By Mike Vietri
Years ago, when my Dad went to the dealer to buy a new Dodge automobile, his choices were pretty basic. The salesperson would show him a red Dodge with a red interior, a black Dodge with a gray interior and a white Dodge with a tan interior. “Take your pick,” the salesperson would say, although there wasn’t the option if he preferred a black on black Dodge.
I call those days “the age of the manufacturer” when most consumers had no choice but to buy whatever the manufacturer offered.
Next came “the age of distribution” when many consumers were willing to buy whatever the salesperson showed them, although they had more dealerships and brands to choose from. Life and health agents in this age primarily represented one carrier (some agents still do). The agent, in essence, sold the home team’s product. Consumers may have been aware that other products or carriers were available, but those options were not easy to find or explore. As a result, some customers ended up with less-than-ideal products.
Today, we’re in “the age of the consumer.” Buyers have nearly infinite choices – not just in the products they buy, but in the way they buy them. Tired of making the trip to Walmart? Then choose from 100 similar items at Amazon, and get them delivered to your door! Anyone who doubts that we’ve reached the age of the consumer hasn’t been trying to earn a living in the financial services business recently; traditional sales strategies (and the salespeople employing those strategies) are falling by the wayside.
A New Day Brings A New Opportunity
The customer is now the boss. And “late” baby boomers – part of a total projected universe of 72 million retirees by 2025 – represent a tremendous opportunity for agents and advisors. Late boomers are the evolving newly Medicare-eligible population – ages 55–63, born 1956–1964. They are not the same as our parents’ Medicare generation or even the “early” boomers born between 1946 and the early 1950s. Agents and advisors need to understand the characteristics of this market segment.
Understanding The Late Boomers:
- As a group, late boomers are healthier and more active than other boomers – and they don’t think of themselves as “seniors.”
- They value their time, are tech-capable and embrace online shopping options.
- They are cost-conscious, including being comfortable with wellness and fee-based models – which bodes well for future sales of Medicare Advantage plans.
- They face more financial challenges in retirement than those of prior generations, including rising health care costs and the loss of their financial safety nets (employer medical and defined benefit plans).
- Because they are living longer, the buying cycle of late boomers is longer.
It is no wonder that a 2017 study found that baby boomers’ main retirement fears are: health issues and the cost of health care, personally running out of money, and Social Security running out of money (or ceasing to exist).
Given these concerns, late boomers will increasingly look for experts who can recommend holistic solutions across a wider portion of the insurance and retirement product spectrum – not just sell them one-off products.
Traditional Medigap producers need to become knowledgeable in Medicare Advantage plans, which are an attractive option to late boomers. MA plans are now the fastest-growing segment of the Medicare market. From just 13% of new enrollees in 2004, MA’s market share has grown to more than 34% today, and is projected to reach 42% by 2028.
As more consumers seek advice on how to pick the right Medicare health plan and incorporate those health care expenses into their retirement plans, the distinction between Medicare advisors and financial advisors will continue to blur.
- More Medicare insurance agents will become investment advisory representatives and use asset-under-management programs.
- More financial advisors will add Medicare services.
We’re already seeing more health insurance-oriented agents broaden their reach by earning Series 65 certifications in order to offer more financial retirement planning services. Likewise, financial advisors, who traditionally had little time for health and life insurance – or annuities – are now exploring ways to fill these important gaps.
The future belongs to agents and advisors who broaden their solution set and partner effectively.
To deliver holistic planning support in a cost-effective way, however, you need a partner that can supplement your existing knowledge and capabilities. Ideally, your partner will bring to the table:
- Proven expertise in the retiree health, life and annuity space, with an emphasis on developing, marketing and distributing Medicare and retirement planning solutions.
- A comprehensive asset-management platform, education and training resources, and operational and marketing support that will enable individuals to start and grow a successful investment advisory practice.
Agents and advisors who choose wisely will:
- Continue to evolve with the needs of customers and also with the dynamics of the Consumer Age.
- Move past prior constraints to become a provider of holistic solutions for both health care costs and retirement income needs.
- Deliver solutions cost-effectively.
With the right partner, insurance agents and advisors can provide a broad range of products and services with complete independence – everything in one stop – and deepen client relationships by serving their entire financial life cycle.
Mike Vietri is the chief distribution and marketing officer for AmeriLife. Mike may be contacted at firstname.lastname@example.org.
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