If you don’t understand baby boomers’ psychology, you’re unlikely to land and retain them as clients, according to Frank Maselli (below right), founder and president of The Maselli Group in Raleigh, N.C. During his career Maselli, author of the self-published “Seminars: The Emotional Dynamic,” has trained thousands of advisors in advanced marketing, sales and practice management skills. Senior Market Advisor’s contributing writer Ed McCarthy, CFP, recently asked him to share some of his insights into boomers’ psychology and how that affects the advisory process. Here are five key points he shared with us.
Point 1: Boomers are terrified emotionally.
Boomers were told that there was nothing they couldn’t do. The world was an unlimited source of adventure, excitement and possibility. They’re fighting it, but the realization is beginning to sink in for the first time that this generation is vulnerable. They’re realizing they’re running out of money and they are going to be the first generation in the history of the planet that lives 35 years in retirement because the parents of the boomers died in their 60s. Now what they’ve got for the first time in their lives is tremendous fear of not being prepared for what is going to be for many boomers a very frightening journey in retirement. From an advisor’s perspective you’ve got to calm them down. You need to assure them that with precise financial guidance and skill and ability that we as advisors bring to the table, this boomer or this boomer couple can still achieve many, if not all, of their financial goals.
Point 2: Don’t treat boomers as if they’re old.
Boomers are doing everything they can to fight old age. You see it on commercials; you see it with the medications we buy. We’re trying to stay young. And, to a great degree, that will be true. The boomers will age very differently than their parents or their grandparents did. They will attempt to maintain active lifestyles. As an advisor you have to understand that your boomer is going to want to be active — this is not a rocking chair retirement. You may have to convince your boomer to not retire in the traditional sense of the word retirement. You may need to give them some ideas on how to remain active and how to generate income in retirement, which is a strange concept. The old concept of retirement was at 65 you’re in the rocking chair and that’s it and now you’re playing shuffleboard. That’s not going to happen for the boomers. For a lot of this boomer generation, they’re going to need some income in retirement and they’re going to want to remain active.
Point 3: Boomers are getting squeezed.
Boomers are squeezed between two generations: their children, who are moving home in increasing numbers, and their aging parents. They call them the Sandwich Generation and that’s a very apt term. The impact of having to deal with aging parents is mind-numbing and an advisor needs to be valuable in that space. When I call my advisor and ask, “Can you help me, my dad needs to go into hospice care, do you know anything about that?” And the advisor goes, “Gee, I don’t get involved with that, (but) here’s the stock I want to sell you today or here’s the annuity I want to sell you.” You’re useless to me as an advisor if you can’t help me solve these gigantic problems that I have. An advisor must branch out beyond financial advice to truly be a valuable resource. They may need to know a lot of other things that impact the boomer’s world. Also, you have to prepare the boomer for old age by offering solutions so the boomers’ children don’t have to take care of the boomers when they’re in the nursing home. You’ve got to begin the conversation with the boomer now that says you better get some long-term care into your world otherwise your children, who are now living in your basement and can’t get work, will be taking care of you.
Point 4: Boomers want to be in control.
Boomers do not respond well to structure, to procedure, to advisors who say to them, this is the way we’ve always done it and we’re going to do it this way for you. If you go to a boomer and say we’re a very big, very old, very conservative firm, they say, well, who needs you? I want dynamic. I want exciting. I want creative. When you speak to a boomer, you say things like, my firm specializes in being creative and being customized. We build things specifically for you. We never put anybody into a cookie-cutter portfolio. As an advisor, there needs to be a very high degree of customization or the perception of customization for the boomer client. Boomers don’t want to feel like they’re part of a giant group that’s doing the same thing. They want to feel like their advisor is listening to them and carefully crafting the advice specifically for that boomer.
Point 5: Boomers need a dose of reality.
The baby boomers made their first significant investments in the early 1980s. For 19 years, basically, they saw a raging bull market, the most historic bull market in our country’s history. The Dow Jones did a fourteen-fold increase in 18 years. What they need now is a dose of serious reality to say, hey, we’re not going back to 20 percent-plus [returns] per year in anything — those days are gone. You have to give them some growth but you’ve got to bring them back to reality growth, not hyperbolic growth. You’ve got to bring them back to an understanding that normal returns are going to be single digits. They can’t be rolling the dice anymore but yet they still need to step up to the table. You have to guide them through growth but conservative growth.