Any client can use a cash flow plan, but their stage of life can impact how you would use the strategy with various clients. Let’s explore how cash flow and debt advice would be applied based on the generation a client belongs to.
The silent generation: (born 1928 - 1945)
The silent generation lived through the Great Depression and World War II. They are known to be thrifty and frugal, and learned by necessity to value financial security above all. This generation was also the first to have access to both OAS and CPP. People in this generation are now in their 70s through 90s. Like all generations, they are in different stages of life.
Ways to use cash flow planning with the silent generation
Most of your clients in this generation will be retired. And some assume that cash flow planning isn’t necessary or helpful. You won’t find many in the silent generation that aren’t price sensitive. Also, valuing frugality and financial security doesn’t mean they’ve created unlimited wealth, and it doesn’t mean they don’t have any debt. So for this generation, a retirement cash flow plan is the best fit, focused on helping them maximize what they can spend from their nest egg with confidence, while still protecting their estate. Consider extending cash flow planning as a referral option for their children, who will often belong to another generation.
Baby boomers: (born 1946 -1964)
The baby boomer generation is thought of as hard working and diligent savers, and they benefited when more women entered the workforce, making two-income households more common. Many clients of this generation also had some experience with extreme interest rates in the late 70s into the early 80s. And for those carrying newer mortgages at the time, that could have made them more careful with debt, at least for a while. But boomers aged 50-59 who still have a mortgage owed an average of $367,000 in Q1 2023, and their total debt is approximately $566,000. Even boomers in their 60s who have a mortgage owed an average of just over a quarter of a million dollars during that time, with their total debt coming in at a whopping $436,000.
Ways to use cash flow planning with boomers
When cash flow planning for baby boomers, you must ensure that debt management is part of your discovery. You should also discuss how to use a cash flow plan, even if the clients have no debt at that time. Debt can easily erode hard-earned assets, and too many financial professionals assume that clients who’ve been responsible and built up their retirement savings must not have any debt. But you cannot make assumptions about the absence of debt based on the existence of assets. The retirement cash flow planning exercise in the Retirement Shift Worksheet should be a regular part of your review process with clients of this generation. For those clients who are still working, a standard cash flow plan is the way to go. And then shift into a retirement cash flow plan as they reduce their hours or stop working.
Generation X: (born 1965 - 1980)
Gen X is now caught between raising children and caring for ailing parents. They have become the current sandwich generation. They experienced higher housing prices when they entered the market (compared to previous generations), creating more debt, and faced increased job insecurity. The financial pressures created by higher debts have impacted this generation’s ability to save for retirement.
Ways to use cash flow planning with Gen X
A cash flow plan is beyond crucial for your Gen X clients. They will have more life events revolving around raising children and their aging parents. On one side of their financial commitment sandwich, they find childcare costs, fees for kids activities, and postsecondary tuition. On the other side, they’re facing everything from reduced wages due to time off needed to care for their parents, or paying for caregivers or larger costs, such as home renovations to manage mobility needs. Their cash flow plan will need to take into account big picture goals, like retirement and debt freedom, and be adjusted for various life events along the way.
Millennials: (born 1981 - 1996)
While millennials get a bad wrap for short attention spans, an overreliance on technology and a desire for immediate gratification, they actually have proven to be quite interested in improving their financial knowledge. They also face higher housing costs and student loan debts than the generations that came before them.
Ways to use cash flow planning with millennials
Millennials may be your clients, or perhaps the adult children of your current clients. Either way, to be successful with millennial clients, you need to have cash flow planning skills. Millennials will expect more advice, not just products. They are digital natives and feel more comfortable learning about products. Financial advice specific to their needs is harder to research, and that's where savvy financial professionals can stand out from the crowd with strong cash flow planning skills. This generation will need a cash flow plan that balances debt repayment, emergency savings and investing, along with the costs of first houses, new babies and early careers.
Generation Z: (born 1997 - 2012)
Gen Z may not even be out of junior high school yet. But most of those born early in the generation are not long out of university, still early in their careers, and in need of financial advice. Many in this generation saw their education at least somewhat impacted by Covid, and of those who had graduated, their early career took the hit instead. This shock to the system has resulted in this group prioritizing well-being over wealth. In part, this is because of the standard of living achieved by their parents or grandparents, and a heightened awareness of mental health. They strive for more of a work-life balance than those who came before them. After witnessing a work-a-holic culture resulting in the burn out of many older generations, they have no interest in financial stability at all costs.
Ways to use cash flow planning with Gen Z
With Gen Z, a cash flow plan should be primarily focused on building up an emergency savings account, funding a high priority, short-term goal, initial debt repayment planning and saving for a first home, or other major financial goal. They may be more keen to leverage technology as part of their cash flow planning experience. So they can quickly learn how to set up the account to be successful, and manage their day-to-day spending alongside funding their goals.
No matter what generation you find the majority of your clients are in, cash flow planning can benefit them all. Don’t lose sight of what they need you for in the first place. No one is really thrilled about the latest mutual fund. Your clients aren’t showing off their recent life insurance policy to their friends over dinner. They only buy financial products from you because of cash flow. They are either trying to create future cash flow, or protect current cash flow. Don’t sell your clients short by deciding what they do and don’t need by leaving cash flow planning to be an afterthought. Show your clients that the center of your work with them is their cash flow, and you’ll both be better off financially.
About CacheFlo
CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allow them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.
About the Certified Cash Flow Specialist (CCS) program
CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.
About the Real Life Money program
An annual, digital, behaviour-based program that teaches employees everything they need to know and do to become financially capable. Our proven financial wellness program that combines online workshops, microlearning, and a powerful app called Winton that puts financial capability, confidence and control into the hands of every employee. Learn more.
