The American family is changing, along with what they’re demanding from their financial advisors.
For one thing, in 1990, people over age 50 represented about one in 10 divorces in the U.S. They now represent roughly one in four, according to researchers from Bowling Green State University.1 Adoptions have been rising2, and the number of grandparents with grandchildren under the age of 18 living with them is inching upward too3, according to federal data.
Meanwhile, people of retirement age aren’t necessarily giving up work altogether, and many can afford to splurge on smartphones, tablets, alternative-fuel vehicles and other high-tech gadgets.
All of that has added new wrinkles to building a financial strategy for clients, not to mention engaging them.
At a Transamerica Coaching Forum event last spring, Massachusetts Institute of Technology AgeLab director Joseph Coughlin, Ph.D., outlined some of the ways in which clients over 60 have changed and how their families are playing a large role in how they spend their money.
“The business of financial advice has changed,” Coughlin says. “Your client is now a family.”
1. Managing health
According to the Centers for Disease Control and Prevention, 141 million Americans have at least one chronic condition such as diabetes, obesity or cancer4. It’s no wonder that one of Americans’ top concerns is health, both for themselves and their families. Advisors can’t know all the ins and outs of Medicare, Obamacare and beyond, but online toolkits like Your Client Is Now a Family have compiled resources and websites that you can point out to clients.
2. Staying informed
The Census Bureau says that in 1960, we as a nation earned fewer than half a million college degrees5. Today, that’s grown to more than 3.2 million college degrees. Clients are smart, educated and know how to find answers. They’re interested in setting aside money for their kids to go to college, but Coughlin contends middle-aged adults also may be looking at going to school for themselves. As people live longer and change jobs more frequently, they may want to pursue advanced degrees or study a new field so they can launch a second career or start a business in “retirement.”
3. Expecting tech
In addition to talking over the fence to a next-door neighbor, prospects are researching advisors via LinkedIn®, Yelp or Facebook. MIT AgeLab researchers sorted hundreds of social media reviews of financial advisors to figure out what clients value most. The results? While clients value expertise and effectiveness, empathy and personalized service also ranked highly, AgeLab reports.
4. Planning to work
Hitting retirement age doesn’t always mean retiring. Look at Guy DeCarlo, a former college professor. He could have retired years ago but is now well into a new career as a professional ski instructor in Colorado.
5. Lacking in trust
Six years after the collapse of giants like Lehman Brothers, clients are still skittish about the financial industry. In fact, skepticism of big business in general appears to be growing as people yearn for small and local. A referral from someone a prospect knows personally, particularly a close relative, is valuable.
6. Living alone
While some seniors seek community, others are content being independent. Advisors can show their value by helping clients anticipate expenses like paying for someone to mow the lawn when they can no longer do it themselves, remodeling a home to accommodate someone who would rather not take the stairs, moving to a senior living community, or leaving a career to become a caregiver to an aging relative.
7. Investing in smart
As online advice platforms grow, what clients will pay for is advice that connects their financial decisions to all parts of their lives, Coughlin argues.
“The next-generation advisor is going to have to become more of a generalist: expert in money but able to connect me to all those other discussions and people that I may need as I chart my longevity and care for others,” Coughlin says.
For more on thriving in the new age of advice, check out Transamerica’s Your Client Is Now a Family.
Catherine Tsai is a writer for Transamerica’s New Age of Advice and Your Client Is Now a Family. When she has questions about investing, she turns to the same advisor who has been consulting her grandmother, parents and sister for years.
- “The Gray Divorce Revolution: Rising Divorce among Middle-aged and Older Adults, 1990-2010,” National Center for Family & Marriage Research
Working Paper Series, 2012 - Child Welfare Information Gateway, 2011
- U.S. Census Bureau, 2013-2014
- Centers for Disease Control and Prevention, 2014
- U.S. Census Bureau, 2012
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