X-ers or Gen Z: It's pivotal to understand the traits of your generation to have an honest conversation with yourself about finances.
Did your notoriously frugal granny invest her money the best? What about the upstanding "Boomers"  or the "Keeping up with the Joneses" -inspired "X-ers"? And then there's the Millennials - soon to  constitute most workforces worldwide - and Gen Z, the "always-on", somewhat-cynical youngsters  who understand tech better than any other generation. 

Every generation differs from its  predecessor so it's pivotal to understand the typical traits your generation is synonymous with to  have an honest  conversation with yourself  about finances.

For example, if you're a Millennial and you prefer a DIY-approach to investing, you know you're not  alone. That's a trait most Millennials share. It's a strength but it could also be a weakness, hindering  you from getting valuable financial advice down the line.

Guy Fletcher, head of Client Solutions & Research at Sanlam Investments, says, "The  2018 Sanlam Benchmark survey  revealed that employers estimate that, on average, only 14% of their employees  will be able to maintain their current living standard when they reach the 60 to 65 age band. In that  we're not alone - in the US, nearly half of working-age families have no savings at all.

"Understanding the generational 'personalities' could be a way to glean insight into ourselves and  overcome innate biases. It's also a way for financial services professionals to offer more relevant and  customised advice that’s 100% focused on advancing our clients' wellbeing."

Here, Fletcher outlines the main traits typified to each generation:

THE SILENT GEN/ BUILDERS: born 1918-1944 (in their 70s, 80s and 90s):

The  Silent Generation  is  known for making some of the  most significant strides  of all the generations in terms of wealth,  longevity and education. Having grown up amidst the turmoil of the Great Depression (1929 to  1933) and World War II (1939-1945), it's synonymous with traditional values like loyalty and hard  work, with tendencies towards frugality.

The Silent Gen's investing style: The Silent Gen typically stayed in the same job for 40 years to get  that coveted gold watch. They adopted a very disciplined approach towards their work and careers  with a high level of respect for authority. The same approach applies to their investing style: they  tend to follow the advice of "experts", pick an investment portfolio and stick with it.

THE BABY BOOMERS: born 1945-1964 (in their 50s, 60s and early 70s): 

Sanlam survey  of 350 Baby  Boomers, Gen X-ers and Millennials found that most Baby Boomers are prioritising saving for  retirement - which makes sense given their age and life-stage. The legacy of World War II instilled a  similar sense of selflessness and "do the right thing" values in the Boomers. This generation puts  great stock in hard work and links its identity to respect and success earned in the workplace.

Despite Boomers having "had it easier" - they  earned twice what millennials earn now  at the same  age - they  haven't been the best savers  and many retirees are starting side hustles to supplement  their retirement incomes. Especially in South Africa, where grandparents frequently support their  grandchildren.

The Baby Boomers investing style: Like the Silent Gen, Boomers tend to have a buy-and-hold  mentality. Additionally, Boomers' "my home is my castle" mindset means many have invested in  property.

GENERATION X: born 1965-1980 (in their 40s, and early 50s): 

X-ers grew up in homes where dual  incomes had become the norm. With a "yes, we can" approach, this generation became synonymous  with mass consumption, Wall-Street levels of opulence and "Keeping up with the Joneses"  aspirational lifestyles. 

They're also a generation that's been impacted by increasing divorce rates. It  is disturbing to note that, despite a need for self-sufficiency, within South Africa women fare worse th an men on retirement planning. In a recently published survey, over 43% have no plan and only  40% of women have savings of any kind at all. 

In the Sanlam survey, Gen X - also known as the  sandwich generation due to supporting both parents and kids - were the least optimistic about  having enough for retirement. This means X-ers will either need to keep working after retirement or  lean heavily on the state.

The X-er's investing style: X-ers are sophisticated and tech inclined, with increased openness to risk.  They have tended to follow a more growth-oriented as opposed to income-based strategy. They  have also been open to investing outside of their home markets and understanding the value of  diversification. However, the downside of this aspirational lifestyle has been a predominance of  chasing performance, often at a significant transactional cost and impact on investment results.

GENERATION Y - AKA MILLENNIALS: born 1981-1996 (in their 20s and 30s): 

Much ado about  Millennials. There have been countless studies unpacking this generation's traits. Rightly so,  considering Millennials will make up  half the workforce by 2020 . Millennials have been shown to be  motivated by meaning and experience, with a drive for self-development. Led by a sense of purpose,  they also thrive on affirmation, expecting continuous feedback and full transparency. 

