You’ve heard it a million times: 10,000 baby boomers will turn 65 each day for the next 15 years. They are living longer and aiming to retire earlier. They also control a large portion of the nation’s wealth. This means there is an enormous and steady influx of prospects nearing and entering retirement on a daily basis — and they’re looking for a financial advisor who has specific knowledge of decumulation and can help them establish guaranteed income they won’t outlive. Yet many advisors are still focusing on clients in the accumulation phase, figuring their AUM can only grow larger by doing so.
Not these three advisors. They are doing remarkably well — AUM between $100 million and $300 million — by specializing in baby boomer retirement and understanding exactly how boomers tick.
A wide-open window of opportunity
It’s hard to deny the opportunity boomers present to advisors looking to grow their business, says Gregory B. Gagne, ChFC, owner of Affinity Investment Group, LLC in Exeter, NH. “From a sheer marketing perspective, there is a huge abundance, a huge need, and not enough advisors to service the need that exists.”
Gagne says he deliberately sought out boomer clientele. “I laser-focused my entire practice around working with people who had their landing gear down,” he says, “people who were coming into retirement and trying to move from being accumulators to decumulators for the rest of their lives.”
Working with boomers, Gagne says, is more enjoyable than other generations because “they’ve accomplished most of their lifetime- and career-related goals” and are now looking to reinvent themselves and focus on leisure and volunteer activities. “Seeing and participating in this process is fun,” he adds.
Brian D. Heckert, CLU, ChFC, AIF®, owner of Financial Solutions Midwest, says he somewhat stumbled into the market when he found that the majority of prospects in his local area of Nashville, Ill. were boomers. “It’s not so much I gravitated to the market as much as that market gravitated to me,” he says. But he believes that the market is here to stay. His clients, who had been working with multiple advisors during the accumulation phase, are now consulting him as their sole financial advisor for the distribution phase of life because “people want to simplify, so they simplify their advisor relationships, as well.”
This development isn’t unique to Heckert’s practice. According to a 2006 study by McKinsey & Co., 75 percent of boomer clients switch advisors within the 15 years preceding retirement.
Gagne has noticed the same trend. While many of his clients also work with an accountant and an elder care attorney, very few are working with more than one financial advisor. “It becomes an issue of too many cooks in the kitchen,” he adds. This movement toward simplification provides advisors with a key business opportunity, he says: the chance to solely manage each client’s distribution process.
Rectifying previous risk-related losses
For Briggs Matsko, CFP, CRPC, co-founder of Retirement Security Centers in Sacramento, Calif., understanding boomers is a no-brainer: He is one. However, he says there are still challenges working with their unique personalities. While boomers tend to use the Internet to educate themselves about financial matters and are price-conscious when it comes to investments, he says “many still think about retirement abstractly when it comes to finances and haven’t considered how to specifically categorize expenses in retirement or link them to their incomes sources and assets.”
According to Gagne, boomers have a reputation for being more risk-prone than their more conservative parents, the silent generation. He says that, while the silent generation “kept all their money under the mattress,” boomers are more aggressive with their investments. “They’ve been told all their lives that equity outperforms debt in the long run,” Matsko adds, “which is why they tend to have riskier portfolios than they need for retirement.”
Before the market crash of 2008, many boomers aimed to retire by age 55 or 60 and lead a comfortable lifestyle similar to — or better than — the one they led before retirement, says Heckert. But when the market went haywire, their goals for retiring early went up in smoke. “They didn’t save enough, they spent too much, and now a lot of them are working 5 to 7 years longer than they ever anticipated,” he adds.