The Baby Boomer generation– by virtue of its size alone – has unprecedented financial clout, and embraces a new attitude toward retirement that emphasizes an active lifestyle. Over the next 20 years, another eight Boomers will retire every hour. For financial marketers this represents not only a major opportunity, but a significant challenge.

There are, however, a few risks. One is market fragmentation. The Baby Boomer generation consists of individuals born between the years 1946 and 1964. This is, of course, a huge time span and there is some debate about whether there exists a sub-generation within that group. Tastes, commonalities, and preferences can vary significantly within a population with a 19-year age span making it difficult for marketers to zero in a single message or theme.

In addition, although the top-line numbers look enticing, the fact is less than half of the Boomer demographic can truly afford to retire. According to an AARP study, only two subsets of boomers can afford their retirement, which makes up 46% of Boomers. Thus, right off the bat, the number of happily retired baby boomers is about half as large as the actual number of Boomers. It is not difficult to see just how competitive this market is.

As a result of these demographic shifts, financial marketers must adapt. Where messaging once centered on retirement preparation and asset accumulation, controlled de-accumulation of assets will need to be the theme. Firms are responding with specialized products to help do this – witness Fidelity’s Income Replacement Funds.

Financial services firms must adjust the way they do business if they want to successfully serve the needs of these customers. Firms should consider a new Boomer service model, which should include:

  • A more expansive vision for customer service, with reps trained to go “above and beyond” in order to capture Boomer assets and make their move into retirement – and the process of opening an account with your firm – easier;
  • A product range that emphasize income management rather than asset accumulation;
  • Educational resources that both inform and market your products;
  • A communication style that recognizes the physical changes that people experience as they age, including deterioration in vision and hearing; and
  • On-going marketing efforts that tap into the interests and values of the Boomer generation. 

Financial services firms that embrace this model stand to gain a critical competitive advantage over their less nimble competitors.