As boomers obsess about launching their Millennial offspring and form new types of households the financial industry is refocusing on what family means.
Baby boomers have always been a self-absorbed lot. But as we age evidence suggests the “me” generation has morphed into a “we” generation, in part through prolific volunteerism and philanthropy. Many have also discovered a new, not entirely selfless cause: launching our Millennial children.
Young people by the millions are being sent into the real world without great job prospects, few safety nets and little practical knowledge about how to make ends meet and save for retirement among other goals. A good many have boomeranged back home, heightening boomers’ collective concerns.
Six in 10 Americans past the age of 50 provide financial support to adult family members, according to a report from Bank of America Merrill Lynch and Age Wave. Most commonly this support goes to adult children (68%), though 26% support grandchildren, 16% support parents, and 13% support siblings.
The financial industry has begun to take note. Last year, Merrill Lynch adopted a formal business strategy built around helping boomers plan financially for the needs of extended family. The firm has made a big bet on this approach, which centers on seven “life priorities,” including home and family.
Insurance giant Allianz Life is the latest financial firm to take a fresh look at family, and in a Love Family Money report finds that the traditional nuclear family is largely a thing of the past. Leave it to Beaver households were by far the most common 35 years ago, accounting for 40.3% of households. Today, they account for just 19.6% of households, Allianz found. Other common formations include multi-generational, single parent, same sex, blended family, older parents with young children, and boomerang families.
Each has distinct financial needs and any firm that clings to the nuclear family model risks irrelevance in short order. “For financial advisers it’s now all about the modern family,” says Katie Libbe, Allianz vice president of consumer marketing and solutions. Traditional families have fared best since the recession, financially speaking, Allianz found. Every other “modern family” category—80% of households—is struggling.
Fewer modern families express a high level of financial security (30% vs. 41%). More modern families have collected unemployment (36% vs. 21%). More modern families have unexpectedly lost a main source of income (35% vs. 23%) and twice as many modern families have declared bankruptcy (22% vs. 11%), Allianz found.
The good news for modern families is that they tend to be more open about finances. “They are more open about everything,” says Libbe. “These families are closer than ever and they are starting to talk more about money.” So far the open dialogue about budgets and spending has not translated into greater savings. But one hope is that discussion will lead the younger generation to become proactive, and start saving at an earlier age—probably the most important step that Millennials can take towards long-term financial security.
Firms like Merrill Lynch and Allianz are banking on their family-focused strategies first to serve boomer clients, who have considerable assets to manage. But by helping boomers with their latest cause—launching their Millennial children—these firms might also capture the next generation of clients.