the recovery following the Great Recession has for many
Americans been painfully slow, a recent study has
identified a group of Gen Xers and baby boomers who are
still nursing financial and emotional wounds. The
setbacks they experienced which may have included
the loss of a home, a job or their retirement savings
may be holding them back even now.
years after an economic crisis generally acknowledged to
be the most devastating since the Great Depression, a
Minneapolis-based financial services company found 1 in
5 boomers and Gen Xers display attitudes and behaviors
crippling their ability to move forward in their
financial planning. They may have lost confidence in
financial institutions or are only comfortable with
company named people in this group "post-crash
are some people who have a certain DNA where once they
experience certain trauma, they have an emotional versus
rational response to that trauma," said Katie Libbe,
head of consumer insights for by Allianz Life Insurance
Co. of North America, which commissioned the study.
some, the hits came from all sides.
were contributing to their 401(k) plans and doing
everything they thought they were supposed to do,"
their lives fell into chaos when the crisis hit around
2008. "Now they are not sure they want to get back
into the stock market. This segment is much more
cautious in their financial strategy than before. The
Great Recession altered the way they think of risk and
Lifes study of 2,000 Americans including 1,000
baby boomers ages 49 to 67 and 1,000 Gen Xers ages 35 to
48 asked a series of 13 questions about possible
experiences from the 2008 market crash, including
whether their home or 401(k) went down in value, whether
they or a family member lost a job, and whether their
savings or retirement planning were affected.
in 5 experienced six or more of these events,
identifying them as post-crash skeptics.
Dingus, president and chief operating officer at
Fragasso Financial Advisors in Pittsburgh, said he and
advisers at the firm have worked with people who have
not fully overcome their fears of the stock market since
the crash of 2008.
crash of 2008 left a lot of people paralyzed," he
said. But the market really took off after 2008, and
those people who were leery of getting back in may not
have participated in the rebound as much as they could
too cautious may also negatively impact investors, which
is essentially the opposite of being overly
confident," Dingus said. "With low interest
rates on many fixed income securities and the pittance
paid on cash investments, it has created a new set of
challenges for reaching your financial goals."
said the longer such skeptics stay on the sidelines and
refuse to address the challenges, the more difficult it
will become to prepare for the future. Before long, a
delayed retirement or a reduced lifestyle becomes a
people will probably work another 10 to 15 years, so
they should get back on the horse," she said.
advisers should also be aware that this group exists and
may need special attention. "Its important for
the financial services industry to recognize this group
and consider strategies for helping them move past the
barriers and bias resulting from 2008," Libbe said.