Social change adds colour to grey market

Reaching 50 no longer means slipping on furry slippers and curling up on the sofa with a cup of cocoa. Now financial marketers must get to grips with this age group’s many and varied sub-sectors if they are to gain from its growth.

Betty and Ernie are celebrating their golden wedding anniversary in a Bournemouth holiday home. Betty is a housewife and Ernie has worked for 40 years at one company and has recently retired at the expected age of 65.

This stereotype used to be the expected life path of the 50-plus generation, which was romantically promoted by financial services brands wanting to sell their products and services to those consumers seeking this post-retirement lifestyle.

But the clichéd image of a happily retired couple strolling along the beach hand-in-hand is no longer a relevant marketing message for the financial services sector to promote, according to findings from a series of studies by the Business Development Research Consultants (BDRC). This includes the Atlas study, which has questioned 5,500 households three times over the past decade.

Marketers, especially those working in the finance area, need to take note of several trends picked up by the studies or risk being irrelevant, claims BDRC director Dr Roger Donbavand.

“The 50-plus group used to be far more homogenous; kids flying the nest and people being ‘empty nesters’ and then eventually retiring. It used to be very well delineated but this is changing,” he reports.

Now the over-50s face a whole host of different living arrangements and lifestyles, which affect how they buy. Some families see so-called “boomerang kids”, coming back to live at home after moving out to go to university.

These delayed “empty nesters”, who have discovered their nests are no longer so empty now the kids are back again, may have to come out of retirement and then go back to work.

Divorce is also changing the entire make-up of families, “crumbling the traditional life course”, according to Donbavand. Grandparents are becoming childminders to their children’s kids and this greater family interaction is creating a generation of “blended families”.

Modern family unit

The complexities seen in the different types of modern family unit and their varying circumstances should be seen as a real benefit to financial services brands, says Donbavand. It offers them the chance to reach a far wider group of people than ever before.

For example, financial services brands need to be aware that not only are over-50s shopping for products of their own but they are likely to have an influence on the decisions of their children and grandchildren and vice-versa.

Donbavand observes: “They used to call it the grey market, but it’s actually quite a colourful market; it’s also an area that is growing and a missed opportunity.”

As well as the groups BDRC identifies, such as the “delayed empty nesters”, “empty nesters”, “semi-retired”, “retired” and “child-free”, agency Opinion Leader has also identified another group, in research carried out for Aviva, called “the sandwich generation” (see The Frontline, left). These are people looking after their children at the same time as their elderly parents. 

Yet despite life over the age of 50 appearing to be varied and active for many, just 8% of all respondents to the BDRC research appear to be saving for old age, compared with 27% who are saving for holidays and special occasions.

This is because most people find it too difficult to visualise their 50-plus future and can only plan for the near future, says Donbavand.

He observes: “While most FMCG brands are marketing about the present, financial services is all about the future. The problem is that most people find it difficult to articulate what they’ll do in the future,” adds Donbavand.

Changing social trends have resulted in many people believing that they don’t believe they will be in a situation where they can retire at the age they want to – 46% of all generations don’t believe they will be able to, and this rises to 65% among those with a young family.

Those whose children have flown the nest are more optimistic, with 39% believing they will be able to retire when they choose. But it is clear that all age groups believe that their lifestyle paths over the age of 50 are unlikely to follow the same route as their parents or grandparents.

Marketing by life stage is a more effective mechanism to engage with consumers than focusing on age, claims the BDRC research.

The majority (76%) of all respondents agree that it would help if financial companies really explained what certain products could be used for at various life stages to ensure they have a more obvious role in people’s lives.

This seems to be true across all sub-groups – 80% of those in the category of delayed empty nesters and 64% of retired and semi-retired respondents agree with this statement. 

Demonstrating in a clear manner how financial products fit into lives and lifestyles could help brands cut through consumer confusion over financial products.

The BDRC research found that 40% of all respondents agree that the “thought of investing in stocks and shares frightens me”. And 35% of retired respondents also agree with that statement, as do 43% with a young family and 49% with an older family.

The jargon used in financial services can be bewildering, says Donbavand. Relating marketing to real-life situations is a far more effective way of engaging with the 50-plus market. He argues: “Rather than saying ‘we’re the specialist pension provider’ it should communicate how it will help a 58-year-old.”

Most financial services companies aren’t targeting consumers in this way, according to Donbavand. But he has noticed that some forward-thinking financial businesses are starting to incorporate emotional messaging into their marketing.

A recent Standard Life campaign featuring Mariella Frostrup led with the strapline “People don’t grow old like they used to. Why should your money?” Donbavand says: “This recognises people in their 50s and 60s have changed quite significantly. The Standard Life campaign connected with this age group, because it didn’t use clichés. It also emphasised self-esteem in this age group, which you don’t generally see in financial services.”

Donbavand reiterates that marketers need to overhaul their understanding of this age group in order to provide products that are needed and communicate in a way that is easily understood. “Marketers need to think far more holistically about these people,” he argues. “They could create far more of a dialogue with them.”

It appears everyone agrees the 50-plus market has become a large and vital market that financial services marketers need to understand and sell to. The tricky part is talking to a generation that has changed dramatically since the days of Betty and Ernie.

The Frontline

We ask marketers on the frontline whether our “Trends” research matches their experience on the ground

Brian Bussell,
Director of pensions and savings at Aviva

Marketing is about being aspirational. We tend to paint a reasonably rosy view of retirement. The messaging centres on being retired but still fit and healthy. It’s about having the freedom to do things – take up hobbies or go on holiday. For example, in one of our pieces of advertising, we have an elderly couple on a motorbike.

In terms of the products, it’s making sure you have the flexibility to cater for everybody’s needs. The population is breaking up and it’s about understanding these niche groups.

Our marketing tends to focus on different sub-groups within the population. We’ve seen a big change ourselves called the “sandwich generation”. These are people who are looking after their children and their parents as well.

We need products that can allow for changes in contribution levels, so people can have premium holidays and make adjustments. One of the barriers to saving for retirement is the concept that people have to put away a fixed amount, which they can’t access until they retire.

We’re experimenting with different forms of media to get information across simply. It’s much easier to get complex points across on the screen, visually. We have an online “guide” called Lisa, who helps internet users understand our products.

We also do an on-screen projection showing how the fund grows over the years displaying the range of possibilities. To try and describe these on paper would be very difficult.

Barry O’Dwyer,
Managing director for retail life and pensions at Prudential

The over-50s is actually quite a difficult group to market to. There’s a very strong mindset, especially among people in their 50s and 60s – they don’t want condescending images of retirement.

If you pick on a particular segment that has a particular lifestyle, you’re going to potentially put off a huge number of people. We’re careful not to pick imagery such as grandparents in their swimming togs carrying surfboards, which might have been a traditional clichéd image. We try to pick imagery that’s more reflective of real life.

When people get to retirement age, they don’t necessarily want to change what they do. They might want some luxuries but they still want their house, they enjoy living in the same neighbourhood and like to have their families around them. It’s about trying to reflect those lifestyles rather than depicting cruises and walks on a beach.

One of the main recommendations that came from a Prudential-commissioned study by The Association of Independent Financial Advisors is that the industry needs to develop a common glossary that we can use to get rid of the jargon. This can be quite difficult because we’re such a heavily regulated industry.

In the last couple of weeks, I wanted to change one of the terms used in our literature because I thought customers wouldn’t understand it, but I was told that we were mandated to use that term by the FSA. But there’s a hell of lot we can do ourselves as an industry to simplify things.

The reality is that for our industry, the over-50s is the most important age group. The whole of the industry will seek to innovate to develop products that will appeal to this age group. I see us developing more products for customers aged 50-plus around, for example, income generation.

But people tend to only understand the value of products to help in retirement when they get to an age when it’s too late. A lot of education is about breaking it to people that they don’t have enough to retire at 60, which is what they might have seen their mother and father do.

Ashley Shephard,
Head of marketing at AXA Sun-Life Direct

Writing to an 80-year-old is different from writing to a 50-year-old. The copy for an 80-year-old needs to come across as more understanding. We’ve also recently made changes to products as we recognised that people were living longer and wanted to reflect that by increasing the age limit of our life policy to 85.

We’ve increased the amount of research we do post-sale [to older consumers]. We contact a couple of hundred people a month and ask them to check their understanding of what they’ve bought. The feedback has been positive so far with those in the 80-85 age group scoring highly on understanding as well as the 50-year-olds.

The Sun-Life brand is about being straightforward; we have to keep things simple so we try and use a strong caring theme in the copy that we write.

We use celebrities to attract attention to our ads. Our current celebrity is Michael Parkinson. Michael comes across as very trustworthy, friendly and straightforward – I expect the northern bias helped as well.

That resonates with our target market of mainly C2 and D2s.

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