotype Gen Z or millennial or whoever gets a stock tip from some influencer on TikTok or something like that and they're really excited about it and this is what they want to put all their money into, how do you talk them out of that?
Nicole Cope (17:50):
Yeah, so I think this is where those sophisticated tools come into practice. Anytime you can model the impact of what happens, if that goes to doubles, great, let's take a look at it. But on the flip side of that, what happens if that crashes and those tools like giving those generations, the opportunity to model that out is one great way to do it. If you don't have those tools in your practice, everyone has a very robust technology suite available to their clients. There's a thing called a pre-mortem. So you may have heard of the term post-mortem, like how to look at something after fact and dissect it. A pre-mortem is just the inverse of that. So it's sitting down with them and saying, okay, let's map out best case scenario for this and what needs to happen for that to occur and what's the positive impact? Alright, now let's map out worst case scenario for that, what is going to occur and the impact that that's going to have. So it's another way to have that conversation without having the sophisticated tools to support it.
Nathan Place (18:59):
Right, right. Yeah, I think that's a great idea. I like that the pre-mortem. Okay, and let's talk about biases, and by that I don't mean conservative or liberal or something like that, but emotional biases, psychological biases. What are some of the biases that you've encountered with different generations of clients?
Nicole Cope (19:22):
This is where as an armchair psychologist, this is where I find very interesting around how clients behave. In fact, there's been a lot of great academic research on this. One thing I'm going to reference, and for our advisors that are listening to this, I encourage you to go out, Oli in 2019 did a study called the BFI Barometer, and what they looked at is what are some of those common financial biases that impact each generation? And so I think for today, while it's an amazing study, encourage iterate it. For today, I think what we can do should do is maybe focus on what are one or two of the top biases for each generation, and then talk a little bit about what it is one, but two, how it may come up in your conversations with your clients. And then I think it's always important to have the facts, but then also have a plan. So if you encounter it as an advisor, how do you overcome it or work around it or work through it?
(20:33)
We will take it from the top again, as we have been. So our baby boomers, there's three, we'll focus on one. The three biases that you'll see common in this generation is anchoring loss aversion and overconfidence. And so I think for today, anchoring is a real big one. And so what anchoring really is it's the tendency to really focus on a specific reference point when making an investment decision. And so this will sound like Nathan, that stock at 45, I'm not going to sell it until it's 55 and the thing sitting at 20. So that's anchoring. They're anchoring themselves usually on a price or a concept, and that's the reference point which they make all their decisions around
Nathan Place (21:25):
And they get a little bit overly fixated on that one point.
Nicole Cope (21:30):
Exactly, exactly. So you'll hear that. You'll hear it come up in your practices. And so this is an interesting one. You have to break the anchor, but as I say, all of this advisors can actually use this to their benefit as well. So if you realize that that generation is going to sit and fixate on a specific reference point, plant the reference point as an advisor. So set the anchor yourself. However, if it's a negative anchoring experience that you're faced with as an advisor, one thing is really to help them level set on the future. So instead of taking an arbitrary point in time, help them refocus this on future. So say for that example, the stock that they bought at 45, they'll only sell it at 55 and it's sitting at 20. A great way to kind of do this is say, okay, well let's look at an arbitrary benchmark for that. If you needed today, if you had the option today to buy that stuff at 45 again, would you, and probably they're going to say no, right? And so that's going to help them break that anchoring. And so now you as an advisor can set the new reference point. So it's really about coming back to a client and talking about if you had to make the same decision today, what would it be? And that will help break the anchoring.
(23:02)
So then as we move on to our Gen Xers here, recency bias is big for them. Also, mental accounting and confirmation bias. So what I want to focus in on today is that recency bias, and this is a big one as a proud Gen Xer here, I find myself also suffering from this. I've been in the industry forever, and I talk to my own advisor and I find myself doing this. So I'm going to say, even if we're educated to it and we understand it's happening, we all fall victim to something. And so I speak from authority on recency bias. And so what that is, it's really the tendency to be over influenced by a recent event news or experience. And so I'm going to ask our audience here to just think about it. If you're in an office environment right now, and I were to walk into your waiting room or your foer, what am I going to be faced with? And for a lot of advisors, it's a television, and for a lot of advisors, it's a television with some sort of business channel on. So as a Gen Xer, whatever you wanted to talk about in that meeting is now going to be overridden by the last thing that I had seen on that financial program.
