Bridging the Generation Gap in Retirement Services — Part 1
This article originally appeared in the Fall 2012 issue of Plan Consultant. To view a PDF version, including an accompanying chart, please click here.
For several years, we’ve heard about the “Graying of America” as Baby Boomers approach retirement. The retirement services industry is experiencing a similar type of “graying.” Many retirement services and advisory firms blossomed after the Employee Retirement Income Security Act of 1974 (ERISA) changed the retirement services’ world forever. Some of these owners and managers (Radio Babies and Baby Boomers) have passed their businesses on to heirs or sold them to other entities. Some have held on and are now dealing with succession issues. Many of the industry experts and managers are of this generation.
Understanding the Generations
To better understand a single generation, we look at the similarities; to compare generations, we look at the differences. Generations are similar to cultures, with common values and beliefs and shared experiences. Many of the people from a distinct generation have been programmed to view the world and filter information through their own generational lenses based on experiences during their formative years.
Part 1 of this series will give an overview of the generations and how they see the retirement services workplace. Subsequent articles will deal with how to integrate the generations successfully in retirement services and use case studies to illustrate where each group’s talents were successfully used to improve operations and increase education levels across entire firms.
The following is a summary of the characteristics of each generation.
Radio Babies grew up in close family environments and looked up to heroes. In their younger years, they never had the luxuries or technology that the subsequent generations came to know. They were a hard working generation who wanted jobs, security, and decent wages in order to take care of their families. They were loyal to their employers, and in return, they relied on company pensions to take care of them in retirement and repay them for their years of loyalty. They were significantly affected by the Great Depression and World War II.
Baby Boomers began to see the deterioration of the traditional family as divorces became more common. They believed in the American Dream and went for it. Historically, the Boomers were the largest workforce group and because there were lots of them, they were conditioned to compete for position and recognition. They were workaholics who believed in throwing time at work to solve problems. They were the first generation exposed to technology in the workplace. They were heavily influenced by political events and women’s rights, and they pushed for change to make the world a better place.
Gen Xers were the first wave of Baby Boomer children. Many Gen Xers were latch-key children and had less adult supervision than prior generations as they were growing up, primarily due to dual working parents or single parent environments. They also were conditioned not to trust strangers. As a result, Gen Xers are very independent and not as social as other generations.
Because they experienced parents who worked long hours, work/life balance is very important to them. They represent the smallest generational group of available workers. For most of them, their first exposure to technology was in school. They were influenced by the Challenger disaster, AIDS, and the prevalence of technology and the media.
Millennials are the product of either later or more mature Baby Boomers or Gen Xers, and their generation has the lowest parent-to-child ratio in US history. This generational timeframe gave birth to the term “helicopter parents.” Millennials’ parents were very involved in their activities, controlled their schedules, oversaw their schoolwork and, in essence, “hovered” over every aspect of their lives. Millennials were groomed to learn and achieve, and they were frequently rewarded (i.e., gold stars, participation awards) for their endeavors.
Growing up, their mouse and computer represented what pencils were to Boomers, and the Internet became their virtual library. They learned about technology and the underlying logic of how it works in the same “native” way that they learned to speak a language. Their technological abilities far exceed even Gen Xers. Technology is integral to the way they live, think communicate, and the way they work. They are very social, collaborative, and the ultimate multi-taskers. They see themselves as part of a global community where diversity is an advantage, and their work should make a difference in the world. They are energetic and like to participate in activities inside and outside of work. They were heavily influenced by terrorism, which reinvigorated new respect for family and community, the Internet, and environmental issues.
If your workforce is starting to look like an age barbell, with lots of younger and older workers and not many workers in-between, your firm may be experiencing generational issues. Generational issues are not new to the workplace—what is new is that the gap is much wider, primarily due to rapidly changing technology.
We often have misconceptions about other generations. For example, the older generations tend to think Gen Xers and Millennials are very much alike, but in fact, the most significant thing these two groups have in common is technology. They are extremely different in most other aspects, and overall, Millennials are actually more similar to Baby Boomers. Once we gain a better understanding of each generation, it is easier to identify and accept the differences. From there, we can seek out commonalities, capitalize on opportunities and bridge the gaps.
Fortunately for the profession, the children of the Baby Boomers are entering the workplace and advancing through the ranks. According to the U.S. Census Bureau, there are approximately 80 million Millennials and 50 million Gen Xers, and the Millennials are even more numerous than their Baby Boomer parents.
Within the next year or two, Gen Xers and Millennials are likely to make up 50–60% of the country’s workforce. Their sheer size and their immersion in technology give them the power to radically transform every aspect of society. As these talented individuals permeate the retirement services sector, businesses are faced with unique opportunities and challenges resulting from the interactions of three or four generations working side by side. One of the major challenges will be the knowledge transference required in such a knowledge-intensive business. Rapid technological change combined with the need for sophisticated customer service will make collaboration across the generations essential to a successful business model.
Although there are no exact lines drawn for the start and finish of a generation, the chart indicates the way generations view the workplace. As in astrology, generation members can find themselves “on the cusp,” where traits of two generations might be relevant.
Part 2 of this series will offer strategies on how to bridge the generation gap through education and communication.
Sarah Simoneaux, CPC, is president of Simoneaux Consulting Services in Mandeville, La. and a principal of Simoneaux & Stroud Consulting Services. She is a former president of ASPPA and previously served on the Education and Examination Committee as a Technical Education Consultant. Ms. Simoneaux wrote the textbook, Retirement Plan Consulting for Financial Professionals, which is used for the PFC-1 (Plan Financial Consulting - Part 1) course of ASPPA’s Qualified Plan Financial Consultant (QPFC) credentialing program.