During a hectic November afternoon at the office my phone rang. Although I am well versed in pleasantly explaining to telemarketers that I do not make decisions about new office equipment purchases and I sometimes speak for the whole office (let me know guys, if you are not happy) and say that we are perfectly content — in fact, sufficiently quenched — with our water cooler supplier, I sometimes get wary about answering the phone when an unidentifiable number pops up on the screen.
This time, however, I picked up and a pleasant, energetic man with a mutual financial services company introduced himself. The company shall remain unnamed in this blog. Now, as an editor who covers this industry I am used to getting phone calls — but usually from someone in the carrier’s communications department — and this gentleman identified himself as a producer. In any event, he asked if he could pay me a visit at our office and I obliged.
When — let’s call him Carl — arrived, he had with him a meaty stack of literature from his carrier and I ushered him into our conference room to hear what he had to say. As it turns out, Carl was not here to pitch a story or try and get his carrier’s name in the media. In fact, he had no idea we produced National Underwriter or Lifehealthpro.com. Carl must have found some background information on me and headed on over to sell me retirement products and long-term care insurance. He was a little embarrassed when he realized where he was but he kept on with his sales pitch. I liked him.
I arrived at the conclusion that Carl did not pick my name out of hat, as he asked to speak with no one else in the office. I was 28 at the time and he must have felt that I would be the perfect candidate to purchase a retirement product that would operate in conjunction with my employer-sponsored 401(k). New data from LIMRA Retirement Research shows that there are 51.1 million Millennials (Gen Y) in this country, 65 percent with some kind of employer-sponsored defined contribution plan and only 31 percent with an IRA or any supplemental retirement plan.
Where the opportunity lies for carriers and producers is that according to LIMRA, Millennials — even at such a young age — identify retirement as the number two reason for saving, falling only behind vacations and travel. Bear in mind the fact that 66 percent of them are single and the conclusions are striking. It is not a shock that single, young, working people view travelling and vacations as a top reason for saving but it does say something about the mindset of this generation that saving for retirement is a close second and more of a priority than saving for education costs, large household purchases and home improvements and repairs. Retirement is a blurry image on the horizon for these folks. For many, it is 40 years away.
Now, we can draw our own conclusions as to why this is the case. Many Millennials have witnessed first hand the outcome of the decline of defined benefit plans and the migration to defined contribution plans as their parents were the guinea pigs of the this movement. They have also watched the Great Recession from a front row seat and have seen both factors culminate in many Baby Boomers postponing their retirement.
Millennials, as a generation, are in-tune with the concept of retirement planning. They are interested in it — albeit not as interested as going on vacation — and most importantly, they are ready and willing to take the necessary steps that leads them to safe retirement one of those being, starting to save early.
This a huge opportunity for producers and carriers selling annuities, individual retirement accounts and life insurance. There is no hard sell here. There are essentially 50 million people in the country who understand the need of the products that the industry deals. Your work is practically done for you. So, why is this market so underserved?
Well, there are many theories as to why the middle market in general is underserved and I do not wish to derail this blog by going on and on about the problems with the compensation model. However, I will say that some of these products are available elsewhere and Millennials will not wait forever.
About a month before Carl came to the office I went to my bank and asked to speak about opening an IRA. I was planning on waiting for another major mutual fund provider which had just taken over the defined contribution plan for our company to approach me. They never did. And how easy would that have been for them? I already had my 401(k) plan with them. Why not open an IRA with them? Well, they never approached me or any of my colleagues for that matter.
The industry needs to examine itself. It needs to look back at its glory days when guys like Carl got out of their chairs and out of the office and met with people. We are ready and waiting.