(24:37)
And it's going to derail any kind of agenda or healthy conversation that might've happened. So if you're sitting there and you're like, yep, I have a television, and yes, I have a tuned to a business channel,
Nathan Place (24:53):
CNBC or whatever, yeah,
Nicole Cope (24:55):
Yeah. Fox Business, CNBC, Bloomberg, there's hundreds of them. I would encourage you to go and change it. And there's two areas where this recency bias can help an advisor now go change it to an aspirational channel. And by that I mean if you have travel channel, if you have HGTV, because now people are going to see these things and that's going to be their anchor, and that's a goal that they may want to attain. They may want to come in now and say, Hey, I know in our plan we thought about home renovations. I'd like for that to occur Sooner or later, it sets it a little bit differently. So any of those aspirational channels, or if you find that you have a practice with a lot of individuals that are anxious about, I would never have news on, never do the news, never do a business channel. You may want to put the Hallmark channel or something that's really kind of drippy and sappy as well. It's going to get people in just a good spot for your meetings.
Nathan Place (25:59):
Right? Right. Yeah, I love that tip. So practical. Anybody can do that at their office. Just change the channel on the tv because then once somebody is watching something about travel or something like that, they're taking more long term, what kind of vacations am I going to want to take in my retirement? Instead of just thinking about this short term thing of like, oh, this stock is down, or I dunno, bad things are happening in the economy or whatever. Okay, I have more questions. Everything
Nicole Cope (26:29):
That's out of our control,
Nathan Place (26:31):
Right? Yeah, yeah. Scary things that are out of our control, things in the news, get their mind off of that. I have more questions of my own coming up, but I want to switch for a moment to somebody in the audience who has a question. This is a two-parter, and this is Matt Park, and he asks, did you say millennials or Gen Z want to be heavily involved using digital tools? So we'll start with that.
Nicole Cope (26:56):
Yeah. Yeah. So it's both of those generations really like the tools. I will say there is a little bit of a difference of how they want to digest or synthesize the information. So millennials are going to want a little bit more sophisticated tool that's going to show them outcome. So they will sit and play with the tool for a little bit longer. They will include open the conversation to the family, gen Z, while they want tools, they want everything. So just, I hate using the reference of TikTok, but that generation gets a lot of their information in a minute 35. That's as long as you have on a TikTok to get your point across. So while they want tools, they want it in a really snackable bite-sized way to consume the information.
Nathan Place (27:51):
Right. Very short bursts of information. And then the part two of this question is since Gen Z is pretty far from retiring, do you think they are less involved because of that and will that change over time?
Nicole Cope (28:06):
Yeah, I think that's the million dollar question from less involved. I would say no. And there's been some interesting research done on that generation around their savings habits, and they actually, and we could send the stats out for this, but they actually save on aggregate about 20% of their income. So they're big savers. And I think that goes, advisors can capitalize on that, capitalize on it. They also, there's the common phrase of I'm not working to retire with this group. I'm working to live. And so there's a little bit of a disconnect if they're saying that, but they're saving so much. So this is where that why becomes really important. Why are they saving so much if they never think they're going to retire?
(28:58)
And so that, as I think through will they change likely there'll be some changes for everyone as our circumstances change, as our lives evolve, as our situation become more complex, there is some changing there. However, I still think that core value will remain. What I find interesting, and I know Nathan, you and I had a conversation about this, is who will they look like as they reach a little bit more that financial maturity? And this is just one woman making a bet on this, but I'll be curious to see if they respond. The silent generation,
Nathan Place (29:43):
Right, right. Yeah. I thought that was a really good point you made last time. Can you explain that a little bit?
Nicole Cope (29:47):
Yeah. So if you think about the silent generation, so they're the generation that predated the baby boomers. So these were our World War II vets, these were our Great Depression folks. There's some commonality in what influenced them in their formative years. So the Great Depression, this whole concept of scarcity of resources. I laugh at my grandmother who uses the cotton out of every medicine bottle to use for nail polish remover. That's her scarcity thing. She does it. She reuses, she cleans out Ziploc bags. I also have a nephew who's in Gen Z who will never use a Ziploc bag without reusing it, reusing it. He doesn't believe in this concept of single plastic waste. So as I watch these two generations, there is some commonality about them where for the silent generation, it was scarcity. They were great savers for Gen Z, it's less about scarcity and more about environmental. I want to make sure I have a great planet to retire too. So that scarcity is a little bit different. It's a scarcity of resource. And so it'll be interesting to see if they actually mirror each other as the Gen Z progresses in their financial journey.
Nathan Place (31:11):
Yeah, yeah, absolutely. And not only is there the looming climate crisis, but there's also, there have been a number of unquote once in a lifetime recessions during Gen Z's formative years, there was the great recession and kind of sluggish recovery from that. More recently there was the short but very intense pandemic recession. So they've gone through some similar things, not exactly the same, but they've gone through some economic crises that I think the silent generation could relate to. But then they also have certain advantages. And I want to shift into that a little bit, the different advantages that different generations have. So Gen Z, as you mentioned, has some great savings habits. Can you explain a little bit what's behind that and what's causing that?
