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.