Blog Entries by Joseph Murphy, Executive Vice President, ByAllAccounts

Do You Have What “Baby Boomer” Investors Are Looking For?

By Joseph Murphy, Executive Vice President, ByAllAccounts on Tuesday, November 22nd, 2011

As the conversation around Baby Boomers (born 1946-1964) develops, it’s important to note that a Baby Boomer turns 50 every 8.5 seconds, and there are now 77.6 million of us. Clearly, the number of Boomers who are looking at retirement is on the rise—and any discussion of their retirement goals and methods takes on added urgency.

Specifically, I’d like to take this opportunity to talk about meeting the needs of Baby Boomers who still have some time until retirement (i.e. 46 – 55 yrs old) and are still very much in the accumulation stage of their financial lifecycle. As they look to transition to the Distribution phase, many will look for a new advisor. Or, if they elect to stay with their current advisor, they may be looking for an expanded or modified set of services to meet their new needs. Either way, whether you’re trying to attract new Baby Boomer investors or retain the ones you already have, there are several points to keep in mind:

1.) Complexity is the name of the game with older investors

At this stage of life, your investors have many commitments, and they may have a complex set of circumstances and needs. It goes with the territory of having lived longer life and made more obligations than their younger counterparts. It’s important to recognize that, by definition, serving these clients will be more complex than serving Gen X or Gen Y or some other demographic group.

That can necessitate a team effort when undertaking investment planning and management. As the lead advisor, you quarterback a larger team that provides services according to its areas of specialty. It’s essential that you communicate with clients that there is a coordinated plan to help them meet their investment and retirement objectives—with a leader providing direction and oversight, and key players providing the vital services and expertise that serve as the nuts and bolts of the initiative.

2.) Provide the key services that can be categorized as “Financial Management 101”

This involves ensuring the daily cash flow and engaging in the day-to-day planning that enables your Baby Boomer clients to run their lives. It’s “what they’re really looking for,” and may include:

  • Planning for living expenses for clothing, food and shelter (yes, even High Net Worth clients need to plan and make choices in these areas)

  • Caring for pre-college children, college-age children, graduated post-college kids who are living back at home 

  • Meeting insurance requirements (includes basic medical, life insurance, and all of the variants of these products) 

  • Accumulating retirement savings (or making plans for retirement that take into account a lack of savings)

  • Ensuring that Wills, Trusts and after-life planning are taken care of, and incorporating them into the financial planning  and allocation process

3.) Extend your services to cover special situations that you don’t see every day, but that can be pivotal

Do your prospective and current Baby Boomer clients have special circumstances? Adapt your services to the financial requirements of these challenges, such as:

  • Meeting the needs of parents who live with them and/or depend on them for some form of financial support

  • Caring for special needs dependents, which can be a very costly obligation in terms of money, personal time and commitment (Life Planning is vital here, or your clients could spend their life savings in this one category and have nothing left for themselves)

  • Caring for a sick spouse who has medical burden or condition that restricts their ability to generate income,  and draws from existing resources

  • Financing the care of a sick dependent who may have medical challenges

  • Meeting the obligations incurred through previous marriages

  • Paying off debt from a business that serves as the basis for all or most of their net worth 

4.) Adapt your data requirements to each of the tasks cited here

In carrying out the tasks that have been listed here, there’s something important to consider: Your data.

More to the point, as the lives of your Baby Boomer clients become more complex, so does the speed with which financial data needs to be transmitted, and so, too, does the possibility increase that it’s watered down. To describe this phenomenon, I have heard the expression “data exhaust,” which comes to us from the high tech world where IT systems are feeding data to corporate decision-makers. The expression leads us to an interesting analogy: we don’t want to breathe in too much exhaust; rather, we want clean, streamlined, purified information which can be turned into clear plans of actions in our planning discussion.

The question arises: Why expose your Baby Boomer clients and yourself and your colleagues to data exhaust, when instead you can access “good” data that’s not only high in quality, but also extends of all areas of the investment arena, including held away accounts?

Or to put it another way: If you’re a Baby Boomer client who’s selecting the right advisor, would you rather speak to the advisor who sees the whole landscape and can help you based on the entirety of your portfolio, or the advisor who is content to only do the portion of the plan where he maximizes his or her income?

Hmmm….I know who I would want to speak to—hands down.  

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