Identifying the needs for clients of different generations

People love to categorise, effectively putting items into neat boxes. This in turn enables the processor of these items to systematically deal with large quantities of whatever might be in a particular box, quickly and effectively by using the same set of rules and methodologies to deal with its entire contents in one go.

In simplistic terms, a computer package will employ a similar course of action to process vast quantities of data efficiently. However, in most cases it will not have the capability to deal with the oddities – the exceptions to the rule which fall outside a set of given categories.

Financial plans created by computers - aka ‘robo-advisers’ – tend to deal with simple scenarios or known quantities. However, bespoke financial plans are best created using the powerful and intuitive combination of robo-advice and face- to-face advice with a human. A bespoke plan will of course include information specific to an individual’s circumstances or, in the case of intergenerational financial planning, specific to several individuals’ circumstances and their interactions with each other.

Labelling has an important role to play in modern financial planning. Most of us will have our first experience in being categorised or labelled at school, where social Labelling might have compartmentalised us according to stereotypical adolescent cliques such as swots, hipsters and rebels or perhaps by our music tastes –such as new romantics, punks and rockers for example.

Generational Labelling, where we are categorised according to the year in which we were born rather than our social interests, is the most prevalent form of labelling used in the financial advice sector. It helps advisers understand how we are impacted by economic circumstances over which we have no control. Such factors include property prices, inflation, taxation and employment. All of these and more will impact the personal wealth of an entire generation.

Generational Labelling takes several forms:

Generation Name Births Starting Births Ending

The Silent Generation 1923 1944

Baby Boomer Generation 1945 1964

Generation X 1961 1981

The Millennials - Gen Next 1975 1995

Generational Labelling enables advisers and planners to respond rapidly to certain financial planning requirements by drawing on shared experience relating to similar scenarios. For example The Silent Generation will have experienced Great Depression in the 1930sand World War II in early life, along with post-war austerity in young adulthood. They are likely to have modest spending habits and to have accumulated wealth in property and savings. The Baby Boomer generation, however, is likely to have lived safe from war and serious hardship, enjoyed economic prosperity and be more relaxed about spending money and personal finance per se.

Generation X will have been unable to replicate the lifestyles and wealth of their Baby Boomer parents, and the Millennials will be seeking to become financially independent but struggling with property prices and the seemingly unbridgeable gap between earned income and living expenses. All these factors will impact family wealth across multiple generations.

There will always be exceptions to the rule – those people whose circumstances do not belong in a particular category or classification. Where financial advice is concerned, these exceptions are best served by the data processing capabilities of the robo computer working in tandem with an adviser.

We all consider ourselves to be individual, we wish to break the mould and shake off labels. However, we do need to recognise that shared inter-generation experience will help us more fully understand our own situations. It is necessary to consider the circumstances which have shaped generations and to use this knowledge to help us protect and enhance our family wealth and plans for the future.

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