When I was planning a speaking engagement a few weeks ago, the power of generational differences came home to me in a personal way. Simply stated, the woman hiring me wasn't contacting me as often as I liked, ideally by phone. I felt as though my event wasn't important to her, which upset and frustrated me.
Once I recognized the age gap between us (she was a Generation Xer; I'm an older baby boomer), I realized we simply had different generational preferences. The lesson I learned—to take less to heart the infrequency of her communications, usually texts or emails—greatly improved our relationship.
It amazes me that I wasn't conscious of such generational contrasts before. Investigating further, I found that some authorities say the differences between millennials, Generation X and baby boomers may run much deeper than those between previous generations.
Peter Brinkerhoff, author of "Generations: The Challenge of a Lifetime for Your Nonprofit," said in an article on The Huffington Post, "It's not just age difference, it's a cultural difference." He cited smartphones, Facebook and Wi-Fi as some of the technological innovations that have erased work/life boundaries by keeping younger generations connected around the clock.
It's crucial for advisors to understand these differences and adapt their style to that of the generation they're working with, be it a client or an employee. As generational consultant Cam Marston reminded me, the younger market looks more and more appealing to the average 56-year-old male advisor than his own age group (see "Under 55 and Underserved" sidebar).
While the 45–50 million Generation Xers and 80–85 million millennials together outnumber the 75-80 million baby boomers, many advisors continue to use boomer tactics with these two groups and offer financial services created with boomer clients in mind.
"Advisors are approaching the youth market in the same way they approach their [age] peers," Marston said, "and the messages, sales tactics and ways to connect with clients are proving ineffective." Furthermore, this habit can risk losing younger clients in a heartbeat. "It's an ingrained way of doing business that doesn't support the future of advisory practices," he said.
Marston, the author of several books including "The Gen-Savvy Financial Advisor: Advising the Generations in the New Age of Uncertainty," became interested in generational differences about 15 years ago. While reviewing surveys conducted by his North Carolina research firm, he noticed that responses often differed by generation. His search for explanations led him to found Generational Insights, a Mobile, Ala., consulting firm that helps organizations target and manage younger generations of clients and employees.
Aided by the observations of Marston and others, let's examine these different characteristics by putting the spotlight on millennials—the youngest and least well-known generation of potential clients and employees. (The date spread I've indicated for each generation is approximate; some demographers move the brackets forward or back by one to three years.)
MILLENNIALS: BORN 1982-2000
(Aka Generation Y, Generation Next)
Millennials, the children of the baby boomers, are often labeled as overindulged, self-centered and indifferent to authority. As Joel Stein wrote in the May 20, 2013 issue of "Time," the "Me Generation" begot the "Me Me Me" generation. However, other observers note that millennials are looking for meaning in what they do, with the goal of making a difference in the world. Considering that they comprise a huge 30% of the U.S. population, this offers hope for the future.
In Marston's view, this generation's most powerful influences were the explosive growth of consumer credit and the Great Recession. Helicopter parents were another big factor, hovering protectively to shelter their millennial children from hardship. These moms and dads praised their kids and awarded them prizes for trying their best—or in some cases, just for showing up.
As a result, many millennials grew up with higher self-esteem than their limited successes warranted. Raised to feel special, as adults they are hypersensitive to criticism and tend to need more frequent positive feedback than older generations.
In addition to being a very social group under the constant influence of their friends, millennials retain fond memories of and connections with their parents. (One-quarter of millennials come from single-parent families.) Marston noted that they often check in by phone to ask their folks for advice. Generally, however, texting is their preferred method of communication. "You'll often find a millennial texting productively in the middle of a business meeting," he said. "They are adept at multitasking."
Interestingly, some observers suggest that lifelong use of computers has shaped millennials as "mosaic thinkers," drawing bits of information from a variety of sources to piece together an opinion or a decision, compared with earlier generations' more linear thinking.
Financially, millennials have a long road ahead of them. They will need to save an estimated 19 times their salary to retire comfortably, Marston said. Opinions differ about their willingness to save. In the Huffington Post article, Will Pearson, co-founder of "Mental Floss," a magazine popular with millennials, called them responsible savers who "start saving for retirement four years before Gen X did and 10 years" before boomers. But Marston noted that many fail to maximize their 401(k) contributions or don't contribute at all. In any case, the recession made many millennials so risk averse that they tend to avoid the stock market.
With an unemployment rate for their generation that hovered around 13% in January 2013, they have learned to be skeptical of such promises as "If you go to college, you'll get a good job." Some, in fact, are "intensely distrustful of every government institution except for the military," as a graduate student recently ranted in PolicyMic.com, an online forum for millennials. "We have little or no reason whatsoever to trust anyone over 33" (currently the age boundary of the millennial generation). Sound familiar, boomers?
Millennials' negative view of financial advisors corresponds with their recession-fueled distrust of financial services. To approach them as potential clients, your focus needs to be on the individual and his or her future, not on yourself and your pedigree. If you create a proposal for them, make sure to explain your research and thought process. Be clear about how you are compensated, Marston advised; millennials who feel they've been tricked will be gone for good.
It's OK to ask for their business directly, but don't make every message a sales one. Your goal, according to Pearson of "Mental Floss," should be to build trust in your brand by offering free things they will want to share with others. For example, "Mental Floss" creates e-postcards with trivia that followers can share on Facebook.
Needless to say, you also need to become comfortable with communicating the way millennials themselves connect with each other: via instant messages (IMs), texts and other tech-forward methods.
They may sound like a cynical, highly pressured group, but millennials love to have fun with classic memories of childhood. The "I Can Has Cheezburger" meme has led to zillions of goofy cat videos, and they've built a whole subculture around bacon. Whimsy in your own communications is fine if it's genuine—"quirk in an authentic voice," as Pearson described it.
As employees, millennials expect their time and commitments to be flexible. These "children of Google" prefer to do the job when and where they like, not necessarily at the office between 8:30 and 5:00. Continuously connected, they carry their work responsibilities with them 24/7. By the same token, they see nothing wrong with letting personal tasks overlap into conventional work time. According to "Generations" author Brinkerhoff, "If you have policies against IMs and Facebook [at the office], you are cutting off powerful tools of the millennials. If you're worried about them wasting time, simply give them more work."
The best way to avoid friction around these issues is to be straightforward with millennial employees about the outcomes you expect. They value clear direction, accountability and involvement in decision-making. Adept with technology, they demand instant feedback from you. Accustomed to abundance, they work not for money but for self-actualization. Achievement and affiliation are important to them.
How can you meet more of these younger folks? An introduction through their boomer parents may help, Marston said, but you'll need to shift your style from the boomer service model to that of the millennials. For example, if a millennial wants guidance on investments that focus on green companies or emerging economies, be willing to create a plan that supports these values.
Once you start working with a millennial client, don't forget the parents. Neil Howe, co-author with William Strauss of "Millennials in the Workplace," wrote that "Managers will resist, but [they should] partner with parents. Parents are part of the conversation."
