Baby boomers (those born between 1946 and 1964) are the fastest growing, wealthiest, and most sophisticated group of purchasers. It is estimated that they spend approximately $2.3 trillion each year on consumer goods and services. While the initial class will turn 64 next year, the youngest will not reach that age until the year 2028. With 18 years between the first and last, they will remain a significant consumer group for several years. Their purchasing decisions are influenced by both old and new media, which is important for financial advisors to remember when marketing to members of this generation.
Much is being said and written about how unique baby boomers are, when compared with both their parents and with Generation X. As individual consumers, they expect service providers to offer them a first-class experience, at economy class prices. This presents a challenge for professionals in the financial services industry.
The marketing mix that a financial advisor chooses to implement in her practice has a major impact on the end result. Some decide to communicate their message through seminars, while some believe that building a referral-based business in the only way to go. There is also the decision on how much of the budget should be allocated toward marketing. One thing is certain: Though marketing to boomers may be more challenging than to other generations, the reward is there for those who commit their time and financial resources to cultivating this group.
Undoubtedly, boomers are not one large homogenous group. It is hard to establish an ideal boomer that symbolizes them all; however, there is commonality in how they choose service providers and how they spend their time. Before creating a marketing strategy, there are three questions that must be answered.
1) How do boomers get their information?
Who are the baby boomers?
2) Which activities will attract their attention?
3) When it comes to providing financial advice and retirement planning services, what are the attributes that boomers find appealing?
- More than 60 percent of boomers actively consume socially created content like blogs, videos, podcasts and forums. What's more, the percentage of those participating is on the rise.
- Seventy-six percent listen to the radio -- more than any other demographic
- Forty-nine percent listen to the radio during the morning drive
- Fifty-seven percent read their local daily newspaper regularly
- Sixty-eight percent read their weekly community paper
- Seventy-seven percent watch television between 7:30 pm--11:00 pm
What activities attract their attention?
The majority of baby boomers plan to be active in retirement. This provides financial advisors more opportunities to get their message across. According to the Allstate Financial Retirement Reality Check survey, the following are the most desired retirement activities:
2. Family activities
10. Home improvement
Every year, Mainstay Investments conducts a survey to uncover the needs of baby boomer investors:
1. Frequent Communication -- The research suggests that interpersonal skills are more important to boomers than technical expertise. Boomers want financial advisors who can strengthen their relationship over a period of time, and do so through consistent communication. Whether it is a prospect or a client, boomers want advisors touching base with them a minimum of twice a month. This could be through traditional methods of communication like a phone call or through a simple e-mail. The point is that boomers need to be contacted a minimum of 24 times per year in order to feel that they are developing a relationship with an advisor. They want to know their advisor will quickly get back to them with answers to their questions, as well as initiate communication. An advisor who demonstrates a thoughtful, genuine interest is more likely to have clients for the long term.
2. Empathy -- Financial planners must possess technical expertise in tax and estate planning, risk management, investment management, and finance. Consumers expect to see these core competencies in planners. But consumers also seek client-centered relationships. While technical expertise is critical to successful plan design, if a planner has little or no ability to establish a personal rapport or connection with the client, plan implementation and compliance suffer. And client failure to implement and comply with recommended changes sets the stage for an unsuccessful planning engagement. The Mainstay survey found that transaction-based advisors will need to remove 85 percent of the 78 million boomers with money to invest from their prospect list, because 85 percent of today's investors are seeking client-centered relationships ( Van Zutphen).
3. Trustworthiness -- Based on the recent few years of investor scams, financial scandals, and shaky markets, clients are more concerned about those with whom they invest their money. They now demand that their advisors be trustworthy from the start and work to build trust throughout a relationship. Overall, boomers weigh intangible qualities such as knowledgeable advice and trust more heavily than financial returns ( Richardson).
4.Customized advice -- Most existing mass-marketed products, however, are not customized enough to help baby boomers transition from the one-dimensional working career into retirement, let alone provide for the moves between the fast, medium and slow phases. Although new financial products and services are emerging that address the new retirement paradigm, more attention and innovation are needed. The new focus will be on income for life and on products that facilitate careful and systematic decumulation of a client's savings in retirement, along with insurance vehicles that address the health care issues face d by senior citizens (Davidson).
The Cost of Leisure Index revealed that surveyed boomers anticipate spending approximately $10,900 a year on having fun during their retirement. On average, boomers said they would take four trips per year, and spend about $7,700 annually. What is interesting is that the survey found that there is a fundamental disconnect between what middle-income American expect out of retirement and how much they are actually saving. Respondents in the survey said they would need $40,900 per year in retirement to cover the cost of their top-rated activities and basic living expenses. To have that, the average boomer will need to have more than $1.2 million at the beginning of a 20-year retirement, factoring in savings and inflation. The surveyed boomers on average, have less than $120,000 in assets (AllState)
It is important to remember that providing boomers with information is not enough. The amount of available data and guidance tips available is overwhelming. Providing them with an overload of information will simply cause boomers to feel it is all too much to handle leading to either no action or at best, delayed action. In your meetings with them, it should be mentioned that it is understood that they may have the skills and the time to create a financial plan without a professional advisor; however, due to the volume information already available, doing so would cause them to implement their financial plan on an inconsistent basis, changing course when new information is put in front of them. What boomers are looking for is actionable knowledge: knowledge to understand what their advisor is recommending and enough knowledge to engender confidence that the advisor is an informed trusted advocate for their future (Coughlin, D'Ambrosio).
In an effort to provide financial advisors with advisors statistics that they can utilize to gain more clients and have better conversations, I hope I have made it clear that marketing to baby boomers effectively requires a strategy that combines both traditional media and new forms such as social networking. By understanding how boomers want to receive information, the activities in which they participate and the attributes they are looking for in a financial advisor, you will put yourself at the front of the pack.
AllState Financial's Cost of Leisure Index. " And The Top 10 Most Desired Retirement Activities Are."
Coughlin, Joseph F., Lisa A. D'Ambrosio. 2009 " Seven myths of financial planning and baby boomer retirement." Journal of Financial Planning
Davidson, Charlie. "In the Service of Baby Boomers: A Seismic Mind Shift for Financial Service Providers." September 2005. The CPA Journal
MainStay Investments. "Eighty-Five Percent of Investors Want More than Solid Returns from Advisors, According to MainStay Investments Survey." December 4, 2006.
Pullen, Courtney. 2002. "The Art of Connection." Journal of Financial Planning 15, 6: 32-34
Richardson, Vanessa. "The Five Attributes of Highly Successful Advisors." Feb 13, 2008.
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