Chapter 1

Question 1

Name the following years associated with each Age Cohort?

Early baby boom
Late baby boom
Generation X
Generation Y (Millennials)

Answer 1

Year of birth

1946 - 1954
1955 - 1964
1965 - 1980
1981 - 1996

Question 2

An effective wealth accumulation plan should consider the following:

Answer 2

1. How does the client define ‘wealthy’?
2. What are his or her reasons for wanting to be wealthy (ie. what are the life goals)?
3. What are his or her future expectations?

Question 3

What are three wealth accumulation classification schemes (or systems)?

Answer 3

1. Age cohorts
2. Wealth accumulation stages
3. Life transitions/life stages

Question 4

Define Early Baby Boomers:

Answer 4

1. spans the ages of 68 and 76
2. most are in retirement
3. many do not feel old and are not ready to slow down
4. will not be as prepared for retirement as their parents

Question 5

Define Late Baby Boomers:

Answer 5

1. spans the ages of 58 and 67
2. preparing for retirement
3. basic lifestyle assets in place

Question 6

Define Generation X:

Answer 6

1. spans the ages of 42 and 57
2. transitioning from raising families and focusing on home ownership to having a stable career and older children
3. more likely to be self-employed

Question 7

Define Generation Y (Millennials):

Answer 7

1. spans the ages of 26 and 41
2. focused on raising families and home ownership
3. more concerned with short-term planning than long term planning
4. twice as many millennials as Gen Xers

Question 8

What is a drawback to using age cohorts?

Answer 8

As the cohort ages, their needs will change.

Question 9

What are the Wealth Accumulation stages?

Answer 9

1. Seed-money formation
   ages range from 20 to 40
2. Mid-life growth
   ages range from 35 to 60
3. Pre-retirement consolidation
   ages range from 55 to 70
4. Retirement
   age range above 70

One drawback is that the characteristics do not always match some individuals slotting in the group.

Question 10

Life stages include the following?

Answer 10

1. Independence from parents
2. Marriage/building a family
3. Career evolution
4. Family maturity
5. Pre-retirement
6. Career change
7. Health challenge
8. Single due to divorce or death
9. Retirement

Question 11

Life transitions include the following:

Answer 11

1. Death of a spouse
2. Divorce
3. Critical illness
4. Job transfer
5. Job promotion
6. Financial setback
7. Financial windfall

Question 12

The life state approach differs from the age cohort or accumulation stages in three main ways:

Answer 12

1. Life stages are not always related to age.
2. Life stages are more specific.
3. Life stages focus on how clients view their life and the demands placed upon them.

Question 13

What are the three life transitions associated with the transfer of wealth?

Answer 13

1. Death of a parent
2. Death of a spouse
3. Divorce