Financial Advisors: Economic Downturn Hitting Boomers Hardest
PARK RIDGE, Ill., March 6, 2009 — Key Messages:
* In comprehensive new research of financial services professionals, 77 percent of respondents indicated the current economic downturn has had a significantly greater impact on their Boomer generation clients than any other generation.
* More positively, 73 percent of respondents said the downturn has made their Boomer clients more focused on financial planning (also more than any other generation).
* Boomers have neglected planning because they don’t fully understand the value and they are embarrassed that they haven’t accumulated more assets and thus ignore the problem.
* Advisors who consider themselves “experts” at financial and retirement planning and take a comprehensive look at their clients’ financial, family and life goals appear to better serve their clients and to be more successful in their own business than those who don’t focus on either type of planning.
* The research was unveiled at a series of Boomertirement® Road Shows, half-day seminars for financial advisors in Dallas, Washington, D.C., Chicago, Los Angeles and New York City, hosted by the Partnership for Retirement Education and Planning (PREP) to provide tools and encouragement for professionals assisting Boomers.
In comprehensive new research of financial services professionals, 77 percent of respondents indicated the current economic downturn has had a significantly greater impact on their Boomer generation clients than any other generation. More positively, 73 percent said the downturn has made their Boomer clients more focused on financial planning (also more than any other generation).
According to the research, Boomers have neglected planning because they don’t fully understand the value (a barrier cited by 78 percent of respondents) and they are embarrassed that they haven’t accumulated more assets (mentioned by 70 percent of respondents) and thus ignore the problem. Nearly half (49 percent) of financial advisors responding to the survey said at least 75 percent of the impetus for a successful financial plan comes from them rather than the client.
“The current economic downturn has hit at a bad time for people who are in their late 50’s or early 60’s and haven’t prepared for the future,” says Philip E. Harriman, CLU, ChFC, past president of the Million Dollar Round Table (MDRT), an international, non-profit association of more than 39,000 financial service professionals. “With a simultaneous strain on employment, home values and investments, these Boomers are being hit harder now than generations older or younger. If there is a silver lining in this dark cloud, perhaps this is a wake-up call for Boomers to get busy managing their financial well-being.”
The research, conducted in January 2009, was unveiled at a series of Boomertirement® Road Shows, half-day seminars for financial advisors in Dallas, Washington, D.C., Chicago, Los Angeles and New York City, hosted by the Partnership for Retirement Education and Planning (PREP) to provide tools and encouragement for professionals assisting Boomers. PREP is an unprecedented coalition of 11 non-profit organizations representing more than 200,000 financial advisors who are working to provide retirement education to Boomers and younger generations.
Matt Thornhill, founder and president of The Boomer Project, the consultancy that completed the PREP research, says there has been a great deal of study of consumers and their financial situation but relatively little of how the financial services profession is responding to the problem.
“One interesting aspect of the research is that advisors who consider themselves ”experts” at financial and retirement planning and take a comprehensive look at their clients’ financial, family and life goals appear to better serve their clients and to be more successful in their own business than those who don’t focus on either types of planning,” Thornhill says.
According to Thornhill, advisors in the PREP research who identified themselves as “planning experts” reported their typical client had twice the total assets as advisors who were more focused on individual product sales. The self-reported “planning experts” were not significantly different than “non-planners” in years of experience, size of firm, job function or type of products they offer. But, “planning experts” who approach client relationships with a longer-term planning focus had three times the assets under management and reported 40 percent higher annual revenue than the “non-planners.”
Approximately one-third of survey respondents operated under a combination of fees and commission, while nearly two-thirds were commission only. Only 4 percent of respondents ran a fee-only business model.
MDRT’s Harriman says the PREP associations are working to better educate their members on the unique challenges Boomers face by providing members with communication tools and resources and by encouraging them to conduct community service education targeted at local Boomers. In addition to the sheer size of the Boomer generation, Harriman says this group faces financial challenges no previous generation has encountered, including pension terminations, skyrocketing healthcare costs, uncertainty about government programs such as Social Security, decreased personal savings rates and significantly increased life expectancy.
About PREP
Dedicated to improving financial literacy for Boomers, members of the Million Dollar Round Table (MDRT), the National Association of Insurance and Financial Advisors (NAIFA) and the Society of Financial Service Professionals (FSP) have founded PREP and are working in a concerted effort to provide awareness and education that will help Boomers take action in preparing for retirement. Other organizations including the American Council of Life Insurers (ACLI), Association for Advanced Life Underwriting (AALU), Association of Health Insurance Advisors (AHIA), GAMA International, Insurance Marketplace Standards Association (IMSA), Life and Health Insurance Foundation for Education (LIFE), National Association of Independent Life Brokerage Agencies (NAILBA) and Women in Insurance and Financial Services (WIFS) also have joined. To learn more about PREP, please visit www.PREPpartnership.com.
