Does your financial practice ignore the Baby Boomer generation? According to Annalect, a marketing data agency, the 78 million boomers born between 1946 and 1964 are the largest U.S. consumer demographic, with a total spending power of $12 trillion worldwide.
Yet marketers love Millennials: who they are, what they want, how they buy, and how to talk with them.
Many Registered Investment Advisors and other modern financial advisors have built thriving practices by targeting the Millennial generation (those born between about 1980 to about 2004; or by speaking to Generation X (those generally born between 1965 to 1979).
Boomers Have the Buying Power
But who has the buying power? Hint: it’s the Boomers. The many kiddos who often control advertising and marketing dollars directed only 10% of their total spend to the boomer generation…yet boomers controlled more 83% of all consumer spending in 2014, according to a study by the Live Well Collaborative, a research think tank partnership of Procter & Gamble and academia.
So while millennials might make the headlines, most financial advisors might accumulate the most assets under management by working with the “Most Valuable Generation.”
Ignore the Boomers at your peril. A few statistics:
1. Boomers Control the Money. According to Gallup, the baby boom generation controlled more than 80% of all financial assets. On average, they held more than $100,000 in investments and savings.
2. Boomers May Spend More than Others. Over the next 20 years, spending by people 50+ is expected to increase by 58% to $4.74 trillion, while spending by Americans aged 25- 50 will grow by only 24%. (Source: Pew/American Life Project.)
3. Boomers Are Persuadable. People born between 1946 and 1964 are not necessarily set in their ways. Boomer brand loyalty is about the same as other generations, according to AARP. “Baby boomers,” according to CrowdTwist, “Are more likely to demonstrate loyalty to brands that offer exceptional customer service, offer a true value proposition, and prioritize simplicity.”
4. Boomers Have Scale. By 2015, those aged 50 and older will represent 45% of the U.S. population, according to AARP. By 2050, there will be 161 million 50+ consumers – a 63% increase over 2010.
5. Boomers are the Majority. 50% of the U.S. population will be over the age of 50 by 2017. (Source: Annalect). They are the fastest growing demographic, said Pew Research.
6. Boomers Have Higher Net Worth. Despite making up approximately one-quarter of the U.S. population, Boomers comprised 35% of all net worth. (Source: Congressional Budget Office.)
7. Boomers Have the Disposable Income. People over 50 have $2.4 trillion in annual income in the U.S., which comprised up 80% of all disposable income. (Source: Consumer Expenditure Survey.)
8. Boomers Will be Inheriting. There’s money in motion: baby boomers stand to inherit $15 trillion in the next 20 years from the Greatest Generation. (Source: AARP.) And as boomers retire, their children stand to inherit money; will they inherit their financial advisors, too?
9. Boomers are Online. The 50-plus cohort spent more time online, according to Pew Research, than millennials: 51% of baby boomers spent 15 hours per week online. Only 41% of millennials spent the same amount of time online.
10. Boomers Have Spending Power. The worldwide spending power of buyers over 60 should surpass $15 trillion by 2020, nearly twice the $8 trillion in 2010.
11. Boomers Spend Online. The 50-plussers spent $7 billion per year online – $400 million more online last year than the whippersnappers. (Source: Annalect.)
12. Boomers Connect Online. 83% went online to search for information, according to Pew.
13. Boomers Buy Smartphones and Tablets. Also according to Pew, 38% owned tablets, and 36% owned a smartphone as of 2015.
14. Boomers are Social. 82% of baby boomers belonged to at least once social networking site. (Source: AARP.)
15. Boomers are Smart. 50% of adults aged 50+ have used their smartphone to access social networking sites. (AARP, 2013).
16. Boomers Start Businesses. Baby boomers started 14% of new business in 1996, said AARP, but 24% of new businesses as of 2014. Among adults age 18 and older who don’t currently own a business, boomers were twice as likely as millennials to plan to start a business in the next year.
The Downside of Boom
While many Boomers have high incomes, not all have significant retirement income. This cohort may benefit from the financial education RIAs and forward-thinking financial advisors may provide.
17. Not all Boomers are Well Off. 1% of boomers control about one-third of the generation’s assets; the richest 10% own more than two-thirds, according to the Congressional Budget Office.
18. Boomers May Rely Too Much on Social Security. According to the Transamerica Center for Retirement Studies (TCRS), 36% of boomers felt that Social Security would be their primary income source in retirement. (With retirement accounts and savings accounts at 34%, and company-funded pensions at 12%.)
19. Boomers Have No Savings. About 40% of the boomer generation have no retirement savings at all. Source: Insured Retirement Institute.
20. Boomers Don’t Fund Their 401k. From the TCRS study: 19% who could have invested in a company sponsored 401(k) or other retirement plan declined to do so.
21. Boomers are on Track to Meet Their Retirement Needs. Despite the dour sounding news, more than half of the not-already retired Boomers were successfully on the way to funding their retirement, according to The Employee Benefit Research Institute. For those working and not quite there yet, the average extra required was more than $140,000 for couples, and approximately $100,000 for single females.
A Generation, Not A Monolith
As you build out your RIA or financial advisor practice, catering to one generation over another may be a sound approach. Yet as each generation may have a general persona, every generation has niches and communities within. Boomer lawyers, boomer dentists, boomer military, boomer executives, boomer stereo aficionados: advisors have built and will continue to build successful long-term practices targeted to a specific persona within a specific age group.
One thing is certain, however, and that’s the need to build the book of business, whether from client referrals, professional referrals or from new lead generation.
Have ten minutes? Try this quick quiz on how inbound marketing for advisors can build your book for this generation and beyond: