The boomer population is large, and only continuing to grow each day. With the vast density of the demographic, comes a deep need for financial advice and retirement planning.
But what are some market factors and industry sales trends to take note of when advising boomers?
Are there any new technology applications that may help advisors better plan for their boomer clients?
To get an industry executive's take on the matter, I interviewed Mark Fitzgerald, national sales manager for Saybrus Partners, Inc.
Emily Holbrook: What are some market trends that present challenges for baby boomers planning for retirement today?
Mark Fitzgerald: The changing retirement landscape continues to present challenges for baby boomers as well as for those already in or nearing retirement. For the long-underserved middle-income market, which encompasses the majority of Americans, these obstacles are particularly formidable. These are the individuals for whom Social Security income and a pension — if they’re fortunate enough to have one — will not be enough to cover all of their expenses during retirement.
The shortfalls mean they’ll need to maximize the income they can get from their IRAs, 401(k)s or other savings. Although this may seem daunting, the challenges facing the middle market represent significant opportunities for agents and advisors to help offer attainable solutions.
Individuals in this market are often less inclined to initiate the retirement planning process simply because they don’t think they have the money to do so. However, this group is at a much greater risk of running out of resources in retirement, and therefore has the greatest need for financial advice.
EH: How can advisors help middle-market retirees achieve their goals?
MF: Since middle-income Americans often don’t actively seek professional advice, it falls to agents and advisors to help these prospects and educate them on what they need to be thinking about, especially as they get closer to the retirement age. Advisors should consider employing the following strategies to reach this audience:
Expand your marketing message:
Despite the fact that these prospects don’t actively ask for advice, they are still very concerned about securing predictable retirement income as well as some level of protection regarding health or long-term care costs. Many times they may not realize that annuities and life insurance strategies are not exclusively designed for the wealthy.
Take a multifaceted approach to education:
Agents can partner with employers or networking groups to provide educational workshops and/or one-on-one sessions that offer a 101-type of approach to retirement planning and annuities. They can also reach this demographic by providing planning information through social media, a blog and other online tools.
EH: Are there any new sales trends you’re anticipating for the year ahead that will benefit this market?
MF: Even with the Fed’s recent rate hike, there is still a very low interest rate environment, and we expect this to continue impacting sales to middle-market baby boomers in 2016. Advisors will continue to offer fixed indexed annuities (FIAs) as an attractive alternative to typical offerings such as CDs, fixed income investments, money market accounts and variable annuities.
In addition, if rates continue to rise, we should expect to see more enhancements to product pricing. The overall market volatility and economic uncertainty also plays a strong role in consumer behavior, highlighting clients’ needs for guarantees and protection.
EH: What are the latest technology innovations that are impacting sales? Are there any new ones that may become available in 2016?
MF: We expect to see much better illustrative capabilities in three particular areas. First, the technology will allow consumers to see how the caps on performance and guarantees work together. Second, the technology will be able to show how a systematic withdrawal strategy will impact guaranteed benefits and cash value.
And, finally, consumers will have a clearer view of how the various benefits in combination products work together to provide comprehensive solutions. All together, these improvements will provide a much better view of how the product will perform in real life.
FIAs can seem complex – and some of the features require careful explanation. Any technology that offers a clearer line of sight to how the benefits and features work and how they are performing will benefit consumers, advisors and manufacturers alike. It’s important to understand the value of the benefits and solutions, not just the features of the products.
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