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Winning in the Senior Market

You need lots of patience and a keen understanding of your prospects’ needs and wants.

By D. Douglas Graham

Today’s seniors are a very well-heeled group. More than three-quarters of the nation’s wealth is currently owned by people aged 50 and older. Seniors earn a per-capita income that is 26 percent higher than the national average, and make an annual spending contribution of more than a trillion dollars to the national economy. They buy the most expensive cars, splurge in the fanciest restaurants and increasingly are nudging younger folks aside in web-based spending. Seventy percent of all money-market account and certificate-of-deposit assets are senior owned, as is the lion’s share of top drawer, U.S. real estate.


A growing market
“The senior market for life insurance, financial services, investment products and long-term care insurance is a lot bigger than is commonly believed,” says Bruce E. Dickes, vice president of marketing, Standard Life and Accident Insurance Company. “Two generations ago, a man received his gold watch at age 65 and immediately embarked upon the last leg of his existence. This is true no longer. For some people retirement is just the beginning.”

Nowadays, seniors live well beyond their 60s, 70s and sometimes their 80s, Dickes continues. Nor do today’s seniors follow historical behavior patterns. Some retire before age 65, others much later. A few even start new families very late in life. The point is that “senior” is a much broader category of humanity than it once was, and as a concept, a lot more difficult to pin down. There are also many more seniors around today, and as Baby Boomers mature, that number will increase significantly.

Providers like Allianz Life Insurance Company of North America are marketing their senior products accordingly. According to Becky Malkerson, senior vice president of marketing and communications, the company has no illusions about the sophistication of its target market and advertises in all relevant media, including the web.

“Our ad campaign really focuses on the trend of living longer,” she says. “When we looked to cast commercials we wanted to show people between the ages of 55 and 80 leading very active lives. Actually, we didn’t have to cast the commercials at all. We found real people; ordinary people living extraordinary lives. Among them were a 75-year-old, world-record holder in track and field who specializes in hurdles, a 74-year-old stunt pilot who learned to fly after her 55th birthday and a 73-year-old skydiver who has logged more than 4,000 jumps since learning the skill at age 63.”

Making contact
Many advisors specializing in the senior market find it easier to reach potential clients through low- or no-pressure marketing vehicles. William N. Haraway, CLU, ChFC, president of Haraway Financial Services and member of Suburban Maryland AIFA, believes referrals are a time-honored way to connect with the sometimes-cautious senior group. And while he welcomes recommendations from any source, the most effective often come from attorneys and CPAs.

“I get a lot of mileage out of referrals and work very hard to develop ‘centers of influence’ with lawyers and accountants,” he explains. “I also sometimes co-host educational seminars with attorneys and CPAs as these often prove to be very effective marketing tools. The thing that makes these seminars effective is that they are educational rather than sales-oriented. Seniors don’t want to hear a sales pitch. They are hungry for information, and when I host a seminar I present myself as an expert qualified to provide such information.”

Informational seminars can take two forms, Haraway continues. The first and often most cost effective is through a sponsorship situation in which a church or country club sets everything up and invites an advisor to serve as guest speaker. Option two is completely up to the advisor. He foots the bill for the entire event and promotes it through print or radio advertising. The upside to this arrangement is that the advisor gets total control of the production, serving simultaneously as director, producer and star of the show. The downside is the high cost and risk.

“Hosting your own seminar can be a crapshoot,” Haraway says. “It can cost plenty, and for all your trouble earn you little or no payment. You might, for example, mail invitations to 5,000 people and have just 20 show up. The point is that while such seminars can be very effective, they do entail some risk.”

There are other no-pressure methods for reaching seniors, Haraway adds. One is to get involved in popular senior activities. Golf, for example, allows an advisor the opportunity to meet prospective clients on common turf. Haraway will often foot the bill for a day on the course attended by a client or two, and a couple of their friends.


Another is to host a client-appreciation dinner or a “thanks-for-doing-business-with-me” special event. Haraway regularly hosts such activities and subsidizes them. He widens his sphere of influence by encouraging current customers to bring friends along who may be interested in the services he provides.

The power of education
“Seniors want unbiased, generic information they can learn from,” adds John H. Putnam, CFP, CLU, a financial representative for Northwestern Mutual Financial Network, whose firm does business as Putnam Personal & Business Planning, and a member of Charlotte AIFA. “Our strategy has therefore been to act as an informational resource for these customers. The workshops we host do not endorse any particular company, product or process. Instead we create a forum for the open discussion of topics of interest and concern to attendees.”

The workshops aim not to sell but to educate, Putnam adds. Through the years, he’s been able to provide this resource to a number of senior groups he would have had difficulty reaching otherwise.

“It’s actually proven more profitable for us to posture these workshops as a community service than to use them as a marketing tool,” he adds. “While we obviously want people to purchase the services we provide, we don’t market them aggressively. In fact, at the workshops we don’t market them at all. Sometimes people raise their hands and request that we get together with them one-on-one later on. On other occasions, we get no hands at all but that’s really not important in the context of our mission. We see our job as providing information in the spirit of community service. And because we also understand how the senior market works, we know that approach will pay off for us down the road.”