Nicole Cope (32:01):
Yeah, and I think this goes back to their entrepreneurial spirit of that group. They are they hard workers, the fact that they have side hustles on top of their regular job, they really want to control their destinies. And so that is where I believe a lot of this high savings, they also have heard it. So they've heard it from their baby boomer parents, their Gen X parents, some of the later millennial parents, they heard this kind of concept of start early. You can't depend on anything, start early, start early, start early. So it's great that they're actually taking that advice and they are starting early and they are saving, and it'll be great in 15, 20, 30 years for planners to be able to be like, Hey, you started at 22, you can't retire at 55. Right? It's going to be such a unique environment for advisors.
Nathan Place (32:58):
But there's also the other factor, which has less to do with Gen Zs themselves and more to do with their retirement plans. 4 0 1 Ks have been changing and evolving over the years and have some new features that really give them a leg up on other generations when it comes to saving. Can you talk a little bit about that?
Nicole Cope (33:18):
Yeah. So anytime we can automate as human beings, it's a great thing. So auto enrolling for this generation and for the millennials too. Auto enrollments have become very big in the workplace in corporate America. Auto escalation of that savings rate is also a great tool that has been used. I would always say to advisors too, how can you bring some of that into your own everyday practice? And so those generations really will do benefit from any kind of reoccurring deposit that you could set up because it's already embedded in them to do that in the workplace. So anything that advisors can do to help that automation will be very beneficial for I think all generations, but especially for our millennials in our Gen Zs.
Nathan Place (34:11):
Right, right. Absolutely. Okay. And then what about the other generations? What are some special advantages that they have when it comes to retirement savings?
Nicole Cope (34:22):
So I would say our baby boomers have really benefited from two things, right? Pensions. Some of them still have not a large percentage as it once was, but a healthy amount of our baby boomers still have some sort of pension income to fall back on. Secondarily, they went through two amazing bull markets during their accumulation stages. They went through the earlier bull market and they just went through the longest bull market in history that we just came off of. So during those accumulation phases, they benefited greatly from that. And then our Gen Xers, while I think that every generation has some advantages, they're probably the ones I could think that they have a little bit more of a disadvantage. The Zs have time on their side, really healthy savings habits, millennials, they still have all the human capital in front of them. They still are just starting to earn hit their peak earning years. Not to say they don't have a lot of difficulties because they do like housing market, housing crisis have been terrible for them. Student debt has been terrible for them. So they do definitely have some polls on their financial lives. Gen X is interesting because they saw their parents with pensions. They probably didn't start saving early because they just assumed when they entered the workforce, it was at that transition of pension to more of a 401k, 4 0 3 B self-funding of retirements
Nathan Place (36:04):
Right around the 1980s.
Nicole Cope (36:06):
It didn't save as much. Yeah, their nest eggs just aren't there. However, I am an eternal optimist, Nathan. So I will say they do benefit from hopefully some of the transfer of wealth from the baby boomer generation. We really will see it. It's, it's an interesting place for Gen X. They, they're a sandwich generation, and by that I mean they may be caring for financially, physically, mentally, for their parents as well as for adult children. So I think as an advisor that you really need to kind of approach those conversations with a lot of empathy because as I've said to many peers as well as friends and clients, you can take a loan out for your kids' education, but you can't take a loan out for your own retirement. So take care of yourself first. It's noble to want to pay for your kids' education, but take care of you. But those conversations
Nathan Place (37:14):
Put own oxygen mask. Yeah, the old metaphor put on your own oxygen mask before you put on your child's. Exactly. But yeah, I think that's a really good point. It's interesting to me, maybe we could think of some worse words than interesting, but just how generation X is caught in the middle of so many transitions from pensions to 4 0 1 ks, from all of the media attention that went to the baby boomers and then went to the millennials and kind of skipped over Gen X. And then also as the standard generation, they're caught between their parents and their children. So they're stuck in the middle in so many different ways. Exactly. Okay. Let's see. Have we covered all the generations? How are we doing? We're talking about the advantages that each generation has. We talked about the boomers, talked about Gen X. Did you want to elaborate a little bit more on millennials and Gen Z?
