While many of the 45.8 million people born between 1965 and 1975 would like help with investing, the 32- to 42-year-old members of so-called Generation X probably won't be receiving much attention from financial firms anytime soon.
"There is no doubt it is a significant market," said Laura Ries, author and marketing consultant of Ries & Ries Inc. of Roswell, Ga. "But I don't see much focused on Generation X. It's up for grabs."
Financial companies understandably are targeting older, wealthier prospects, Ms. Ries said.
"But they also need to focus on the ones coming up who will have the money in the future," she said, noting that using the same marketing to reach two different generations "doesn't work."
Currently, many Gen Xers say they would like to save and invest but find it difficult.
They were a big part of a national survey of 5,000 people 25 to 40 conducted this summer by Los Angeles-based Kelton Research for Charles Schwab & Co. Inc. of San Francisco, in which 33% of those polled said they were starting to save but were not sure how to invest or where to go for financial advice.
Strained circumstances were a concern: 47% reported living on a tight budget with nothing left to save, while 66% said they thought about their finances daily, and 18% said they were depressed by their financial outlook. Given the financial condition of Gen Xers, 51% believed that investment firms didn't care about them, and 47% felt that it would be difficult to find a good financial professional, yet 44% said they would like someone to explain the available financial choices.
Based in part on the results of the survey, Schwab earlier this fall launched the Generation X Initiative to create products and services that will attract younger investors. The company revamped its pro-cesses to create what it calls a 15-minute individual retirement ac-count, which allows investors to open an account online quickly.
It also introduced linked checking and brokerage accounts that require no minimum balances. The free checking account pays 4.25% interest and has no monthly service charges or fees for automated teller machine use or bill paying.
On the investment side, Schwab lowered the minimum investment for Schwab Funds to $100, from $1,000 to $2,500, and lowered its account-opening minimum to $1,000, from $2,500, for brokerage accounts and IRAs, and educational savings accounts.
Fidelity Investments of Boston is not marketing specifically to younger investors but has several programs that are attracting Gen X, said company spokeswoman Jennifer Engle.
These include a no-fee, low-minimum SimpleStart IRA and myPlan snapshot, which is an online program to guide an investor through the planning process. The company also lowered the minimum contribution to the Fidelity Charitable Gift Fund, which resulted in a 30% increase in participation in the first year among investors ages 21 to 30.
"We certainly feel that we design products and services that will engage younger investors," Ms. Engle said.
One investment company that is focusing specifically on Gen X is Thrasher Capital Management LLC of New York, which recently introduced the GendeX Mutual Fund, a no-load fund that is capping ex-penses for individuals at 1.5% (see accompanying story).
The fund's minimum investment is $100, provided investors sign up for an automatic monthly investment plan that carries a $50 minimum.
The fund's prospectus describes its investment objective as "long-term growth consistent with preservation of capital," and its investment strategies as "guided by the adviser's proprietary Demographic Convergence Thesis."
James Perkins, chief executive and portfolio manager, said demographic convergence seeks to capitalize on the baby boomer generation's increased life expectancy and its members' propensity to emulate younger lifestyles, as well as the increasing financial maturity of Generations X and Y.
"Different generations are coming together in a way that they didn't before," said Mr. Perkins, a former
hedge fund manager, who cited greater use of iPods and laptops across all age groups.
"GenX was formed by a latch-key upbringing and new family dynamics of dual-income households," said Matt Jarvis, a Los Angeles-based executive vice president of ad agency Deutsch Inc. of New York. "Part of its essence is self reliance. It is developing a social caste system around experiences versus possessions."
Since they are being introduced to investing through 401(k) plans at work, many younger investors are fueling the popularity of target date funds, said Morningstar analyst David Kathman.
"If you get them early, then they'll be a loyal customer." Mr. Kathman said.
Target date funds are being sold now that go out to 2055, he said, and billions of dollars are being invested in funds with a target date of 2040, which will be a peak year for Gen X retirement.
Advisers say that communication will be key in winning Gen X clients.
"Our industry is so focused on the retirement crisis and the lack of preparedness for the baby boom-ers," said Jeff Bernier, managing director at TandemGrowth Financial Advisors LLC, also based in Roswell, Ga."But we cannot communicate in the same way [to Gen Xers] as we do to the 60-year-old who just retired."
Sue Asci can be reached at [email protected].
