I was recently approached by a life insurance advisor who was concerned about how to approach the subject of life insurance with Gen Xers and Millennials.
In order to answer these questions we need to examine the events that have shaped the lives of these two generations and how they feel about financial services (including and probably especially life insurance) and advisors. Let’s begin with Generation X.
Gen X has lived through a number of economic events that have negatively impacted their lives and shaped their worldview:
- The stock market crash of 1987
- The economic recession in the late 1980’s just when many of them were graduating from college
- The dot.com bubble burst in the late 1990’s which after they finally found employment or started their own businesses found they lost their jobs or their businesses
- 9/11 and the recession that followed
- The Great Recession of 2008.Gen X was the generation that was hardest hit by the Great Recession
- Many members of Gen X are still paying off their student loan debt
Millennials have not fared any better. They too were negatively impacted by the Great Recession. As a article in Pay Scale points out “The Great Recession, which kicked into high gear in 2008, may have officially ended just a couple of years after it began, but the ripple effects continue to be felt. The impact for Millennials has been pervasive, and might not be countered or reset any time soon”.
The Pay Scale article rightly adds that “the impact of the Great Recession continues to impact their lives and careers in some big ways years after the recovery began”.
Since Millennials were not able to start their careers after college and many had no choice but to move back with “mom and dad”. Additionally, delaying their careers meant they delayed marriage. And, throw in the fact Millennials are bowed down with enormous amounts of student debt and you can understand their cynicism.
If you want to understand the frustration Millennials are feeling read Amanda Oliver’s blog in Huffington Post. Ms. Oliver’s frustration is loud and clear when she says “I am so fed up right now I could scream. I turned on the news (as I do every evening) and was greeted with the information about how the Feds are raising interest rates. That isn’t what bothered me so much, as it was the bitching by several pundits about how millennials don’t want to invest in purchasing large ticket items, like a home or vehicle. It was like someone had thrown down the gauntlet. I am so sick of being told how our generation is such a pain in the ass. You know what’s really a pain in the ass? Practically owing my first born (and their first born) to Sallie Mae for my student loans”.
Steven Rattner (American financier who served as lead adviser to the Presidential Task Force on the Auto Industry in 2009 for the Obama administration) agrees with Ms. Oliver’s assessment in an article he wrote in an August 2015 piece for The New York Times in which he says “To some, millennials — those urban-dwelling, ride-sharing indefatigable social networkers — are engaged, upbeat and open to change. To others, they are narcissistic, lazy and self-centered. I’m in the first camp, but regardless of your opinion, be fretful over their economic well-being and fearful — oh so fearful — for their prospects. The most educated generation in history is on track to becoming less prosperous, at least financially, than its predecessors”.
So it will not come as a surprise when I say Gen X and Millennials don’t trust financial institutions and that includes life insurance companies. Let’s face it — as an article in Insights-On-Business points out “No industry communicates in more convoluted ways with its clients than insurance” — which in part leads to the distrust and misunderstanding of life insurance carriers, their products and their advisors.
Not only do we speak in convoluted ways — life insurance is confusing stuff. An article in Einsurance.com talks about a 1974 New York Times article about the “readability” (readability tests were designed gauge the difficulty a reading passage in English is to understand of certain documents. The higher the readability score the easier a document is to understand.). That New York Times article announced that while the Bible scored 67, Einstein’s relativity theory scored 18 and insurance contracts scored a 10 or less — in other words the Bible and Einstein’s relativity theory are easier to understand than life insurance contracts.
A USA Today article about Millennials and life insurance is really disturbing, “Faced with slumping sales, life insurers throughout the developed world are targeting young adults for a massive infusion of little-risk income. Trouble is, their would-be customers distrust their objectives; see their products and sales methods as antiquated; and aren’t thinking about death, given their record life expectancies”. The USA Today article doesn’t stop there “The seller-buyer disconnect is just short of comedic: Firms 100 years or older deploying legions of middle-aged agents to sell policies to online-shopping Gen Yers (Millennials) who may very well live to 100. It doesn’t help that insurers keep pitching lifelong, investment-linked products that millennials (born in the 1980s and 1990s) don’t much want, and coverage for single people they don’t much need — in many cases employing dubious marketing practices.”
So what’s a life insurance advisor to do? If you look at the daunting economic set of circumstances Gen X has experienced it’s no wonder they are behind the “retirement eight ball”. An article in Yahoo Finance points out that Gen X is still the furthest behind other generations (when it comes to retirement) but they are aware of the difficulties they have — they know they are in trouble.
Obviously, you must listen to Gen X’s needs and concerns and demonstrate how your products can help them achieve their financial and retirement goals. We all know that a properly structured life insurance policy can help fund retirement needs — which are a huge concern of Gen X.
Millennials want help with ways to reduce their student debt burden, they may or may not want to purchase a home, they want to travel and yes they want to save for a retirement — and they want their financial advisor to be a partner and help them achieve all of their financial goals. It’s important to show them how your products can help them achieve these goals.
For more information about understanding the various generations download my FREE White Paper.
Originally published at www.nancysalamone.com on June 17, 2016.
