The Challenges of Financial Planning for Gen X

Despite the development of new tools and technologies to help manage money, financial planning remains both challenging and time-consuming, a recent study conducted by Harness Wealth revealed.

A survey of 1,000 Gen-Xers aged 35 to 60 showed most believe they lack the knowledge necessary to manage their finances, despite spending a substantial amount of time on money management. Perhaps as a result, the majority report anxiety surrounding financial planning, in large part due to the perceived complexity of the task.

Because of high levels of frustration and anxiety, most survey respondents report they want digital tools or advice from a financial advisor to help them with financial management – yet, the majority of Gen-Xers are not taking advantage of either expert advice or online tools aimed at simplifying financial management.

The good news is, those who do seek help are much happier with their financial solutions – and the majority of survey respondents are willing to pay a price for the right advice. This means money management could be simplified for Gen-Xers if they can only find the right person to meet their needs.

Financial Planning is Time Consuming and Generates Anxiety

Money management is complex, and Gen-Xers across all income levels report lacking the knowledge they need to do it right.

In fact, more than half of all individuals surveyed did not feel they had strong knowledge of financial planning.

  • Just 28% of individuals with investible assets below $250,000 reported strong or expert knowledge in the areas of financial planning.
  • While individuals at higher income levels expressed more comfort with money management, a full 50% of survey respondents with $250,000 to $750,000 of investible assets felt they were lacking in strong or expert financial planning knowledge.
  • Even substantial investments don’t do much to increase comfort and familiarity with financial management. More than 1/3 of individuals with $750,000 or more in investible assets still didn’t feel they were experts or strongly knowledgeable when it comes to money matters. Gen-Xers lack this knowledge despite investing a significant amount of time in money management. Nearly 3⁄4 of survey respondents (74%) said they spend several hours monthly managing their finances, while four in 10 spend a few hours every single week.

Spending so much time trying to handle financial issues they don’t fully understand is causing significant anxiety for Gen-Xers. In fact, 56% of survey respondents reported moderate to extreme anxiety managing their finances while 72% describe financial planning as either moderate to extremely complex.

Gen-Xers Want But Don’t Have the Right Financial Tools

The Internet has aimed to revolutionize the way people make financial plans and the way people manage money. There are an increasing number of online tools and automated or digital resources that promise to do everything from helping to track spending to assisting with choosing the right investments. And, most Gen-Xers suggest they are comfortable with these tools, with men more likely than women to use online research when making financial decisions.

Sadly, digital tools designed to simplify money management have failed to make financial planning easier for Gen-Xers. In fact, while 83% report comfort with technology and digital financial tools, just 7% are actually using online tools and services. Such low adoption rates suggest survey respondents have found these tools aren’t an effective fit for their perceived needs.

A Human Financial Advisor Adds Value

Over half of all Gen-Xers still manage their money on their own, despite recognizing professional financial advice could be helpful. In fact, 84% of survey respondents believe it’s important to have a person to speak to in managing their finances. Those with higher income levels are more likely to use financial advisors; but all Gen-Xers who utilize financial advisors report higher levels of satisfaction with their financial planning solutions.

Finding a good financial advisor could make all the difference for Gen-Xers, with 87% of survey respondents indicating they would utilize an advisor if they found the right one. Moreover, those who have an advisor are happier with their financial management solution. Survey respondents who work with a financial advisor to manage their finances are approximately twice as happy with their solutions as those who self-manage their funds.

Survey respondents were clear on the most important aspects of finding the right financial advisors, with the three most important aspects of financial solutions reported as expertise in the area of need and pricing.

Not only are Gen-Xers happier when they receive expert financial advice, but Harness Wealth’s survey shows they’re willing to pay for the assistance financial professionals can provide. In fact, as investible assets increase, and as respondents get older, Gen-Xers increasingly prioritize expertise over price when choosing financial professionals to provide assistance.