e-Tips

New additions:

I am happy to announce that I am adding a new generational voice to some of my e-Tips and blog posts. I have brought on Tricia Lendore, a recent Cornell graduate, as an intern to comment from the GenY/Millennial perspective. Tricia is planning to start law school in 2010.

A new MetLife survey says the severe economic downturn has revised the retirement mindset for all generations and indicates their current attitudes regarding money. Better late than never all generations regret their financial behavior pre-crisis. Amassing too much credit card or other debt was most prevalent among Gen Xers (54%); and Boomers more than others (22% to 17% for all Americans) regret insufficient diversification of assets.

Older Boomers (over age 55) are the most pessimistic about their own financial recovery, probably because they have less time to make up for recent losses. 38% of younger Boomers believe their personal financial recovery will take at least 10 years.

Gen Yers expect the economic recovery to come sooner than other generations do. 29% expect the economic recovery for the country to come in less than 2 years according to the survey, while many more (49%) expect the recovery to come for themselves within that time frame.

From her observations and informal research, Gen Yer Tricia Lendore writes that “The likelihood that one, or three, employers will provide Millennials/Gen Yers with a 401(k) plan motivates them to take charge of preparing for their retirement. Unlike their predecessors, many are now saving for their nest eggs. Witnessing the uncertain economic times groomed Generation-Y to plan for retirement. Paranoid, Millennials are not. The Social Security Administration raised the qualifying age for Social Security to 67 years old. With the normal retirement age likely to increase in the future, Millennials are taking control of not only their jobs, but their retirements too. Since time flies for this generation, they are very forward thinking.” I add that this is both an idealistic and a pragmatic generation. We see signals of both.

The attitudes revealed in the MetLife survey haven't translated into much action so far. 44% haven't done anything yet to change their retirement/investment behavior, probably owing to both inertia and confusion. The data indicates that 54% of Gen Yers haven't made any changes, and 45% said the financial crisis had little or no impact on them.

Is this undue optimism on the part of Gen Y, since job loss is high, along with salary cut-backs, and not showing signs of turning around soon? Or is it not knowing better, or the influence of an upbringing which told them they would be successful whatever the situation?

In the workplace, will the behavior and attitudes about money found in the survey mean an increasing divergence in opinion on how a business should make its investments in technology, training, risk management, etc.? Protective strategies vs. future investment at higher risk aiming at higher gains?

Will these differences in generational attitudes make it more difficult to achieve smooth transitions of practices and clients from one generation to another? Individuals, according to the study, are increasingly realizing they need and are turning to financial advisers. Will firms turn to advisers to help achieve more harmonious, win-win transitioning that will benefit the firm overall, those who are leaving, and those who continue on?

What do you think? Please share your thoughts.

Phyllis

© Phyllis Weiss Haserot, 2010. All rights reserved. 

* The generational chronology for easy reference: Generations are defined by the similar formative influences – social, cultural, political, economic – that existed as the individuals of particular birth cohorts were growing up. Given that premise, the age breakdowns for each of the four generations currently in the workplace are approximately:
Traditionalists: born 1925-1942
Baby Boomers: born 1943-1962
Generation X: born 1963-1978
Generation Y/Millennials: born 1979-1998

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