For many financial services professionals focusing on the retirement market, the baby boomers provide both the greatest challenge and the greatest opportunity we'll face in our careers. Some advisors are even in denial, claiming to "only work with seniors." The fact of the matter is, the first of the boomer generation is turning 62 years old this year. Jack Marion recently did a study claiming that the average age of an indexed annuity buyer is, you guessed it, age 62.
No matter your feeling on the index annuity itself, the point is that baby boomers are here. If you are marketing your financial services firm to the public in any fashion, you are reaching this demographic. I have had the opportunity to train and speak to hundreds of advisors on this topic, and there are four key factors an advisor needs to understand to be successful with this demographic. (I introduced the S.A.M.E concept in an earlier article
, and here I have applied it to the baby boomer generation. Again, this can be used as a template when targeting any new marketing classification.)
Situation -- How does the class/advisor view the situation?
What is the class/advisor's level of awareness of the situation?
How do I create a compelling message and what medium do I use?
Education and acquisition --
How do I get the prospect to see things the S.A.M.E. way I see them?
is based on understanding the evolution of the baby boomer generation. We need to understand this, relative to the age 65+ senior market, which we have all been focused on for the past couple decades.
Seniors (parents of boomers) grew up in a time of defined pension plans, working for the same company for a majority of their working years and limited exposure to a volatile stock market. Their children, the boomers, have often switched jobs, if not careers, multiple times in their lives.
Boomers are accustomed to portable retirement plans like IRAs and 401(k) s. Inside those 401(k)s and IRAs are largely mutual funds in which they had little or no help choosing their allocation. Many of them have built sizable retirement accounts and are very comfortable with market volatility. They understand the market goes up and the market goes down, as it has their whole lives. As advisors, some of the startling market lessons you illustrate may not be as effective. One thing they often don't understand is that much of their account growth has really been no fault of their own. What many boomers have experienced is the benefit of dollar cost averaging over a long period of time. Their deposits where added on a monthly basis in down, up and flat markets, forcing them to invest in one of the soundest ways possible.
of their history is one factor; our awareness of their future is another. American Express issued results from a study back in 2005 titled, "Affluent Boomers Who Seek Financial Advice Are More Likely to Reach Retirement Visions."
"The survey found that a majority of affluent boomers are planning for a retirement far different than the one chosen by their parents. According to the survey, boomers see their retirement as a time for `learning and self-discovery' (85 percent), for `reinventing oneself' (65 percent) and for a `new beginning' (51 percent). About nine-in-10 (88 percent) see it as a new phase of personal growth and development. Also, six-in-10 say they plan to work because they want to, not because they have to. This is in stark contrast to the 57 percent who say their parents did not work at all in retirement."
"`With greater expected longevity, boomers can't help but redefine retirement as they've redefined major life events every step of the way,' said Rusty Field, vice president of Financial Education and Planning Services. `They are interested in reinventing themselves, starting a new business or career, and going back to school to learn new skills or travel. And they are increasingly reassessing their future role in the workplace by extending their careers or downshifting.'"
If we agree that the boomer generation has different goals and objectives then their parents, then we must agree the marketing
message has to be portrayed in a different manner.
Baby boomers see wealth as a means, not an end -- a means of achieving what they want out of life. They are looking for advisors, not salespeople. Does that mean you shouldn't make a living from sales? Absolutely not. The problem is, you'll need to find a way to incorporate real planning and strategies into your product recommendations. The product is part of a solution, not just something you pitch.
You have seen a big push on income planning, Roth IRA conversions, and arbitrage using unwanted RMDs and withdrawals. Marketing messages that help boomers solve planning issues will be twice as effective as some of the messages used with seniors today. You'll need marketing campaigns that are not always "proven." which can often mean "saturated." You'll need progressive mediums such as video, Web presence and e-mail. You might be thinking, not yet. My advice is to practice, so you stay two steps ahead of the curve and three steps ahead of your local competition.
Once you start getting more boomers into your office, the education and acquisition
begins. One of the things many advisors are doing is getting their Series 65 and becoming investment advisors. You have a choice to form an independent registered investment advisor (RIA) or join an existing RIA. This gives you a huge positioning advantage as to the way you are viewed by your clients and prospects.
Providing a real investment review is a great place to start. As we agreed, most average retirees hold mutual funds but don't really understand them. Morningstar is a simple, third-party resource to educate your prospects and illustrate how much in fees they might be paying with their current advisor. The benefit of the third-party resource is they expect you to tell them they have bad investments; they don't expect an unbiased third party to agree with you. I'm not talking about getting into hour long Monte Carlo simulations; simply highlight a few areas for them to consider improving performance while lowering internal fees.
People, as a whole, are often more open to recommendations after real value has been provided. They often do not forget who added that value. You will increase your sales by 50 percent when you figure out how to say, "You're doing fine, but I think there might be a better way of doing this," rather than "You have made poor decisions."
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