Gen Xers – the original latchkey kids – came of age defined by neglect. They’ve concluded they can rely only on themselves. (Photo: Shutterstock)

Remember the first time you traveled to a foreign country? You got there and discovered, no matter what you thought, you just didn’t know the language. You knew a few important phrases, but, when it came to idioms, you were completely lost.

In case you don’t remember middle school English class, an idiom is a phrase that means something beyond the literal meaning of the words within it. For example, “get on the ball” does not mean to literally find a ball and get on it. It means to align your efforts with the current goal.

This miscommunication makes sense. After all, it merely represents the difference in culture and upbringing.

After speaking with an expert in generational studies, I’m convinced you don’t have to cross the national boundary to experience this inability to adequately communicate (see “Exclusive Interview: Chuck Underwood Explains Why the Generations View Money Differently,”, October 16, 2018).

The concept of a generational divide is not new. The “Generation Gap” became a popular term in the 1960s as a way for Baby Boomers to express the differences they had with their parents’ generation. At that time, it was as though the two generations lived on different planets. The older, raised in the scarcity of the Great Depression and in the national unity of the Second World War, possessed vastly different values from the sex, drugs, and rock-n-roll that defined the life of the younger generation.

Indeed, one of the most watched TV shows of all time – “All in the Family” – featured this generational schism as the basis of its plot line.

The field of generational studies barely existed when Archie Bunker butted heads with Meathead Mike Stivic. Within a couple of decades, however, academic research on the study produced profound insights. Today it’s almost become a cottage industry. (Incidentally, Underwood notes this with lament as he’s concerned there may be false prophets practicing in the field due to its popularity.)

With regard to financial professionals, only the three most recent generation pose growth opportunities – the baby boomers (born between 1946 and 1964); Generation X (born between 1965-1981); and the millennials (born after 1982 through maybe 2000).

Note, officially, there is no “Generation Z.” Underwood says its almost impossible to determine when a new generation begins until they’ve reached their mid-20s. That means it won’t be until another 7-8 years before we can truly identify a “Generation Z” (or whatever we decide to call it).

Research shows there are clear, distinct, and significant differences between the generations. Why? Because generations are defined by “what’s happening” in their world just as they leave the cocoon of the educational system.

That’s when they adopt the values that stay with them for the remainder of their lives. Granted, it may take a few years for those values to percolate before that generation becomes self-aware, but the seeds are set as early as high school and as late as college.

At this point, the baby boomers and Gen Xers are set in their ways. The millennials are still gelling, but they’re almost there. Research in the field offers confirmation on many of the worries the financial industry has in terms of servicing Gen Xers in particular (but probably not millennials).

Gen Xers – the original latchkey kids – came of age defined by neglect. Not only did their parents let them come home to empty houses, but every night on the news they saw scandals plaguing leaders in government, religion, business, and sports. Divorce and layoffs took their toll.

Gen Xers concluded they could only rely on themselves.

Self-reliance is a good thing. However, when you couple it with distrust and cynicism, there may be unintended consequences. Gen Xers aren’t joiners. They don’t trust institutions – any institutions. This might explain everything from the decline in church attendance to the dearth of new members in many civic organizations and trade associations. Gen Xers became the first “job-hopping” generation.

With Gen Xers just now verging into “empty-nesthood,” they remain the primary “parent” generation. Usually, this would be considered a sweet spot for financial professionals.

Yet, we see more interest in the millennial generation, despite the fact millennials, on a per capita basis and based solely on their age in life, likely have less assets and less needs than Gen Xers. Why would this be so?

Underwood says Gen Xers have “a pretty big chip on their shoulders against boomers.” Since baby boomers remain in control of many financial service firms, they no doubt detect this antagonism. Millennials, on the other hand, “generally love older people” according to Underwood.

Now, if you’re a baby boomer in charge of business development, would you target a market that is naturally opposed to you (Gen Xers) or one that is naturally attracted to you (millennials)?

You can further add to this equation the fact that the market naturally attracted to you is also the largest generational cohort ever.

This gives a whole new meaning to “generation-skipping trust.”