Talk of meeting the needs of the baby boomer retirement income market has been incessant for years now. I was reminded of that fact today when I read an article in Forbes, which counseled financial advisors to deepen their involvement in the retirement planning process of baby boomers, To that I say, Amen! And for good reason.
During the next 25 years, millions of boomers holding trillions of dollars in personal wealth will reach retirement age with a pressing need for income that will allow them to enjoy a reasonable standard of living and cannot be outlived. To a varying degree of effort and creativity, the insurance and investment industries have been attempting to develop and market products that respond to this opportunity.
This is all well and good, but marketing organizations and producers should not lose sight of another equally dynamic market – the market of the future.
The entire industrialized world, including North America, Europe, and parts of Asia, is experiencing a rapidly aging population. In Germany and much of Europe, as well as Japan, there have not been high enough birth rates to replace those who die. This will have a dramatic impact on the future economies of these areas, even greater than does an aging population.
The United States is unique in this aging scenario in that it is the only highly industrialized country with both aging and younger growing populations. Think of it as a barbell. Unlike other countries, in the United States, there are large groups on each side of the population bar. Certainly there is the mass of baby boomers approaching retirement on one side, but there is also a large group of the population entering its most productive years.
In the rush to meet the pressing needs of those approaching retirement, this younger segment of the market, those in their 20s and 30s, has been virtually ignored. Yet this group is really the future and represents a unique ongoing opportunity.
Read any publication or company announcement on new products and you will see an overwhelming emphasis on products designed to meet retirement needs. There is an equal, if not greater, opportunity to develop new products for the younger population at the other end of their careers. Maybe many in the insurance industry are shortsighted, or maybe it is for lack of understanding of the different needs of this younger
As a result, the younger generations are being under-served. They are offered only the tired old products that were suitable for their grandparents, but those products are not appealing to them. If companies, marketing organizations, and producers are going to take advantage of the unique demographics of the U.S. population, it will call for a new generation of products and marketing approaches that appeal to this younger group.
Meeting this market calls for creative and innovative products that will serve the needs of these individuals over their entire life, not just periods of their life. For example, pure life insurance policies are not attractive to younger people because fewer and fewer are dying young. And the long-term aspect of a life insurance policy does not serve them well at older ages. At the same time, these individuals do not have the current income or wealth to take advantage of pure annuities. This younger generation is also concerned with the impact
that a catastrophic illness or disability might have on their earning power and family, even if they don’t die.
What is needed is an entirely new concept in financial products, one that would protect against premature death but at the same time offer competitive long-term returns to encourage investing for the future and also protect against the middle age risks of illness or disability. Such a product would appeal to the younger generation as a type of “life fund” that would protect and reward them during the entire span of their life.
Such products could easily be developed and marketed, but onlhy if we are willing to think about the future of this younger market. Remember, those who forget about the future rarely have one.(This article bylined by Bob MacDonald was originally printed in Insurance Marketing, the premier source for marketers of life, health, and financial products.)
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