• Focus your marketing efforts on the fact that seniors are living longer.

• Use referrals from professional contacts, including attorneys and CPAs.

• Get involved in popular senior activities.

• Offer unbiased, generic information seniors can learn from.

• Always discuss tax issues.

• Assume the role of CFO in their family business.

• Be patient—most seniors take a long time to make decisions.

• Build solid relationships with them and focus your efforts based on those relationships.

Start early
When is a good time to start offering these services to prospects and clients? According to Dickes, the best time is when they turn 50. It’s at roughly this age that most people begin worrying about the next phase of their lives, he says, and the possibilities both good and bad that may lie just ahead for them. Because of the tremendous costs involved, it’s far better to craft a plan for retirement, financial security, life insurance and long-term care at the building stage of the relationship than at the point at which the money socked away for that purpose is about to be distributed. The price of retirement is greater for seniors now than ever before and as centenarians become as common in our culture as septuagenarians are today, so will be the range of problems with which they will be forced to cope.

Seniors issues
Sooner or later, an advisor will have to broach the topic of longevity, adds Turner Thompson, an associate with Ohio National Financial Services and a member of NAIFA-Greater Detroit. This is an extremely sensitive subject, but when dealing with seniors, advisors will soon discover it is very much on their minds and that many seniors want to talk and need to talk about it.

“An important but sometimes underrated aspect of managing the longevity issue is developing sensitivity for the effects of time on your clients,” Thompson says. “You have to be able to recognize the warning signs of dementia and Alzheimer’s and know how best to deal with them as they apply to your relationship. While this understanding is very important in dealing with seniors, it’s often misunderstood by people working in our business.”

Taxing matters
Any conversation an advisor has with seniors on the topic of longevity should segue into taxation, adds Gregory Gagne, ChFC, owner of Affinity Investment Group, LLC, and a member of NAIFA-New Hampshire. As children of the Great Depression, seniors are naturally cautious, he explains. To most seniors, capital investment will mean capital preservation—a means, in other words, to avoid exhausting their capital through the course of their lifetime.

“One of the things our firm does is look at the current investment structure of our clients and based on that, determine what will happen to their assets down the road,” Gagne says. “Many seniors are deeply vested in IRAs, which they’ve left untapped through the years in the belief that they couldn’t do so until they are age 70. Not only is this notion untrue; the tax consequences can also erode much of the retiree’s savings.”

While IRAs are tax-deferrable, sooner or later the taxman comes calling. At this point, they become one of the most heavily-taxed assets one can possibly own, Gagne adds. However, many retirees are blissfully unaware of this. Many of them enjoy the “luxury” of the 10 percent and the 15 percent federal tax brackets, which is about half of what their children will pay when they inherit the account.

“We sit down with these clients and try to work out a tax strategy that will convert as many assets from traditional IRAs to Roth IRAs without jumping brackets,” Gagne says. “When you transfer assets to a Roth you pay taxes at the time of conversion and never pay on them again. Many seniors don’t know they have this option. They live comfortably on their pensions and Social Security and never touch their IRAs, or they take only the minimal distribution according to the rulebook. Meanwhile, the IRAs keep growing until they become a tax liability.”

Estate planning
Seniors are concerned not only with the prospect of spending away their assets but also with the issue of what will happen to their surviving spouses and loved ones after they die. Understanding that, Gagne addresses the needs of his clients comprehensively, assuming the role of CFO in their family business.

“You start as CFO, but that’s only the beginning,” he says. “If you’re successful in that role and in gaining the trust of the people you do business with, you will ultimately evolve into your clients’ financial steward. That will take time, a great deal of work, but most of all, patience.”

Patience pays
Broaching topics like longevity is just one of the many challenges advisors in the senior market face. While selling to seniors calls for some of the strategies described earlier, patience ranks far above others. With seniors it’s all about building trust, Thompson says, and that takes time.

“Advisors must learn how to breach the wall of distrust in seniors,” comments Norman Bouchard, vice president of education at the Society of Certified Senior Advisors. “The senior market is all about relationship-building.”

It’s common wisdom that we become less interested in life as we age, but the truth is it’s the other way around, Bouchard continues. Medical science has established that while our left brain tends to wither with age, the right brain flourishes. Right, of course, is the creative side, the place where art and imagination happen. Financial advisors should be well aware of that, Bouchard says.

It's all about processing
Because they’re usually dealing with widows and women who have assumed the role of decision-makers and primary caregivers in their households, advisors should also learn to process, Bouchard adds. Processing is really nothing more than reasoning founded on relationships. In a business context this means that buying decisions are made not so much on the forcefulness of a salesperson’s argument in favor of the product he’s selling as it is on the quality of the relationship he enjoys with his client.

“There’s really no secret to winning in the senior market,” he says. “The bottom line is about understanding and meeting the wants and needs of your customer.”

D. Douglas Graham is a contributor to Advisor Today.


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