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Editorial Comment: 
This Is The Time To Go After The Boomer Market

Will financial advisors ever go after the baby boomer market? Time was, even just a few years ago, the answer was “no way, they don’t have enough money to pay for financial advice let alone for financial products and investments.” The group-think was, boomers are spend-thrifts, debt-laden and strapped for cash.

In fact, I’ve interviewed advisors who say they walk the other direction, if they see a boomer coming their way.

It’s time for a re-think. Numbers from the Federal Reserve Bank show that older boomers, those aged 55 to 64, saw their family income rise 8% in 2004--to $100,300 from $92,600 in 2001.

In addition, families whose head of household was age 55 to 64 saw net worth also rise by 8%, to $843,800 in 2004 from $775,400 three years earlier. (Check out more numbers in Trevor Thomas’s article below.)

That should give you an idea of the kind of assets some boomers are packing when they arrive at the office for a consult. Not bad, especially in view of all the alarming reports about the boomers’ looming financial crisis.

Simply put, many older boomers are well able to afford the financial products they need, including annuities, long term care insurance, life insurance, mutual funds and retirement income-generating products and services.

This is not to say that all boomers are flush enough to spend on financial products. The 2004 Federal Reserve numbers point out that younger boomers—those aged 45 to 54—actually experienced a 5% decline, to $92,600, in average inflation-adjusted household income between 2001 and 2004. And only about 59% of boomer household heads said they were saving any money at all in 2004, down from 62% in 2005.

Those more discouraging numbers may help explain why many advisors continue to avoid—or at least, not cultivate—the boomer market. Even if part of the boomer market is doing well and is able to pay for financial products, when reports come out about financial meltdown in the other part of the boomer market, the just sirens roar.

If it’s not time for a re-think, maybe it’s time for market segmentation. That is, realize that some parts of boomer-land are great markets to be in. Then, find ways of detecting those markets, and select the products best suited to this market’s needs and situation. Make it a priority, not an if-I-have-time item.

Even the younger boomers can be a viable market, for advisors who are willing to help clients grow into wealth (by budgeting, saving, investing, etc.). The payoff will come slowly in this case, as this growth will likely be incremental. But not too long from now, those younger boomers will become more like their “older boomers” forebears, with equally handsome financial profiles. They will have paid off their children’s college education and the mortgage; they will have a nice nest-egg in their 401(k) or similar plan; they will have higher earnings than today; and some may have nice inheritances too. With all of that, they will need and want financial advice, products and support.

Some marketers make the baby boomer generation sound like the pot-o-gold at the end of the retirement rainbow. The demographics alone will make that happen, they maintain. But smart advisors rightly take such predictions with the proverbial grain of salt. They already know that some boomers don’t have, and may never have, financial wherewithal.

But smart advisors also know when to act on market opportunities. When a reputable source like the Federal Reserve reports that earnings are up in the older boomer category, advisors should pay heed. 

[ To comment on this topic, click write to the editor. ]
 

--Linda Koco, Senior Editor, Products and Managing Editor, e-Publications
National Underwriter Life & Health