The days of the one-size-fits-all investor brochure are gone. Consumers now demand more from their advisor. They expect information that is tailored for their age group, and there is big money to be made if you set yourself apart by providing it.

Over the past two decades, studies on the current and future impact of the baby boomer generation have created awareness of the need for, and the potential benefits of, moving away from mass market messaging to a customized approach based on generational factors. This article will discuss the advantages of using generational factors to build your financial advisory or planning business across the age spectrum. (For more on "boomernomics", check out Boomers: Twisting The Retirement Mindset.)

Segmenting the Generations
Generational marketing has emerged as a means of segmenting the population based on various demographic and psychographic factors. It is a strategy that provides a competitive advantage among consumer products companies. This strategy has also been adopted by the financial services industry as a new technique to dig up clients.

The following illustration, developed by the Generational-Targeted Marketing Group in February 2007, is a concise presentation of each generational segment.

Generation 9/11
  • Generation 9/11 values fitting in with their peers.
  • Overprotected during their formative years: at home, because of the rash of kidnappings and Amber Alerts; at school, because of school-shooting incidences; and in society, because of terrorism.
  • Will Tend to be risk-averse and therefore conformists as adults.
Generation Y
  • Influenced by their brand-conscious Boomer parents.
  • Attracted to brands at an early age and remain loyal.
  • Associate brands with companies that stand behind their products.
  • Brand names also important for peer recognition.
Generation X
  • Market Savvy
  • Demand an honest, straight-forward approach.
  • Expect you to deliver on your marketing promises.
  • Burn them once, lose them forever.
Baby Boomers
  • The busy generation.
  • Often juggle kids, spouses, parents and jobs, so anything that makes their lives easier or more convenient will appeal to them.
  • They do not have time to read lengthy marketing efforts.
  • Capture their attention in seconds, or lose them.
Silent Generation
  • Once financially conservative, they are now willing to spend money on themselves.
  • Feel it\'s now-or-never time to splurge on that big-ticket item.
G.I. Generation
  • Avid readers
  • Prefer sales by mail because customer service standards have fallen.
  • May have trouble with transportation, so catalog sales are a natural fit.
Source: Generational-Targeted Marketing Group, 2007

How Shifting Demographics Impact your Business
There are several major demographic shifts that financial advisors need to be aware of. Some of the most significant factors driving demographic shifts include:

  1. The shift from the traditional, nuclear family, to families of unmarried partners, single parents and multi-generational households;
  2. The impending retirement of nearly 50 million Baby Boomers;
  3. Increased longevity across all age spectrums.

Nuclear Family Meltdown
The nuclear family (usually defined as a father, mother and their children) is disappearing. According to the survey data collected by the U.S. Census Bureau in 2000, the number of single mothers increased to 10 million from 3 million between 1970 and 2000; over the same time frame, the number of single fathers increased to 2 million from 393,000. There were also 5.5 million unmarried partners (up from 3.2 million in 1990); 27.2 million one-person households; and 3.9 million multi-generational households (65% are elders providing childcare). Financial advisors must become adept at finding solutions for all types of family structures, including selecting the most appropriate beneficiary strategies and estate planning. (To learn more, see Problematic Beneficiary Designations - Part 1 and Part 2.)

The Boomers are Coming
Baby Boomers are likely to need investment income during the coming decades. Baby Boomers hope to receive the bulk of their retirement assets from employer-sponsored retirement plans, but these plans are disappearing. Many Boomers will face unique problems, including how to allocate unexpected income, such as distributions from parent's trusts and other estate assets; and the monetary demands from their Generation X children. (To learn more about these demands, read The Demise Of The Defined-Benefit Plan and Boomerangs: Why Some Kids Never Leave The Nest.)

According to the "2006 Retirement Confidence Survey" by the Employee Benefits Research Institute, a majority of workers (59%) say they want a standard of living in retirement that is the same or better than in their working years. This combined with increasing life spans means that they will need longer-term income producing investments with relatively lower volatility than their current investments. (To read about the special income-generating requirements of retiring Boomers, see Weave Your Own Retirement Safety Net.)

The Financial Impact of Longevity
Most experts agree that, "the end" of working is further away than most investors think - especially if average life expectancies continue to rise. However, despite increases in average life expectancies, investors must factor in the impact of health-related issues. So, even if clients live longer, there is no guarantee that those "twilight" years will be healthy years.

Only 50% of clients who use financial advisors are on track with their retirement investments according to a September 2006 Industry Attitudes Survey by Investment News magazine. As you take a look at your current book of business, ask yourself:

  • What if either (or both) clients live to be age 95 instead of 85?
  • What if my clients want to spend more in retirement than they are now?

Generational Marketing as a Competitive Advantage
Generational marketing strategies can solidify your positioning in the mindset of prospective clients, and increase the long-term profitability of your business. The financial planning process has become increasingly holistic. It is no longer simply a matter of addressing the quantitative aspects of accumulation and distribution. Individuals are looking for advisors who can also address the qualitative aspects of critical life stages throughout the duration of the financial planning process. (For more on the psychology of retirement, see Money Can't Buy Retirement Bliss.)

A well-tailored marketing message will instill a feeling of loyalty in your clients. It's important to appeal to each generation's unique characteristics and mindset. Advisors who understand how to effectively apply generational marketing strategies are far more likely to gain critical insights (a side effect of developing relationships) that will ultimately lead to more business and happier clients.

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