Currently, the world is abuzz with the talk of millennials – the tech-savvy generation of digital natives who were born in the period from 1984 to 1996. Or from 1980 to 2000, if you ask the Time Magazine, which smartly adds “depending on whom you ask” to this definition. Or from 1977 to 1994, if we cite Newsweek. This disparity in itself suggests a certain confusion around the whole affair with millennials. Even the timeframes we just mentioned suggest that millennials are potentially diverse enough as a group to include people from 19 to 42 years of age, with the all the implied disparity in income and social standing.

Thankfully, however, this confusion does not seem to particularly discourage anyone. Employers and HR managers are mulling the ways to integrate these purpose-driven, creative individualists into the corporate world, thinking up new kinds of business cultures and management styles. Marketing managers are trying out means to attract this new clientele, placing the bet on high tech, improved customer experience and backing the causes that millennials could rally around. At times, it feels like there is a cohort of experts, a whole industry built around the idea that the millennials are different… Although not everyone agrees that they are.

But is it really the time to close the door on everyone else?

Not so fast, we think. The millennials, whether they are different or not, are an increasingly important part of the demographic, other groups matter as well. And while Generation Z is yet to delve into the wondrous world of investment, there is another large group that commands some significant weight. So much, in fact, that some were concerned that their retirement and withdrawal from stock market could lead to a major market crash. Who are they? Let us take a closer look at this ominous cabal – meet the Baby Boomers.

Who Are The Baby Boomers?

The first thing to note about the Baby Boomers is that, contrary to the previous paragraph, they are anything but an ominous cabal committed to bringing the stock markets down through strategically-timed retirement. In fact, it is even quite debatable whether the prospect of their retirement really heralds doom and gloom for the stock market – after all, not all Baby Boomers are about to sell off their stocks, and the pool of investors is not limited to Baby Boomers anyways. Institutional investors, be it banks or hedge funds, are also very much active on the market, and not just them.

So now that we have established what Baby Boomers are not, it is time to look at what they actually are. Baby Boomers are those who were born in 1946 and 1964. This was a time, as we can infer from the name of the generation, of a demographic explosion. The high birth rate came on the back of multiple factors. The G.I. Bill allowed the veterans to buy affordable housing, effectively creating the suburban America of the 50s and shaping the new era of American housing. This made it easier for those who postponed family matters until the end of WWII to settle down. A sense of confidence in the future, bolstered by availability of new kinds of credits, as well as the socially-instilled tradition of early marriage, led to 76.4 million babies (which amounted to 40% of the country’s population at the time) born over the period.

These babies were born into the era of prosperity, when increasing demand drove the economic growth, and grew up in the times of stability and confidence in a brighter future. Then, the turbulent 60s followed, with their rebellion against the sterile suburban culture, protests against the Vietnam war, civil rights movement and Cold War. While some of that has led to a certain disillusionment, the idealism of this era would be seen as a trait of the Baby Boomer generation. Other characteristics typically ascribed to Baby Boomers include a hard-working spirit, self-confidence, competitiveness, discipline, great team working skills and a coherent and focused approach to business. In other words, they can be seen as an almost direct antipode to what the Millennials are seen as.

But for all the virtues of the generation, time is taking its toll, and the Baby Boomers, who are now aged from 55 to 73, are beginning to retire. And it looks like the crisis of 2008 has left many of them reeling. Nevertheless, due to their weight in the US economy, Baby Boomer investors should be seen as welcome guests at any wealth management operation.

Baby Boomer Investors

Here is some simple statistics: Baby Boomers are estimated to account for 22.5% percent of the US population, while unabashedly dominating, which is quite understandable, the distribution of US household wealth.

Other accounts also point that they also dominate the US population in terms of net value, spend around $7 trillion on goods and services per year and dish out $420 billion in taxes annually. In other words, economically, Baby Boomers are a force to be reckoned with.

Their investment preferences, however, are described differently in different sources. A report by BMO Wealth Management, for example, paints them as preferring managed portfolios and mutual funds to other ways of investment. It also describes them as more eager to hold financial instruments for long periods of time, and less inclined to work with automated robo-advisors than millennials.

A recent opinion poll by the Capital Group also describes the Baby Boomers as a buy-and-hold crowd, playing the long game and seeking to hedge against the market risks. This suggests an affinity to the risk-on, risk-off strategy and, hypothetically, a tendency to more conservative investment. They are also reported to largely hold a bullish perspective on the market, expecting it to grow in the next 10 years.   This suggests an affinity to the risk-on, risk-off strategy and, hypothetically, a tendency to more conservative investment. They are also reported to largely hold a bullish perspective on the market, expecting it to grow in the next 10 years.  

A report by Spectrem Group, in the meantime, argues that there is no such thing as a typical Baby Boomer investor. Instead, it argues that this group can be split into five distinct subgroups, each of them having its own traits and features. Moneybags, the most conservative of the lot, have a lot of wealth to protect and are thus wary of any risky plays. Cowboys, their antipodes, enjoy the thrill of the trading and are significantly more inclined to go for risky investments. The group referred to as the Big Middle is more moderate, but can still take some risks due to its confidence in own financial savvy. The group labelled as Advise Please, on the contrary, prefers to rely on the wisdom of wealth managers. The final group, Rock On, is comprised of the younger Baby Boomers, who are still in employment and are thus not that inclined to take risks.

AI-Driven Investment Solutions For Retirement

While we mentioned earlier that Baby Boomer investors may not necessarily be too trusting when it comes to robotic investment advisors, an AI-driven investment decision enhancement tool may in fact be quite beneficial. The Israel-based I Know First company utilizes its propriety AI to deliver daily stock market forecasts, which offers a range of clear benefits to investors looking to protect their egg nest.

First, the investors are capable of tailor their portfolio to their risk tolerance level using clear and simple mathematical calculations. The AI’s forecast is delivered as a heatmap with two numeric ratings for each asset on the forecast. These are signal, which is an estimate of how well the asset is going to perform in comparison with the other financial instruments on the forecast, and predictability, which is a Pearson correlation ratio between the correct forecasts in the past and the stock’s actual movements. These values can be used to get a clear understanding of how risky any move would be and tailor the strategy accordingly, which would be a boon for the Baby Boomer investors with various levels of risk tolerance.

In a similar fashion, monitoring the forecasts for multiple sectors across multiple regions can make for a more flexible asset allocation strategy. The idea here is to re-balance the portfolio every now and then based on whichever region is predicted to do the best. Furthermore, since the AI works not only with stocks, but with other financial instruments as well, including ETFs, currencies and commodities, it is possible to work with lower-risk assets the same way one would work with stocks, which would be an option for the more conservative investors. Overall, it covers over 10,000 various assets, making it easier for investors to explore the more exotic options like cryptocurrencies, which they may not necessarily be too familiar with.

The algorithm is designed with elements of chaos theory, deep learning and genetic programming. The former essentially means that it views the markets as chaotic systems, which can be thrown off balance by a relatively minor event. Deep learning is utilized to enable the algorithm model the complex interplay between various stock dynamics and predict the way the market could develop. Genetic coding allows the algorithm to learn from its past successes and failures, improving the accuracy of its forecasts with every new iteration.