Generation X - Is there a generational gap in banking?

Posted on March 30, 2018 at 1:00 PM by Stephanie Butler

As discussed in my previous blog, the question of a generation gap in banking is a bit nebulous.  Depending on who you ask the answers can vary.  One thing is clear, no generation is all branch or all digital.  There is always a blend of services used and preferred methods for obtaining information.

In my last blog, we looked at the Baby Boom generation and its banking needs and desires.  This time, I want to look into the most amazing generation - GENERATION X.  The generation that gave us 80’s music, great clothing, and memorable hairstyles.  (Who could forget the Flock of Seagulls haircut?)

(Yes, you have probably guessed, I am a Gen Xer.  I still listen to Billy Idol and Adam Ant, but I have let the clothing styles and haircuts go!)  I love these quotes from the August 2017 issue of Vanity Fair in an article titled Why Generation X Might be Our Last, Best Hope,

“Caught between vast, self-regarding waves of boomers and millennials, Generation X is steeped in irony, detachment and a sense of dread.”

“We are the last Americans to have the old-time childhood.  It was coherent, hands-on, dirty and fun.”

Generation X is unique.  We are not Baby Boomers or Millennials, but we have traits of both.  Some interesting Generation X facts include:

  • Born between 1965-1980 and sometimes is referred to as the “lost” generation
  • First generation of latchkey kids
  • More conservative than Millennials and less partisan than Baby Boomers
  • There are only 49 million Gen Xers, which means there are 82% more Millennials than Gen Xers (mx.com)
  • Very influenced by childhood divorce of parents (William Morrow from his book Generations)
  • Highly educated with 43% graduating from college
  • Only 41% of the generation is loyal to their primary financial institution

We are a generation of skeptics that tends to ask, “What’s in it for me?”  We tend to be quickly forgotten by the media, who focus on Baby Boomers and/or Millennials.  But make no mistake; we are separate, distinct generation with unique banking needs and wants. 

Over the past several years, Generation X has been hit hard economically.  Per the City Journal in their article entitled Zero Hour for Generation X, “Their salaries have stagnated over the last nine years, along with GDP growth.  The underwater mortgages are largely theirs.  The ever-heavier costs of college education is all on their shoulders.  Social security, if it isn’t somehow fixed, is going to disintegrate just as they are getting ready to retire.” So while well educated and highly paid, Generation X has fallen behind in many financial areas.  This is where the financial industry can help.

Generation X has a median family income of $71,000 versus $63,100 for their parents at the same age.  Yet a 2015 study by JP Morgan Asset Management found that members of Gen X have fallen well behind  Baby Boomers when it comes to saving for retirement.  Nearly two out of 10 say that they are not saving or investing anything. (USA Today, Retirement Crisis by Adam Shell.) Gen X is the first 401k generation (no company pensions) and, as noted earlier, was significantly impacted by the 2008 financial crisis. 

Financial institutions can gain Generation X loyalty by guiding, training and assisting with financial planning.  Whether these are online tools with self-directed investing decisions, one on one conversations or annual portfolio reviews, Gen X needs help with managing finances for both short and long term goals.

Generation X also has substantial amounts of debt and is the generation most likely to be underwater on their mortgages.  Financial institutions can help by offering home refinances.  Another option is to help the Gen Xer prioritize debt to allow for quicker payoff or assist with budgeting through online tools and training videos. 

While discussions about budgeting, refinancing, stagnate wages, etc. are downers, there are also very positive areas for financial institutions to focus on and assist the Gen X demographic.  “Gen X have a heart for entrepreneurship,’” said David Melnyk, a financial advisor with Versus Wealth Management. 55% of all startup founders are members of Generation X according to the 2015 State of the Startup report.  (www.sage.com)  As a financial institution, you can be there to assist with business loans, deposits and networking.  Moreover, as the business grows, your opportunities to expand banking services grow as well.

There are a wealth of opportunities for assisting Generation X with various financial needs.  But remember, we are not Baby Boomers or Millennials.  Market to us as a unique demographic, one that grew up with ATM’s and rotary phones but have moved on to smart phones--and expect eye contact. 

Topics: Market Trends, Analytics

Stephanie Butler

Written by Stephanie Butler

As Director of Advisory Services for Baker Hill, Stephanie Butler guides the implementation and strategic consulting for new and existing Baker Hill clients. Butler is responsible for analyzing client goals and objectives, and providing recommendations for best practices. Relying on more than 20 years of experience within the financial services industry, she successfully maintains a client base of banks and credit unions ranging from $100 million to $100 billion in asset size.

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