Pub. 6 2016-2017 Issue 3

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE HSAs and Generation X: From Overlooked to Opportunity KIMBERLY SEXTON VICE PRESIDENT ASCENSUS Generation Xers heavily influence the HSA market because of the support they lend to the two surrounding generations. I f you search online for generations in the U.S., you will find copious articles about baby boomers and millennials. But don’t forget the generation in between those two: generation X. Today, those are the people generally between the ages of 37 and 51. They represent approximately 64million people. In contrast, millennials and baby boomers each make up about 75 million people. Generation X may be the most overlooked generation, partially because of its size and the number of years it spans. But when it comes to the business of health savings ac- counts (HSAs), you won’t want to overlook this group. With roughly 40 percent of HSAs owned by generationX, based on data from the Employee Benefit Research Institute (EBRI) 1 , the HSA market is one area that generation X seems to dominate. Marketing to generation X is well worth the effort if you keep inmind some key charac - teristics about generation X. It is a generation stretched thin, sandwiched between caring for children and parents. Meanwhile, generation Xers are wondering if they are doing enough to prepare for their own retirement and health - care costs. They see their parents, who have largely retired, as not doing as well financially as they hope to be when their time to retire comes along. They also are the first generation to experience the switch from pensions to defined contribution plans. Add to that, gen - eration X experienced two market downturns early in their saving years (2000–2002 and 2007–2009), which affected future growth significantly. Generation X is perhaps the most flexible generation when it comes to receiving infor- mation. They love in person and they love technology. But most of all, they love simplic - ity. They already have a lot on their plate and don’t have time to sort through complexities. Because of this, they tend to like consolidation, which is great for financial organizations. Having their checking, savings, HSA, and loans all at one place is appealing to them. However, because generation Xers are pro - viding financial support to both baby boomers and millennials, their savings rate into HSAs is not as high as it should be to adequately prepare for their future. Add to that, 66 percent of generation X accounts have distributions, which can be good for financial organizations because of the interchange fees but bad for saving for the future. Knowing these key characteristics is helpful as you develop a plan tomarket to this particular group. But what does generation X want in an HSA? Just three things: • Interest. With the average interest rate of about 0.05 percent in many HSA accounts, anything better than that is worth the switch. • Ease of access. This generation carries more plastic than any other, so a debit card is critical. • Online banking. This generation doesn’t have time to come into a branch. Generation Xers heavily influence the HSA market because of the support they lend to the two surrounding generations. They have higher average incomes than both boomers and millennials. They like messaging that speaks to them directly. They look for authenticity and real-world situations they can identify with. And once you have them as a customer, they are brand loyal. n 1 Paul Fronstin, Ph.D., “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2014: Estimates from the EBRI HSA Database,” Employee Benefit Research Institute, July 2015, accessed July 1, 2016, https:// www.ebri.org/pdf/briefspdf/EBRI_IB_416.July15.HSAs.pdf Kimberly Sexton is a Vice President at Ascensus with more than 20 years of experience in the benefits industry. She has been with Ascensus for more than 10 years and was previously a Vice President with Merrill Lynch and Amvescap Retirement. Kimberly is passionate about benefits education and has spo - ken at the Nashville Benefits Renaissance, the Las Vegas Bene - fits Mania, and the Workplace Benefits Association Conference. Kimberly holds a MBA from the University of Georgia, has obtained the Certified IRA Services Professional (CISP) desig - nation from the American Bankers Association, the Qualified 401(k) Administrator (QKA) designation and the Qualified Pension Administrator (QPA) designation from the American Society of Pension Professionals & Actuaries.