Inflation Stoking Generational Concerns Bring Advisor Opportunity

First, a housekeeping item. This article was penned prior to the release of the July reading of the Consumer Price Index (CPI).

Heading into that report, economists expected an increase of 8.7%, down from 9.1% in June. Obviously when it comes to inflation, declines are better than increases, but an 8.7% CPI reading is nothing to brag though the White House is likely to do just that. It’s still in the ballpark of four-decade highs and implies interest rates need to be at least that high in order to have the desired effect of damping soaring prices.

In other words, folks right to be concerned about lingering inflation and this presents advisors with unique opportunities to foster client relationships. Adding to that scenario is the point that Generation X (Gen X) is more troubled by high consumer prices than are baby boomers and millennials.

Some advisors are likely to be surprised by that because many baby boomers are in or nearing retirement, meaning inflation is eroding the purchasing the power of the income from their investments. Still, a recent survey on inflation from State Street Global Advisors reveals some compelling demographic breakdowns, including Gen X being the most worried about inflation.

Golden Gen X Opportunity for Advisors

In societal terms, Gen X is overlooked relative to baby boomers, millennials and now, Gen Z. In epic fashion, too. Making matters worse, the financial services industry is arguably the most egregious offender of this or, at the very least, one of the worst offenders.

Still, pure data confirm Gen X is deeply concerned about inflation. As such, folks in that demographic are likely to want financial advice and seek out relationships with advisors.

The survey found that with inflation on the rise, over two-thirds of investors (67%) are concerned about our country’s economic outlook over the next 12 months, with over half also expressing concern over market volatility (57%) and the value of their current investments eroding (59%),” notes SSGA. “Notably, Generation X is significantly more concerned than Millennials or Boomers about the effects that inflation, the stock market and economy could have on their personal financial situation.”

Simple economics dictate why it’s relevant that Gen X is most concerned about inflation and why advisors should care. Remember all that talk about the “great wealth transfer?” Well, financial services wrongly position it as solely transfer of wealth from baby boomers to millennials. In reality, Gen X will be getting their inheritances earlier than millennials – it’s just simple math – meaning Gen X’s inflation worries are valid and need tending to by advisors.

“When it comes to the overall economic outlook for our country in the next 12 months, 76% of Gen X-ers are concerned, compared to 60% of Millennials and 65% of Boomers,” adds SSGA. “The outlook for their personal financial situation wasn’t much better: 56% of Gen X-ers are worried about maintaining their current standard of living, compared to 46% of Millennials and 43% of Boomers.”

Gen X Taking Anti-Inflation Measures

As has been widely documented, plenty of consumers –regardless of age group – are delaying big purchases, vacations and the like due to inflation.

For its part, Gen X is taking reduced spending seriously, further confirming this group will be looking for advisors’ help in navigating inflationary waters.

“Examination of the money moves each generation has made in the last 12 months reveals significantly more members of Generation X have cut back on spending compared to Millennials and Boomers,” concludes SSGA. “A greater percentage of Gen X-ers than Millennials and Boomers have seen their finances derailed by inflation and have had to cut back on discretionary spending like dining out or entertainment (61%) and essential purchases like groceries or gasoline (41%), or delayed a major purchase like a vehicle or home appliance (39%).”