Surfing the Demographic Wave

In the wake of the recession, while the economy paused, aging did not

by Paul Nourigat

Mr. Nourigat is a leading national consultant and senior wealth strategist for US Bank’s Private Client Reserve, where he has consulted with thousands of corporate leaders and families regarding their financial management and family financial dynamics. Nourigat is the author of nine financial success books; his newest, No Time To Wander: the financial compass for young Americans, speaks to adults in their twenties and thirties who are dreaming and striving for financial independence, against a backdrop of peer pressure, difficult economics, and a gap in foundational financial knowledge. Connect with him by e-mail:

The fallout from the great recession muted much of the talk of “the great wealth transfer ahead” which was expected to result from the profound evolution of the baby boomers. Yet as the economy paused, aging did not stop, and a very significant wave of retirements, business successions, and generational wealth transfer will now accelerate such as the world has never seen.

Regardless of heritage, opportunities will emerge for the next generation, but there is widespread concern for the readiness of the next generation. Do they have the competencies to survive in a hyper-competitive environment? Are they ready to contribute to society? Are they armed with knowledge and the discipline to avoid the calamity or miscues awaiting each generation? The short answer for most twenty & thirty-somethings is “no”.

Many lack the workplace and financial skills, which were less critical for their parents during America’s 4 decades of unprecedented economic expansion. Such skills are learned behaviors, yet the teaching of financial fundamentals and life skills to young Americans took a back seat to economic vibrancy and created a “so what” mentality. Young Americans who have been moving from school into the workforce are particularly challenged, given an unemployment rate more than double that of their elders. Those who are employed are often under-employed or working non-paying internships. Now humbled, America has a newfound appreciation for financial competency, with educators across the country attempting to integrate financial concepts into lesson plans throughout K-12. What about the twenty and thirty somethings, who will have missed such lessons?

It’s never too late

The complex ocean of possibilities requires a game plan, along with playing a bit of catch-up. The convergence of massive social change, challenging economics, and global competition has most young Americans paralyzed in their strategic planning, while of all times planning is crucial. Compounding the paralysis is the distrust many feel about financial matters, given their first hand experience with two serious economic collapses in their short lives. As a result, millions are precariously positioned between the wave that crashed on the shore in 2008 and the huge swell, which is building off the coastline.

Financial advisors who take a holistic approach to service can make a big difference in young lives (and their parents’ lives) by encouraging and facilitating education and planning for young Americans. In essence, regardless of heritage or life situation, young Americans can attain financial freedom through a consistent and disciplined approach to financial planning. The resulting plan offers a guide for their day-to-day decisions, while also offering a great reference point to the advisors who serve them.
Planning runs counter to the daily helter-skelter in our lives, but it can be simplified. Strong plans can range from calculated financial models to simple outlines of core objectives and the high level plans to attain them.

Regardless the approach, each young American should have a game plan for:

  • Income/Employment – finding and protecting jobs is particularly crucial to long-term planning, as disruptions in income will jeopardize all other financial strategies. As job mobility has become the norm, retaining benefits and continuing to fund retirement plans needs to become a personal discipline regardless of the employment situation. Job retention skills run counter-intuitive to many of the messages which have been delivered throughout young lives.
  • Expenses/Spending – a tactical plan to avoid unhealthy consumer behaviors is required to reduce risks and enhance the capacity to set aside money for long term interests. The forces pulling monies in many directions requires a reference point and disciplines which only come from budgeting and regular reviews of budget-to-actual results. Not rocket science or linear regression, just simple math applied on a regular basis to assure cash-flow is in-check and capable of feeding other life objectives.
  • Savings/Retirement – recognizing the importance of preparing for the future at the expense of today will provide for a promising future. Balanced with the prospect of employer matches on retirement savings, such a long-term approach offers hope for independence. The Social Security Administration reports that 23% of married couples and 46% of unmarried depend solely on social-security, receiving an average monthly check of $1,267. By seeing the less than desirable lifestyle that will support, many young Americans will be motivated to reach a higher ground.
  • Risk Management/Insurances – protecting an estate against catastrophic outcomes is financially wise and it feels good along the way. With a wide range of plans and options available, a young American can tailor coverage and cost/benefits with the help of a great advisor.
  • Community/Family/Charitable Interests – balancing self-interests with the needs of others will ultimately result in the greatest “Life” outcome, fueling the passion which will drive the financial engine. Left to the non-strategic funding of every person who knocks on door, families’ charitable gifting is often misdirected and underutilized. At a time of such great need across America, strategic gifting is particularly necessary.
The Social Security Administration reports that 23% of married couples and 46% of unmarried depend solely on social-security, receiving an average monthly check of $1,267

Each of these topical segments involve many moving parts, and all sorts of preferences and uniqueness; the complexity results in the avoidance of great planning. People get lost in the planning details, given the blizzard of other pressing day-to-day activities and the good and bad situations, which distract us. That’s where teamwork comes into play, and the importance of a circle of trusted advisors who can work with each young American and their family to easily create a cohesive decision model for life.

An investment professional, Certified Public Accountant, banker and insurance professional can complement each other’s skill sets, and often will have financial planning certification within these disciplines as well. Reviewing and revising the plan every couple of years makes sense when lives are evolving more rapidly than later years, when such review may only be needed ever 3-4 years.
I applaud advisors who remove their transactional hats to balance a deep care for their clients by educating and stewarding their developing lives, in addition placing products. Equally impressive are the young Americans who step back from the fray, engaging with their trusted advisors to create plans which will allow them to weather the rough seas and capitalize on the tidal shifts which will occur over the coming decade. The future is really quite bright for those who catch the next wave.