Justifying your fee for skeptical Xer clients


Sandwiched between two behemoth generations, Gen Xers have received the short-end of the stick in many of ways. As children, they spent many hours at home alone because they grew up in divorced homes and working moms. As adults, they experienced two major recessions during key points in their careers. These events have contributed to the often misunderstood traits and attitudes of this cohort.

Phrases frequently used to describe Generation X include “the squeezed generation,” “the forgotten middle-child” and “the slacker generation.” While these phrases capture some of the struggles and stereotypes this generation has faced, they fail to highlight one of the prevalent traits of this generation: skepticism. After witnessing institutional collapses and scandals, increased divorce rates and the dotcom bubble burst during their formative years, this generation developed a skeptical nature that needs to be addressed when building trust.

Xers have lived through truly trying financial times. In less than a decade, they were dealt two crushing recessions – the dot-com bubble and the Great Recession – in a time when they were just starting to hit their stride in the workplace. To make matters worse, many Xers bought homes right before the housing market collapsed in 2008 – shortly before being walloped by the Great Recession. As a result of these events, 58% have lowered their expecations about their quality of life in retirement.1

It’s no surprise, then, that a generation dealt blow after financial blow is going to be extremely cautious and protective with their money. Xers are fiercely independent and often trust their own research far above the opinions of others. They carry with them a “if you want something done right, just do it yourself” mentality that can be hard for advisors to break. How do you justify the value of an advisor and, more importantly, your fees to these guarded, skeptical Xers?

When you’re meeting with them for the first time, anticipating what’s on their mind is half the battle. Knowing the kinds of questions Xers will bring, along with some tactics to overcome their hesitance, is key.

Here are questions Gen Xers may ask and strategies to convert skepticism into buy-in:

“What benefits does a financial advisor bring to the table? And how much is it going to cost me"

Xers are going to breeze by formalities and get down to business in a manner that can sometimes come off as disarmingly direct. They’re going to want you to give them the information they need in a clear and honest way. There is no need to sugarcoat or dazzle them with your expertise. Simple, hard facts should be presented upfront. Think about your worst car-buying experience and then provide them with the exact opposite.

Advisor Tactic: Be brutally transparent

Don’t let them catch you off-guard. When you know you’re meeting with a Xer prospect… prepare! Laying out the specifics of fee structure, investment strategy, and having a clear-cut statement of benefits are the first steps toward overcoming Xer skepticism and building trust. Spend the time to learn what their financial ambitions and expectations are. Share with Xers how the financial planning process ties into achieving those goals. Once trust is established, it can last a lifetime. However, continuing to demonstrate transparency, especially during precarious financial times, is necessary to keep the Xer client base.

“Why should I trust a financial advisor?”

Gen Xers have learned the hard way that they need to ask as many questions as possible when vetting an idea, product or service provider. They’re going to drill you not only about why they should even bother paying for a financial advisor, but also why you, specifically, are the right one. If they are going to feel comfortable paying you to manage their money, they need to know, with as much certainty as possible, that you are someone they can trust.

Advisor Tactic: Own up to what you don’t/can’t do

Overpromising is a sure way to get this generation to walk away. Most of the time, the easiest way to earn loyalty with this generation is to admit right up front, what you can do, what you can’t and even what you won’t. No matter your years of experience, they will not only respect you more for addressing your shortcomings, but they’ll be more likely to view you as a trustworthy and reliable resource.

“What will this provide for my family?”

The divorce rate skyrocketed as Gen Xers grew up. Now that they have families of their own, they are devoted to protecting the welfare of their children. While ensuring a safe home front for their families is vital, many have been unable to plan successfully for today and tomorrow. Specifically regarding retirement. Generation X is more likely than other generations to say retirement is the financial obligation they are least prepared to cover.2 For this generation, the fear of not being able to provide for their family is a real concern and challenging to face without a plan. Show Xers you will be devoted to finding ways to maximize their financial security and help with the many needs in their busy lives. Make it clear that any fees they pay you are an investment towards protecting

Advisor Tactic: Show how you’re a safeguard for the bad times

Optimism and positivity are great qualities, but Xers are an incredibly grounded generation. Due to their financial hardships, they’ll be attracted to the idea of an advisor that will be an extra safeguard against those trying times. Show them you’re adding an expert’s perspective that will give them an extra edge. Your job is to find the holes and weaknesses in their plans, and reinforce them so they can live out a comfortable retirement and not be a drain on their children’s resources in the future.

“Why should I incur the cost of a financial advisor when there are so many free options online?”

There is no doubt that online options like robo-advising have a certain appeal for independent Xers. It allows them to manage their money independently, on their own time and with complete transparency. But if they’re coming to you, they know there’s something intangible these online sources can’t offer them, and this uncertainty is a great jumping off point to show them your fees are more than justified.

Advisor Tactic: Present yourself as a time-saving ally who will get to know their needs

Xers love to do things on their own, but they realize they don’t know it all. They have busy lives, and they don’t want to spend time researching and managing money on their own. Position yourself as an ally – you’re on their team, an expert in your field, and can quickly separate fact from fiction. By getting to know them and spending time understanding their perspective, lifestyle and hopes for the future, you’ll be able to guide them towards making the right decision. True advising is not just about data, algorithms and computers – it requires a human touch, and your Xers will understand that this more than justifies the fees.

As many Gen Xers are in the prime of their parenting and career trajectories, having a financial advisor they trust can help this “sandwiched generation” feel less pressed. Taking the time to consider the unique needs and traits, especially their skepticism, will put you in a position to build lasting relationships with this cohort, especially as they move toward their peak earning years. While fees can be a sticking point for many, once this generation understands the value an advisor brings and can see the “fine print” laid out clearly, the fees become less of an issue.

12015 MFS Investing Sentiment Study. (2015) MFS.

2Gen X: The Worried Generation. (2016, Feb. 3). Scottrade. Retrieved from Business Wire.

This information was prepared in part by an unrelated independent third party, BridgeWorks, and is provided for informational purposes only. Ivy Distributors, Inc., believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided.