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The golden age

by: Matt Smith
  • 22/02/2010
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Matt Smith explains why there is a whole generation of untapped customers out there

Projections by the Government Actuary suggest that many more of us than presently will live to be 100. Some 10,000 have currently reached this milestone, and the number could increase tenfold in the next 68 years. By 2074, there could be 1.2 million people over 100.

It is estimated that the over 50s hold as much as 80% of the nation’s wealth, maintain a higher disposable income than the under 50s, and comprise nearly 40% of adults. Nevertheless, the marketing and advertising community remains in awe of the under 50s. To that end – and this is a European phenomenon – 90% of marketing spend is targeted at this age group. Over 50s, or seniors, live longer than ever, live more active lives than ever before and are in fact in better mental and physical shape than they were even 10 years ago. They have money, time and needs as people, without many of the daily responsibilities of the under 50s, such as children.

But we are confused. Old people are encouraged to remain young and appear very willing, where they can afford it, to do so. Their relationship with everything around them is changing.

This includes their counterparts in younger generations. As a child, I remember that there used to be a status afforded to those of a ripe old age, having fought wars, survived varying degrees of poverty, received negligible health care, and battled on to make a good innings.

Now, I cannot remember the last time the Queen’s centenary telegram made even local news. Indeed, these days, you only make the news when you are the oldest person in Europe at around 114. Instead, the numbers of older people, now so much more numerous and visible in the shopping aisles of Sainsbury’s on Saturday, are regarded as an economic burden to society, and potentially a guilty personal burden to individuals.

Neither has society caught up with our increasing success of staying alive longer. We still use the term ‘pensioner’ and give universal discounts to people over 65. Winter heating allowances are paid out to pensioners regardless of their need. Even if you feel young, the system will do what it can to remind you that you are old. State benefits, travel discounting, social health and welfare products as well as membership discounts are all lagging arguably 10 to 15 years behind the reality. Psychologically, there are many steps to overcome as behaviour changes to meet society’s expectations and reflect their pasts and preferences.

As a rule, companies of every type do not like selling products to the older generation. Why? Older people have time to do their research, consult a wider circle of influence in making purchase decisions (according to US research this propensity to consult others rapidly increases to 80% after the age of 75) and they have already got firm views on trustworthy brands.

Neither do they conveniently fit a type. Seniors are a diverse group with differing attitudes and spending power. They are less inclined to follow trends and act as a block than younger consumers. Their thoughts, views and disposition are harder to change as they get older. But this diversity is most noticeable in their own relationship with old age. Here their attitudes and feelings towards the actual process of ageing and coping strategies differentiate them and mark them out as individuals.

For advisers and product providers alike, these fundamental changes will provide opportunities for new products and services. The new generations of seniors are already more comfortable with larger incomes and larger debt, researching and transacting online, spending money on luxury goods, and learning new things. More numerous and more demanding than ever before, as a group, they have the ear of politicians. The seniors are a difficult bunch with different needs and desires. Getting the right message across to this new target market is not an easy task.

So whether their concerns are saving for holidays or providing for long-term health care, or just ensuring that they do not run out of money, the challenge for the financial services industry is to ensure that the optimism of the new seniors dovetails with the notion of long-term saving.

To that end, advice is going to be key to the future of selling to seniors and there is a huge prize for the product providers who take the time to understand this market and create products that actually mean something to them.

Matt Smith is managing director of WPB Creative

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