The senior market is a large market, and it is set to become a much larger one as baby boomers begin to hit retirement age.
Defined here as those at or beyond normal retirement age (65) or those who have taken early retirement, this market creates a tremendous opportunity for those in the financial planning business. The question is, what products to offer this market segment?
Historically, the great majority of senior sales went to certificates of deposit and annuities. Smaller percentages went to mutual funds, Medicare supplement policies, long term care insurance and life insurance.
Now, however, with the stock market down dramatically for more than three years and interest rates at historically low levels, seniors seem to be stuck.
Consider: Annuity interest rates are at or near the minimum guarantees, with many companies having pulled some products because the guarantee is currently unaffordable to maintain. Mutual fund sales to seniors have slowed because of market declines. While bond and income funds have weathered the economic storm a bit, an increase in interest rates will severely impact those yields in the future. And interest rates are now rising.
Some seniors have told me flat out: “Theres nothing to invest in or buy.” Thats the real concern for many seniors today, especially for seniors who have sufficient assets to care for themselves and are lucky enough to have additional assets they dont need for everyday living
To help these individuals, advisors should ask: What is the number one need of such clients? The answer, in most cases, is this: passing the maximum amount of assets on to beneficiaries. These individuals dont care what product they use for this purpose. For them, the product is a means to an end.
For the advisor who has such clients, the product of choice, if the person is healthy, may well be life insurance–in particular, life insurance that can provide LTC benefits if needed.