They're adept  at tech and immersed in social media, which has given rise to an expectation of immediacy. And  they're passionate about causes: they've logged more volunteer hours than Xers and Boomers  combined. Thus, they're all about "money with meaning".

Millennials are also faced with the prospect of ongoing "black tax" as South Africa's rising  unemployment rate (currently officially over 27%) requires those with jobs to support a wider family  of those without. This has been exacerbated by the cost of tertiary education with most Millennials  required to pay back student loans.

The Y's investing style: Impact investing has increased significantly, with Millennials choosing to  invest according to their values. Additionally, they are the first generation that is likely to completely  overcome significant home bias, becoming true global citizens.

GENERATION Z: born 1997-2018 (in their infancy, teens and early twenties): 

Gen Z is still a bit of an  enigma. Members of this "always-on" generation are  highly tech competent  and very adept at multi- tasking. They have a natural affinity for entrepreneurship and grew up in a world of pervasive social  media. They're supposedly slightly cynical, but just as committed to experiences and finding  meaning as their millennial predecessors.

The Z's investing style: Still to be fully revealed, it's likely Z's will favour tech-driven investing and, in  particular, the changes that occur as a result of the fourth industrial revolution and artificial  intelligence. The growth of the "gig" economy may also have interesting consequences for how the  ecosystem of formal vs experiential learning, income vs rewards, consumption vs savings and  longevity may alter the whole concept of retirement.


At its heart, investing is the very essence of a capitalist framework, where generating returns above  inflation allows the patient investor to put aside enough for the day when he or she no longer earns  an income. As such, a society that requires formal retirement will require formal investment - and  this is likely to be with us for at least another 20 to 30 years.

Each generation has its own idiosyncracies but the essence of investing is unchanged and is  predicated on the benefit of compound interest - sometimes referred to as the 8th wonder of the  world. The rules are quite simple, namely:

a) The earlier you start, the more opportunity compounding has to work in your favour.
b) The more you can reduce your current consumption in favour of investing, the greater the " pot" will be at the end.
c) Have a plan and execute accordingly. Chasing short-term results is an enemy to the success  of your plan.

Fletcher concludes, "In 2003, we completed mapping the first human genome - it took over 13 years  and an estimated cost of over US$2.7 billion. Now you can get your "DNA" tested with almost  immediate results, for less than a couple of hundred dollars (US). We've personalised health  solutions and that was far more complex than effecting the same outcomes for individual financial  needs. We are now able to offer the mass customisation of individual investment plans that are  flexible to changing circumstances.

Truly customised, relevant investment solutions for the clients of today - and tomorrow 

"I t is overly simplistic to pigeonhole investment requirements from a generational or even from a  direct age perspective. These aspects are perhaps best represented in the issue of "risk tolerance",  the ability to withstand short-term volatility in outcomes. This is often a function of financial literacy  and background. 

A lack of tolerance may well, for example, lead to panic selling at the worst possible  time. However, an under-represented aspect of investing is "risk capacity", which is the ability to  accept volatility without jeopardising financial goals. This is highly individualistic and multi-faceted,  relating amongst other things to levels of income, consumption, the value of savings and time h orizon. 

From an individual's perspective, it's important to have conversations with yourself - and  your financial adviser - about what your goals may be and how investing could help you attain  these. From a financial adviser’s perspective, it's imperative to understand each client's needs and to  provide the best possible roadmap to a person's long-term happiness and wellbeing."

For more information, visit  ConversationswithYourself.co.za .

5 TOP INVESTING TIPS FOR EVERY GENERATION:

Fletcher shares his advice:
  1. Read the Richest Man in Babylon. Switch from a "consume then save" to a "save then consume" approach.
  2. Adopt a longer-term approach to investing. Appreciate that short-term volatility in the valuation of your portfolio is necessary to deliver compound returns above inflation.
  3. Have a plan and then stick to it, changing only when circumstances demand it. DO NOT just chase last year's best performers!
  4. Become more global in your thinking - get over home country biases and consider offshore investments.
  5. Overcome information asymmetry: if you're overwhelmed by information, do some of the groundwork yourself, then seek help from a professional.
  6. Think of investing money as units of happiness for your future self. Appreciate what the impact of current consumption is on those units of happiness!