A dive into the different generations and what they need from financial advice

Much has been written about millennials and their attitudes to finance but research carried out by Standard Life reveals more diversity than you might expect. Susie Logan, Standard Life Brand and Marketing Director, discusses.

Standard Life recently carried out customer research on each generation’s attitude to personal finance to gain more insight about what today’s clients and the clients of tomorrow need from financial advice.

Our findings were revealing, highlighting different concerns and mindsets for each of the generations’ moments that matter.

Our research focused on the following three generations:

  • Baby Boomers (ages 57-72)
  • Generation X (ages 37-56)
  • Generation Y, also known as ‘millennials’ (ages 25-36)

What is most striking from our findings is that Generation Y is a very diverse group.

The stereotypical view of millennials is that they are the ‘snowflake’ generation, but the truth is much more nuanced. Our research revealed that the millennials can be categorised into three distinct segments:

  • the driven
  • the stretched
  • the carefree

We found that each of the groups is focused on short-term, largely individual goals. This is especially true of the ‘carefree’, who prefer travel and experiences to material possessions. The stretched also want to travel, but they also want material things, like owning a car. 

For the driven, their main goals and moments that matter are acquiring their first home and getting on in their career.

The support millennials need

Despite the focus on short-term goals, Generation Y is largely optimistic for their financial future, believing ‘things will work out’ rather than actively planning for it.

For the most part, this generation don’t currently have a need for ongoing financial advice. However, they can be supported through the advice given to their parent’s generation, such as ensuring wealth is passed on in a tax-efficient way.

They might also need one-off advice in certain circumstances, which could offer an opportunity to engage them in broader conversations and to start life-long relationships - making real life savings achievable in the future.

Generation X is the commitment-heavy generation

When it comes to Generation X, our findings revealed this generation is keen to know more about saving for the long term, but they don’t know where to go for advice.

Much of their focus is on their children, but they also have moments that matter around divorce, house buying, home improvements, employment – and generally wanting to trade up as they get on in life.

And of course, this is the sandwich generation. Not only are children a concern, but so too are aging parents and working out ways about how they can afford the lifestyle they want when they retire.

Although Generation X is the ‘stretched middle’, it’s mainly optimistic about the future, partly because they know outgoings will go down rather than confidence in their retirement provision. However, the Generation X’ers who are actively planning for the future tend to have a more realistic outlook.

Generation X is increasingly in need of financial advice

Time poor and sandwiched between the demands of children and parents, Generation X could benefit from innovations in how advice is made available to them - the easier and quicker it is to access, the better. 

Although our research showed that short-term financial needs dominate what Generation X is looking for from financial advice, this generation also knows there are choices to be made that will have a long-term impact on their finances. Therefore they are looking for reassurance that the financial decisions they make now are the right ones.

Baby Boomers recognise they are financially at their peak

The insight gained from our research around Baby Boomers revealed that they know they are the lucky generation with DB pensions, for example, and had an easier route to home ownership than younger generations.

However, the concerns they do have focus on outstanding mortgage commitments and the costs of education.

Our findings highlighted that Baby Boomers are largely optimistic about the future. And because they generally have more time on their hands, they like to research and find out about the big economic or political issues that will affect them.

The Baby Boomers know they need advice to maximise the money they have

When it comes to the financial advice needs of the Baby Boomers, their moments that matter centre on how to unburden their family, prioritising issues such as care costs and inheritance tax.

For those with moderate savings, digital advice could be a very attractive option for them. Baby Boomers might not be digital natives but they are digitally savvy.

And if they have investments, they have time to think about where they are investing their money and sustainability is an important factor for them. This generation wants investment information that is accessible and easy to understand.

Each of the generations require a different approach

Our findings uncovered the fact that each of the generation’s world view can differ from what might be assumed, especially the views of Generation Y, the diverse segment, who range from the driven to the carefree.

In conclusion, each generation’s financial needs are ever-changing. Although Baby Boomers recognise they’re in a good place, they need help to maximise the money they have.  Generation X is an engaged generation too but they’re keen to know more about long-term saving, while Generation Y needs prompting to think about saving for the future.

Three very different generations, each with very different requirements needed from financial advice.

Standard Life accepts no responsibility for advice that may be formulated on the basis of this information.

The views expressed in this blog should not be regarded as financial advice.

Susie Logan

Susie Logan, Standard Life Brand and Marketing Director

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