In a meeting climaxed by the appearance of former President Bill Clinton, LIMRA International’s annual conference here focused on the prospects and challenges of baby boomers’ impending retirement.
“What lies ahead is the biggest opportunity in the history of our business,” said Robert A. Kerzner, president and chief executive officer of LIMRA, at the opening of the conference Oct. 29. “We are facing record-breaking numbers of potential customers who will need our products. The possibility of increasing your sales and earnings is enormous.”
He pointed, too, to the emerging financial needs of the so-called generations X and Y, the broad age groupings that follow the boomers. Together, they make up more than 37% of the U.S. population, compared to the boomers’ 21% share, noted Kerzner.
“Yet I am not convinced we are spending enough time in the U.S. or in other markets thinking about how to better reach these consumers,” he said. “With defined-benefit plans disappearing and Social Security benefits looking shaky, the X and Y generations will need our products even more than the boomers.
“Right now, they should be buying life insurance to protect their families and saving systematically. Are we doing enough to develop relationships with these potential customers and capture this ignored market?”
To be leaders in selling to such groups, life insurers need to do better at educating consumers, building distribution and making investment for long-term growth, he insisted.
“One would think with all this talk about boomers and all the ads encouraging them to save, we would be seeing record savings rates, right?”
In fact, he noted, savings have declined for the past 2 years.
“Many are asking, ‘Why aren’t people saving more?’ Our research tells us there are many reasons. But most of it comes down to procrastination and confusion. And education is the solution.”
He urged insurers to compete a little less for existing consumer dollars and try to grow the market by being more informative.
“We must stop just moving assets from company A to company B and start helping them understand how to save systematically–how to reach their financial objectives and protect themselves against the risk of dying too soon, living too long or becoming disabled,” Kerzner said.
In a panel discussion later that afternoon, the top executives of 3 major carriers agreed that a major task for insurers right now is to teach consumers why they need their products.
Clients need to think about the fact they can spend a long time in retirement and that insurance products can mitigate that risk, said Jon A. Boscia, chairman and CEO of Lincoln Financial Group, Philadelphia.
“Retirement is not something you save towards,” he said. “It’s a longevity risk you need to protect against.”
Boscia said Lincoln Financial is urging advisors to debunk the standard wisdom that people only need 70% of their pre-retirement income.
“Today, people are living 20 to 30 years in retirement,” he said. “They want to travel, be involved in their kids’ lives. It could take more than 100% of preretirement income to live the way they want.”
Robert A. Chappell, chairman and CEO of Penn Mutual Life Insurance Co., Philadelphia, said his company has been trying to reach boomers by emphasizing guarantees available with many of its variable products and by “aging” its sales force to match the age of boomer buyers.
He also said Penn Mutual has been successful in recruiting older salespeople from the ranks of other professions, such as teachers and accountants who are interested in starting a second career. Once through training, these advisors often return to prospect for clients in the industry they left, where they have extensive contacts, Chappell said.
Christopher M. Condron, president and CEO of AXA Financial Inc., said his company expects to turn its recruitment efforts to hiring more women.
“Because they generally outlive men, women wind up with all the money,” he said. We haven’t done as good a job as we’d like in attracting women. But women are more comfortable buying from women.”
More generally, AXA’s prime interest is in selling products to what Condron called the “at-retirement space,” consisting of boomers who are wrapping up the asset-accumulation phase of their lives and seeking income products.
The task financial advisors face is to educate clients about longevity and convince them to own investments that won’t outlive them, Condron said. Around 85% of annuities his company sells include lifetime guarantees, he added.
President Clinton wrapped up the conference with a speech that spanned a range of issues, from poverty as a cause of international instability to a medical malpractice liability crisis that he argued discourages many young people from becoming physicians.
Basically, he said, solving such problems amounts to a global home-improvement project for nations as a whole.
Among the solutions he urged is for private individuals to become more engaged in national problems.
“People as private citizens have more power than ever to do public good,” he said. “And because we have the power to do it, we have the duty to do it.”
He also said in response to a question that if he were running for president today, fixing the health care system would probably be among the foremost items on his agenda.
The U.S. spends more on health care than any other nation, but access to the health care system is lower than in most of them, he said.
His appearance was cosponsored by 15 life insurers and financial service firms.