Nicole Cope (38:07):
Yeah, so definitely we kind of discussed a little bit about the auto enrollments have really helped the advantages there. I would say from the disadvantage side of Gen Z and millennials, millennials have really, I would say that the younger millennials, they're really having a difficult time. The concept of the American dream of you buy a house, you get married, you buy a house, you have kids, is not easy for them right now. So I think there's that disadvantage. However, they're also one of the most highly educated generation we've had, so their earning potential is higher to become the highest educated generation that we've had. They took on a lot of debt. So there's just a lot of pull for our millennial counterparts, and I think advisors need to be aware of that. That's something that in the past advisors, you may have focused more on the investment side of it. I think for our millennials and our Gen Zs, we really need to start focusing on more of that full financial health picture. So financial literacy, budgeting, debt consolidation, how to ask for a job, how to ask for a raise, how to negotiate a better salary. Those are types of conversations that typically don't, a lot of advisors don't want to enter into or haven't needed to in the past that would really benefit those two generations. And the advisors would really set themselves with value if they could have those types of conversations.
Nathan Place (39:51):
Right. Yeah, I've talked to a number of sources about this where it's not always just about the portfolio. If you can help with budgeting or with forming good savings habits, things like that, that can add a lot of value too. Exactly. Okay, and I think we've covered this a little bit already, but if there's anything left to fill in, what are some of the disadvantages that different generations face when it comes to
Nicole Cope (40:16):
Retirement? So we talked about the X at great length. The other disadvantage really for the baby boomer generation is now they're struggling with like, okay, how do I transfer this wealth that is a concern of theirs? How do we do it in an efficient, effective way? The other concern that you hear more and more from the baby boomers is longevity risk. And so is every advancement in healthcare and in science and technology is really pushing the longevity risk out for those individuals. Sadly, portfolio returns may not have kept up with healthcare inflation. So as our boomers age, and I think it was a stat I heard in the next decade, all the boomers will be of retirement age, which is just think of the, it's mind boggling to think of that in people, but as the healthcare costs increase for this generation, it's going to be something that I think advisors, while they plan, and a lot of advisors include healthcare in planning, I think it's going to be a very just important conversation because the rising cost of healthcare can really destroy a well thought out plan or a well formulated financial plan.
(41:39)
So that's something that we need to be aware of for that generation. And then they're also very independent. So while the Gen Xers are feeling the weight of having to care for them, they're caring for them in their homes because a lot of them don't want to have to go into any type of care. And so there's that kind of push pull too on finances for that generation, but then also to plan for advanced healthcare kind of directives for the boomers. And then for our disadvantages, we talked a little bit about the millennials and just the pool on debt for them, debt management is extremely hard. A lot of millennials, and you'll hear it from Gen Z too, is that they don't even really want to buy houses. They just have seen 2008, they saw the mortgage crisis during those formative years. Now they're seeing housing prices elevate to points where they can't afford them.
(42:40)
Couple that with the interest rates currently, they feel like they're just priced out and they're also thinking, do I really need this asset? Or I saw my parents, or I saw, I know somebody who might've lost their home during the mortgage crisis, and do I really want to take on that risk? So they may be okay renting. And for most advisors, they're like, oh, wait a minute, the house is a big part of your nest egg and a big part of your network. So it's a different way to kind of think through and how we'll have to engage those behaviors around really not wanting real estate, not appreciating it, not feeling the need for it. It's really hard. And then Gen Z, the resilience of Gen Z is yet to be seen. However, based upon what they had to go through in their formative years with Covid, with the recession, I think it's going to be a very resilient group. And who knows, maybe they won't do that whole, I work to live, I work to live, I don't work to retire, kind of thing. May change, but their resiliency is something that I think is going to be very beneficial for them as they age.
Nathan Place (43:54):
Right? Yeah. Yeah, absolutely. That's something that a number of my sources have talked about, and Lester, if you're familiar with her, was telling me they're going to have a lot of money someday. They've already got these good savings habits, these automatic features in their 4 0 1 Ks. They're ahead of the game in a lot of ways. They're already saving at higher rates at people their age in previous decades. So it'll be very interesting to see how their financial future turns out. Alright, we've got one last question, and this is a nice and easy one. Do you have any of this information in written form? I'm a Gen Xer. I would like to share this information with our team. That question comes from Timothy Bollinger, and yes, this will be in written form very soon. This is going to be the cover story of our March issue at financial planning. And it will also be online around that same time. So head to financial planning.com to check this out. And also if you have a subscription to financial planning, you can catch it there. So I think we're just about out of time. Nicole, was there anything else you wanted to add before we say goodbye?
Nicole Cope (45:06):
I would say as an advisor, just go into this with curiosity. We talked in very high generalities about these different generations, but a dose of curiosity and empathy goes a very long way for any kind of interaction.
Nathan Place (45:21):
Great, great, great. Well, I think that's an excellent note to end on. Thank you so much, Nicole, for being with us. We really appreciate your time and your insights. And thank you everybody out there who's listening. Thanks for tuning in and for your questions. And yeah, we appreciate your participation. Thanks so much. Have a great day.
Nicole Cope (45:41):
Thank you.
