Can you guess who said this? “Young people today think they know everything—and they are always quite sure about it.”
Though this statement sounds like it could have come from a social media post by a Baby Boomer grandparent or perhaps a GenX-er with kids about to enter college, the quote above is actually attributed to Aristotle, sometime in the fourth century, B.C. (of course, the original was in Greek).
Differences in various generations—the ways they think, dress, act, and approach life—are as old as civilization, and maybe even older. And when you think about it, that makes sense; our attitudes and behaviors are invariably influenced by our experiences, and since each generation grows up with a different set of experiences, it’s inevitable that their attitudes and choices will reflect those differences. These choices and ways of looking at the world affect our values—those things or qualities on which we place most importance—and our values drive almost everything we do or say.
So, as we look at the four major generations on the scene today—Baby Boomers (born roughly 1946–1964), GenX (1965–1980), Millennials (1981–1996), and GenZ (1997–2010)—what can we discern about the differences in values that guide them? How do those values affect the way they approach important matters like saving and investing?
Baby Boomers
Baby Boomers’ formative years were in post–World War II America. They observed their parents, who grew up during the Great Depression, largely avoid the stock market due to their traumatic memories of the hard times many Americans experienced during the 1930s, following the stock market crash and the failure of many banks. This formative experience, by the way, caused many of the “Greatest Generation” to avoid stock market investing for the rest of their lives and to place dependence upon federally guaranteed programs like the FDIC. However, the post-war years were a time of expanding prosperity for many Americans, and as Boomers observed their parents working hard and profiting in their careers, they absorbed a value of focus on career, saving, and planning for the future. They are typically more willing than their parents to assume some market risk, and many incorporate a portfolio balanced between equities (stocks) and fixed-income (bonds and other interest-bearing accounts) in order to attempt to outpace inflation. As they approach retirement, many Boomers tend to shift more of their holdings to more conservative investments.
Generation X
GenX-ers came up in a time when technology was moving from analog to digital. Because their parents were either younger members of the “Greatest Generation” or older Boomers, those generations’ focus on career and hard work, unfortunately, led to many GenX-ers having less direct parental influence than previous generations. This may also partly explain their tendency toward rejection of their parents’ work- and career-focused lifestyle. On the more positive side, GenX-ers tend to be more independent and flexible, perhaps because they were forced both to spend a lot of time on their own and also to adapt to a rapidly shifting social and technological landscape. They value a positive work-life balance and, because their formative years in the 1990s afforded them a front-row seat to strong markets (and the rise of hedge funds), they may be willing to accept even more risk than Boomers. They are also looking ahead to retirement, according to a 2022 State Street Global Advisor survey, in which 95% of GenX respondents indicated that they had maintained contributions to their retirement accounts, even if inflation had caused them to cut back on the amount placed in short-term savings.
Millennials
Millennials have grown up in a world that is increasingly digital and online, and they compose the majority of today’s workforce. They saw the end of the dominance of analog and the rapid emergence of technologies like Bluetooth, online file sharing, and social media. The impact of 9/11 is one of the major shaping events of their lives. As a result, Millennials are more likely to place a high value on empathy, community, and concerns around sustainability and social justice. They also demand meaning in their daily work to a higher degree than previous generations, which means that they are more likely to change jobs—or even careers—if that means they derive more personal satisfaction. They are earning at a faster rate than their predecessors, but because they are facing a higher cost of living than their older counterparts, they may have more difficulty building net worth. This may also account for the fact that they tend to hold more cash, rather than investing in listed securities or other assets. On the other hand, they are more comfortable than previous generations with digitally based investing resources and information and are quick to utilize these resources in their investing activity.
Generation Z
GenZ are the first true “digital natives”; they are practically born knowing how to swipe a screen and use digital apps. For this reason, the internet is typically the first place they turn to when seeking information about any important topic. A 2020 Morningstar survey of 1,300 Americans age 18–25 found that they use at least one financial app for banking, budgeting, or investing, but interestingly, they still place a high value on human contact. Of those who do invest, 75% own stocks, which they may have purchased on a fractional basis using an online micro-investing app. Cryptocurrencies like Bitcoin, Ethereum, and others are more popular with this generation than any other. Because they are the first generation that has had access to micro-investing platforms since they were old enough to use them, many GenZ investors have been buying stocks and mutual funds since before they were old enough to enroll in college. This generation is also generally committed to values-based investing, since they tend to be very concerned with matters of sustainability, social justice, and ethical governance.
Clearly, no generality can adequately explain or define any individual in any generation; wide variances exist among various members of the cohorts described above. But certain wide principles do apply, and understanding them is vital to being able to advise and guide appropriately.
At Aspen Wealth Management, we go beyond the broad categories to focus on the individual. Because we understand that our clients come to us with differing experiences, levels of understanding, needs, and available resources, we tailor our advice to the specifics of each situation. This means, of course, that we spend a great deal of time getting to know each client. Our fiduciary commitment to placing each client’s best interests foremost in every interaction means that every recommendation is founded upon a thorough understanding of the client’s priorities, needs, and goals.
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