Advisor Today - March/April 2016 - (Page 17)

PRACTICE SPECIALTIES FINANCIAL PLANNING By Ayo Mseka Who's Saving the Most and Why? A study identifies the best savers in each generation and shows how segmentation can help advisors serve them better. G oing Beyond Generation to Understand Younger Investors: How Adoption of the Peak Accumulator Behaviors Leads to More Confident, Loyal and Profitable Customers is a Hearts & Wallets segmentation study that reveals who is accumulating the most assets, outlines three behavioral "saver personalities" and details how the financial-services industry can help each group achieve their financial goals. Although Gen Y steals the headlines, Gen X is bigger in terms of households and financial clout, the survey notes. Gen X includes 37 million households who make decisions on more than $9 trillion in investable assets, compared to nearly 22 million Gen Y households who control $1.5 trillion. Gen X also has six times more investable assets under management than Gen Y households. Hearts & Wallets segments the best savers within each generation according to six measures of financial responsibility that lead to financial success. These Peak Accumulators offer insights into their ability to accumulate wealth, which can benefit peers and help the industry advise all three "saver personalities," the survey notes. Only 9 percent of Gen Y are Peak Accumulators, but they control 20 percent of Gen Y's investable assets. Likewise, only 13 percent of Gen X are Peak Accumulators, but these 4.7 million Gen Y Peak Accumulators control 39 percent of investable assets that are held by Gen X. "The increasingly wealthy Gen X is often 'X-ed' out in favor of Gen Y and Boomers by the financial industry," Chris J. Brown, Hearts & Wallets partner and "Saver personality" segmentations, developed over more than five years of research, are based on answers to questions about smart financial behaviors. co-founder, said. "In particular, Peak Accumulators save more, have more assets and are more engaged in investing. Not only are they ideal clients, but advisors and firms can also encourage other clients to adopt Peak Accumulator behaviors. It's like teaching someone to fish. These behaviors create more secure and self-sufficient households and loyal customers." Three "saver personalities" Behavioral "saver personality" segmentations, developed over more than five years of Hearts & Wallets research, are based on answers to questions about smart financial behaviors. They are: * Peak Accumulators. These are savers who exhibit every financially responsible behavior type as identified by Hearts & Wallets research, which leads to lasting financial success. These include "I generally spend less than I make" and "I have little or no credit card debt." They also tend to be very financially engaged and knowledgeable. * Coasting Investors. These savers often have an attitude of "waiting to be rescued." They do a reasonably good job of spending less than they earn, keeping debt to a minimum and having an emergency fund, but have further to go in adopting behaviors that will lead to lasting financial success. Only 29 percent of this Gen Y "saver personality" own homes outright or with a mortgage. Little more than half (55 percent) of Gen X own homes. * Struggling Savers. Many in this group live paycheck to paycheck. They may struggle with credit card debt, spend more than they make, or do not have an emergency fund. For both Gen Y and Gen X, less than one in five has an emergency fund. Only 15 percent of Gen Y or X has an emergency fund and only 46 percent of Gen X contributes regularly to a retirement savings plan. Winning behaviors The study notes that being a Peak Accumulator is more of a mindset and having a disciplined savings cont'd on page 18 March/April 2016 | ADVISOR TODAY 17

Table of Contents for the Digital Edition of Advisor Today - March/April 2016

From the Editor
Viewpoint
New Products
A Question of Ethics The Details Often Make the Difference
What's Ahead for Financial Advising?
Whos's Saving the Most and Why?
Making the Case for Critical Illness Insurance
Are You a Retirement Expert?
Selling the "Best Plan"
Smooth Sailing
Taking Incremental Steps Toward Success
Investment Strategies for Today’s Consumers
How Tax Efficient is Your Investment and Retirement Portfolio?
Naifa News
Ideas for a Profitable Practice
Crossing the Two Client Relationship Bridges
Working with Muslim-American Clients
Attracting and Serving Today's High-Net-Worth Clients
Becoming a Networking Success
Advertiser Index
Back Page

Advisor Today - March/April 2016

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