Insurance Networking News

ASKED & ANSWERED

Readying for the

Retirement Boom

15 minutes with

Mark Fitzgerald

As the baby boomers head for retirement, the life insurance industry faces unprecedented opportunities and major challenges. In addition to readying new products, insurers will need to invest in technologies to more effectively serve and educate this large but varied demographic. Insurance Networking News asked Mark Fitzgerald, National Sales Manager, Saybrus Partners, a subsidiary of Hartford, Conn.-based life insurer and annuities provider Phoenix Companies Inc., about how the industry is preparing for this challenge.

We recently launched a program called Plan Right, Retire Right, which seeks to provide increased education to the boomers. The objective is to focus on the solutions, rather than the products themselves. From there, we need to help the agents address the specific needs of the individual client.

If we’ve learned one thing over the last few years, it’s that the retirement process, which includes education, must start early. We, as an industry, must begin a dialogue with Gen X and Gen Y now to ensure that they are a bit more prepared than their parents.

I would also add that because of the rapid product evolution that is taking place, we can’t neglect education opportunities for the advisory community. We must keep them informed about what’s available in the marketplace. We have to help agents identify multiple product positioning opportunities. Product education as well as general market and demographic education is critical. We’ve never seen this mass of retirees reach retirement at one time, and we must provide the resources and education necessary to everyone involved in their retirement.

to maintain a certain standard of living in retirement. We need to find a way to make it real to pre-retirees. They need to prepare themselves for what they want in retirement. There is a misunderstanding as to how much money you really need to generate the level of income you might be expecting. For example at 5% withdrawal rate you need $1 million just to generate $50,000 a year. Additionally, aside from the invested assets, it is of great importance to efficiently convert those assets into lifetime income. We need to help Gen X and Gen Y understand these figures.

As told to
Bill Kenealy
INN: A glut of financially
unprepared baby boom-
ers is entering the retire-
ment market. What type of
educational work needs to
be done to help consumers
learn ways to systemati-
cally save?
MF: There are 7,000 baby
boomers retiring each day.
The need for education
along with flexible products
is going to continue to grow
as more of them start to real-
ize they don’t know where
that retirement income
check is going to come from.
This presents not only an
opportunity, but more so a
responsibility for insurers
to develop the right kind of
products and corresponding
education for these individu-
als.

INN: Behind baby boomers
lurk Generations X and Y,
who won’t have defined
benefit plans to rely on in
retirement. What unique
requirements do they have,
and how should insurers
approach them?
MF: You have to approach
this generation with the whole
story. Years ago, everyone
told us to max out our 401(k).
Some of us did; some of us
didn’t. Regardless, I’d venture
to say most of us didn’t
understand the why behind
what we were doing. But
what’s helpful is showing an
illustration. We, as insurers,
need to help demonstrate to
people what they need to save

INN: Will insurers need to alter product development practices to lure this generation of retirees?

MF: From a product development standpoint you’re already starting to see a shift in the marketplace. To date, a lot of focus has been placed on income-generation products. But with the baby boomer generation moving to and through retirement, a major concern is the sustain-ability of income. This is coming from concerns about longevity and inflation as well as from a purchasing power standpoint. The focus is making that money last, and the products have really moved in that direction.

We’re also seeing many products designed to meet multiple needs. Today, we have products that not only have income benefit riders, but now also offer death benefit and/or long-term care benefit riders. The goal is to provide multi-faceted protection for the current or soon-to-be retiree.

So, you’re going to continue to see more combination death benefit, income benefit, long-term care benefit products. And you’re going to see more products that are customizable depending upon the individual’s need. I think