While Generations X and Y consider earning money a top priority, many are not self-sufficient, while others fail to include retirement considerations in their financial plans, according to a new report.
Fidelity Investments' "Generation X/Y Research" found that 77% of Gen Xers (which Fidelity defines as those born between 1966 and 1975) and 74% of Gen Yers (defined as those born between 1976 and 1995) named money as their biggest concern but said that their career decisions were driven mostly by their need to accomplish a work/life balance (70% for Gen Y and 63% for Gen X).
However, when it comes to retirement, few members of either generation worry about fulfilling their longer-term planning needs and place a greater priority on dealing with immediate financial responsibilities first.
Fifty-five percent of Gen X and 44% of Gen Y listed saving for retirement as an obligation or goal, but slightly more than half of both groups listed managing everyday finances, making mortgage payments and managing credit card debt as more important priorities.
For Gen Y, making car payments, paying off school loans and saving for a home are priorities that are held in higher regard, according to the report.
In another finding, 41% of Gen X and Gen Y didn't seek any guidance regarding their workplace retirement assets after they changed jobs. Within that group, 56% cashed out of their workplace savings plans altogether.
"There is a lack of financial discipline among the Generation X and Yers," said Jon P. Yankee, partner at Fox Joss & Yankee LLC in Reston, Va., and a Generation X adviser himself. The firm manages $250 million in assets.
"These kids have grown up without any need to have any financial discipline. There are no financial-literacy programs in the schools, and they should be teaching financial literacy [at the high-school level]," Mr. Yankee said.
LACK OF CONFIDENCE
In addition to deferring retirement planning, a large portion of Generation X (62%) and Generation Y (57%) were also lacking confidence that they were making prudent decisions about their finances in the present.
Forty-three percent of Gen X (43%) and 28% of Gen Y turned to their parents for help and guidance on financial matters. Meanwhile, within both groups, one in five didn't turn to any resource for help at all.
Even among high-net-worth individuals, Generations X and Y continue to ask for and get considerable help from their parents and are still asking for more financial assistance than young people would have 30 years ago, said Benjamin C. Halliburton, a managing director at Tradition Capital Management LLC, a Summit, N.J., company which works with high-net-worth individuals and manages $540 million in assets.
With the data that were collected, advisers need to know that interacting with younger investors will be very different from how they interact with older clients today, said Pam Norley, executive vice president with Fidelity Consulting Group LLC, a Chicago-based division of Fidelity of Boston.
The study was based on 40 interviews with Americans between 21 an 35 conducted by CMI, an Atlanta marketing research firm, and encompassed blogging assignments, in-home interviews and focus groups.
Additionally, Burke Inc. of Cincinnati surveyed 1,200 financial decision makers between 20 and 40 in the United States with at least $15,000 in annual income.
The data for both reports were based on research conducted between October and January.
E-mail Aaron Siegel at [email protected].
