Northwestern Mutual

Northwestern Mutual: Amidst Economic Struggles, 75% of People Feel a Responsibility to Pass Along Financial Advice; Across Generations, Americans Agree on the Right Things to Do

MILWAUKEE (BUSINESS WIRE), August 24, 2010 - At a time of great economic uncertainty and financial struggles across the nation, three quarters of Americans feel a responsibility to pass along financial advice, according to a study commissioned by Northwestern Mutual called “Financial Realities: Generational Advice.” Across all age groups studied, there was great similarity in people’s views regarding the right things to do both financially and personally.

Good Advice is Ageless

The study surveyed the opinions of Americans from Generation Y (25-29), Generation X (30-44), Baby Boomers (45-64) and Matures (65+). Among the topics explored was what advice each generation would pass along to other generations. Remarkably, when the older generations were asked to provide advice for 20-somethings, it was almost identical to what the younger generations said Baby Boomers should have done differently – pay off debts faster, prepare financially for retirement, save more, take better care of your health and spend more time with family.

“While good advice appears to be ageless, it certainly means different things for different generations,” said Harlan Wahrman, director of market research for Northwestern Mutual. “Older Americans who have made mistakes present a cautionary tale for younger people, who have the benefit of time before them and who are showing encouraging signs that the most important lessons are sinking in.”

The Best Financial Decision I Ever Made

When asked about the single best financial decision they ever made, the same answer came up most among all ages -- “I started saving early.” But interestingly, Generation Y was the most passionate about saving early, at 54 percent, versus Generation X (30%), Baby Boomers (30%) and Matures (21%).

“We see this as evidence that the younger generation is learning the lessons of the generations that came before them, and has the potential to improve their future financial security.” said Wahrman.

Among the Matures, the demographic with the most experience, there was a tie regarding the best financial decisions they ever made. Equal numbers said “I started saving early” and “I bought products with guarantees, like insurance and annuities” (21%).

“This is consistent with what we often hear from our policyowners, especially when it comes to permanent life insurance. They say, ‘If I knew then what I know now, I would have added more,’” said Wahrman. “The fact that one out of five survey respondents 65 and older answered in this way is a strong testament to how these products build value over time.”

Men vs. Women

According to the study results, men feel less of an obligation to give advice than women do, with 29% of men reporting no sense of responsibility to give advice compared to 22% of women. That said, men were more likely to report giving advice to peers, including friends (70% vs. 57%), spouses (42% vs. 30%) and colleagues (34% vs. 22%). Women were more likely to give advice to children (67% vs. 57% for men).

Be Conservative with Money, Favor Personal Happiness Over Unnecessary Sacrifices

Drilling down into some of the specific advice cited, Generation Y encouraged Boomers to:

  • “Save more money” vs. “Spend money while you have it” (48% vs. 5%)
  • “Put more money in conservative financial products” vs. “Invest more in the stock market” (23% vs. 2%)
  • “Take more time to have fun” vs. “Work hard” (23% vs. 11%)
  • “Don’t stay in an unhappy marriage” vs. “Don’t get divorced” (23% vs. 9%)
  • “Be more willing to switch careers” vs. “Be loyal to your employer” (13% vs. 4%)

Boomers’ advice for Gen Y was nearly identical, but in certain categories the numbers were substantially more pronounced:

  • “Save more money” vs. “Spend money while you have it” (79% vs. 2%)
  • “Put more money in conservative financial products” vs. “Invest more in the stock market” (35% vs. 11%)
  • “Don’t stay in an unhappy marriage” vs. “Don’t get divorced” (36% vs. 11%)
  • “Be more willing to switch careers” vs. “Be loyal to your employer” (21% vs. 4%)

In addition, results appear to show that the older the person gets, the more they recognize the value of working with a financial professional. According to the research, Boomers are three times more likely than Generation Y to advise other generations to work with a financial advisor (18% vs. 6%), and Matures are more than five times more likely (31%).

“Overall we were very pleased to see that all ages agree about the right things to do, and that it is based in a conservative long-term approach – which we view as the best path to financial security,” said Wahrman. “We are also encouraged by the inclination to give advice. Yet like any important matter – whether it’s health, finances, or automobiles – advice is helpful, but not a substitute for working with an expert.”

A complete report outlining the results of the study can be found by visiting and searching for the keyword “Generational Advice.”

About the Research

Northwestern Mutual sponsored the Financial Realities: Generational Advice study to help provide insight into Americans’ propensity to give advice against the backdrop of economic uncertainty, and to explore how advice might be similar or different across generations. Independent research firm Harris Interactive conducted the online survey of 1,057 Americans aged 25 or older between March 23 and April 26, 2010. Results were weighted as needed for age by gender, education, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents’ propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available.

About Northwestern Mutual

The Northwestern Mutual Life Insurance Company – Milwaukee, WI (Northwestern Mutual) has helped clients achieve financial security for more than 150 years. As a mutual company with $1.2 trillion of life insurance protection in force, Northwestern Mutual seeks to share its gains with policyowners and deliver consistent and dependable value to clients over time. Northwestern Mutual and its subsidiaries offer a holistic approach to financial security solutions including: life insurance, long-term care insurance, disability insurance, annuities, investment products, and advisory products and services. Subsidiaries include Northwestern Mutual Investment Services, LLC, broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company, limited purpose federal savings bank; and Northwestern Long Term Care Insurance Company; and Russell Investments.

8/24/2010 10:58:20 AM