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Just Another Birthday

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January 1st, 2011 officially marks the first day when the Boomers start turning 65. You would think that the life & health industry would have selling to the Boomers all figured out. Not so, according to Matt Thornhill, president of the Boomer Project, a marketing research and consulting firm in Richmond, Virginia. Thornhill has done work for Lincoln Financial, the Million Dollar Roundtable, Genworth and IMOs like Creative Marketing. What he is turning his sights on now is teaching agents and brokers how to sell better to their Boomer clients, but it requires people to change their views on what they sell and how they sell it.

What is the biggest sales opportunity with Boomers, right now? If you’re not focused on selling annuity products to people in their 40s, you’re missing a huge opportunity. You would think that the youngest Boomers would have no interest in fixed annuities, but they do. They saw what happened to their older counterparts when the markets went south in 2008 and 2009. They saw nest eggs lose up to one third of their valuation, and to people who had no time to make up that lost ground. As a result, young Boomers are only too willing to accept a floor that limits their upside but limits their downside, too.

What about older Boomers? We did a joint study with the MDRT that found that households with $50K income or greater almost universally felt it was important to have a financial plan, yet two thirds felt that they did not have confidence in the plan they had in place. And while this weighs on the minds of young Boomers, older Boomers feel the same way, and it is the ultimate wakeup call for the financial services distribution system.

Why? The current mindset among Boomers is they are not adequately prepared for this next part of their lives, and they are desperately in need of somebody to help prepare them. The problem is, most reps in this business are so focused on product sales – and compensated along those lines – that they simply do not have the advisory focus that Boomers are really looking for.

It sounds like trying to sell just life insurance to these people make you a footnote to the depressing individual life numbers LIMRA published last year. The key is not getting to know your clients well enough to sell them a particular product. It’s getting to know them, period, and act in an advisory capacity.

Isn’t it a lot to expect the industry to adopt a whole new sales mindset for Boomer clients? It will have to be done in three steps. The first is education. Most Boomers can’t see financial planning beyond Social Security or health care beyond Medicare. A lot of them are in this mentality of, you buy stocks and you hope they go up. They don’t know much about other options, so education is a huge opportunity.

Step two? To realize Boomers’ longevity risk. It used to be that people retired at 65 figuring they only had another 10 years left to life. You’d travel for five of those, play with the grandkids for the next five and then you’d get the call for the great beyond. The average life expectancy in this country is still about 78 years old, but among wealthier clients, that number goes up dramatically, and running out of money in one’s late 80s isn’t hard to imagine. The key is to plan in advance for it.

Step three? A lot of financial planning sales are being made right now with 65 being sold as some kind of finish line, after which one can sit comfortably for the rest of their life. But the truth is that 65 is no longer a magical number. It is an individual one. If you’re sitting with a client who is not yet 65 and you lay out their options for when they turn 65, they will look at you and ask, “Who said I’d retire at 65? It’s just another birthday.”

So is 65 the new 40? The Rolling Stones are on tour at 65. Springsteen is 61, and he did 88 dates last year. People will still have things to do, people to see and places to go at 65, and their financial plan isn’t going to be about winding down. It’ll be about what’s next. Somebody who understands that and talks about that in a positive way will earn their clients’ trust, and ultimately, their business.

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