With the investment world paying so much attention to the needs of baby boomers, agents may think they have this lucrative segment of the investment market sewn up with products such as variable annuities, long term care insurance, and mutual funds. But if you think of boomers only in terms of the group that watched “The Mickey Mouse Club,” ducked and covered during air raid drills, and worried about being sent to Vietnam, you may be ignoring a constituency standing right before you: boomers born between 1956 and 1964.

Too young to remember a slide rule and too old to have grown up with a laptop computer, second-wave boomers are now rolling into their peak earning years and are brimming with money for investing — and they’re waiting for you to notice them.

Easy to overlook
Many agents spend most of their days tending to the first wave of baby boomers, who are either entering or living in their retirement years. Providers for the products aimed at this audience have a lot at stake in trying to meet older boomers’ needs, but as a result, many of their products seem inappropriate for younger boomers’ financial requirements. For example, a 100 percent bond portfolio would offer little to no growth, and a very aggressive fund would be high risk with no downside protection, making them inappropriate, as well.

Products tailored to the needs of these younger boomers have been slow in coming, but the investment power of second-wave boomers demands more customized products. While they trail a bit behind first-wave boomers in terms of average investable assets and average total net worth, second-wave boomers tend to have higher incomes and are looking for new investment vehicles. They’ve also learned from their older brothers and sisters — many of whom postponed retirement in the 1990s, when dot-com crashes devalued their holdings — that they really need to retain investment agents.

Not the retiring types
What else makes second-wave boomers prime candidates for agent/client discussions? While nearly a quarter of older boomers are already either fully or partly retired, 73 percent of second-wave boomers recently surveyed are still going strong and have years of employment ahead of them. Moreover, they are entering their prime earning years, offering you excellent investment opportunities. For instance:

  • While first-wave boomers are beginning to access their retirement income and develop a more conservative investment outlook, younger boomers are still investing aggressively as they build nest eggs and work to preserve capital.
  • Second-wave boomers have considerable retirement assets available to invest. In a recent study of 4,000 affluent and high-net-worth investors, second-wave boomers averaged $732,000 in investable assets, close to that of the first-wave boomers’ $998,000. When you consider that many of them will continue to work for several years, even as long as two more decades, their need for your business is impressive. Moreover, they have money to invest that many older boomers do not. Pension plan participation, which locked a major part of many older boomers’ investment assets from your business, is offered less frequently these days, meaning that younger boomers have more money available to place in investments.

Are you suited to serve second-wave boomers?
Younger boomers exhibit a stronger interest in creating a financial plan than older boomers. Second-wave boomers are thinking about their retiring parents, and they have learned through experience that they need to also consider their own long-term financial needs. Fortunately, agents often have all the ingredients that many younger boomers need, including 529 plans, long term care solutions, life insurance, and variable annuities.

You can differentiate yourself from your competition by taking a holistic approach to the financial needs of second-wave boomers. Since agents can offer younger boomers an array of suitable products, they have a leg up on the traditional stockbroker. You should position yourself as a one-stop shop, listen to all of your clients’ needs, and suggest solutions in all product categories that fit their particular situation.

Advice they can trust
With the right approach, you can offer the all-encompassing retirement planning expertise that younger boomers can understand and trust. This group is typically less loyal to advisors, but they will react positively to the personal touch. That means that when you are trying to get their attention, you should call them rather than sending an impersonal direct mail piece. You always have a good reason to call – these younger boomers are interested in products that preserve capital and offer growth, and you may already have the necessary tools to satisfy most clients’ financial needs.

As an example, second-wave boomers would be interested in variable annuity products, with their ability to lock in death benefits and, with a step-up option, the security that comes from periodically locking in gains for further family protection as time goes on. For those with securities licenses, target-date funds help eliminate the confusion that many investors feel when faced with too many mutual fund choices in the typical 401(k).

Younger boomers represent an ongoing opportunity for today’s agent. You can earn the long-term trust of a younger boomer with an independent perspective and an interactive relationship that serves the financial needs of these clients, now and into the future. Armed with products that work and loyalty that lasts, it is quite possible to not only attract your share of the second-wave boomer market, but to keep it, too.

Bruce Harrington is a managing director at Cogent Research.

Financial Demographics by Generation

All Respondents Generation X 2nd Wave Baby Boomers 1st Wave Baby Boomers Silent Generation
Average investable assets $1,003,459 $556,404 $731,777 $998,466 $1,215,552
Average household income $186,491 $206,893 $205,109 $186,757 $170,161
Source: Cogent Research Investor Brandscape: 2007.

What Products do My Boomer Clients Need?

Good for boomers:

  • Lifecycle funds (either target date or target risk)
  • Growth and income funds
  • Variable, equity index, and fixed annuities
  • Long term care insurance

Bad for boomers

  • Aggressive growth funds
  • Specialty funds that concentrate on a sector such as technology or health care
  • Bond funds with short durations