Wallowing in Reality
September 2009 — All four major generations — Silent, Boomers, Generation X and Millennials — are slightly less pessimistic about big-picture, money-related concerns like unemployment, the economy, personal spending and investing plans.
The monthly Generational Money Mindset score is 77.8 for September 2008, off about 25% from February 2007 when we first starting tracking the score. The score is up slightly from the first of this year, which was the lowest point in the overall score we’ve seen, at 74.0, indicating a slow climb back up.
But the news this month is the decline in the score of the Young Adult generation — Generation X, those ages 28-44 in 2009. For the first time in over two years, Gen Xers are scoring lower than Boomers, who had been in the worst position. Generation X ranks last, with a score of 73.1.
Gen X Drops Below Boomers
This lower score is driven by three measures. Gen Xers are less confident in the short-term prospects for the economy. They are also more pessimistic about employment. And they are more concerned than Boomers that they are not saving enough for their future.
These young adults, now with spouses and young children, are experiencing their first significant recession since entering the workforce some dozen years ago. The job situation is probably the most troubling, as many Gen Xers, traditionally not loyal to companies, viewed every job as a stepping stone to another, better job. With no job prospects available, we suspect Gen Xers are hunkering down, checking their portfolio balances daily, and worrying about their long-term prospects.
What this means for financial advisors: Now is a good time to make sure you have spoken with your Gen X clients, and understand their personal financial situations and mindset. They may be interested in hearing about specific strategies and products you have that could help them ease their long-term financial worries, from 401(k)s to 529 plans to investigating Roth IRA conversions in 2010.
Keep in mind this generation is independent and self-reliant. Don’t preach, but teach Gen Xers what they need to know to evaluate your recommendations.