NEW YORK - Annuity pitches that try to win baby boomers' retirement wallets with scare tactics will fail, some insurance marketing experts say.
Boomers require a gentle touch; they don't respond to the painting of grim retirement pictures, said Matt Thornhill, president of The Boomer Project, a Richmond, Va., consulting firm that specializes in how to market to boomers.
Sales tactics that stress outliving one's income and other dire scenarios often may fall on deaf ears, he added.
"I don't believe an educated consumer would believe any of those pitches," said Tom Cross, senior vice president of Securities America Inc. in Omaha, Neb.
"Many companies are using scare tactics to convince boomers that they aren't saving enough. But the boomers don't believe that, and it doesn't match what many experts say," said Larry Greenberg, chief executive of Jefferson National Life Insurance Co. in New York.
The failure to understand what boomers want is one reason little new money is going into annuities, he added.
Insurer marketing keeps hammering on the idea that retirement for that demographic - those between 41 and 60 - is imminent and that they might outlive their savings, Mr. Thornhill said. But surveys show that many boomers think they will retire at about 73 or 74, and half those over age 50 have no idea when they will retire.
So retirement is a long way off in their minds, and they think they still have many years to accumulate assets, Mr. Thornhill added.
"While I agree with insurers that it's never too early to start saving, it's a mistake to use retirement as the bait," he said. "Talking to boomers about retirement is like talking to 15-year-olds about how they plan to raise their children."
Sellers versus advisers
"The ethics of the insurance industry is such that they will use those kinds of tactics," said David Drucker, president of Drucker Knowledge Systems in Albuquerque, N.M., an adviser consulting firm. Financial advisers who depend on product sales are the most likely to convey the insurers' scare tactics to their boomer clients, he added.
"You can't just pitch products to boomers; they don't have the patience for that. Their eyes will glaze over from the complexity and from boredom," Mr. Thornhill said.
"Annuities are not the only way to prepare for retirement and are not a cure-all. Advisers who really advise and don't advocate any particular products will be firm with undersaving boomer clients, but they won't use scare tactics," Mr. Drucker said.
"Some companies are hiring [new advisers] and firing them up to go out and sell annuities to boomers using these pitches," said Ted Feight, owner of Creative Financial Design in Lansing, Mich. Those untrained advisers try to convince people that annuities are the only way they will have enough money for retirement and make sure their heirs get something, he added.
What boomers want
"Compared to their parents who lived through World War II and the Depression, boomers have been prosperous and have had few hardships," Mr. Thornhill said.
"They are naturally optimistic about their financial future. They always think that something good's going to happen," he said.
Even if that optimism is misplaced, the boomers will tune out messages that don't conform to their ingrained beliefs.
"If you tell them they'll be destitute in retirement, they'll tell you they may win the lottery," Mr. Thornhill said.
"Boomers want control over their financial future, and some feel that with an annuity, they are losing control over their investments," Mr. Greenberg said.
Advisers who want to be valued by their boomer clients should pitch control, Mr. Thornhill said. "Show them ways in which they can control their income and financial future," he said.
Boomers also respond well to process-of-elimination thinking, Mr. Thornhill added. For instance, an adviser can ask them if they can retire on Social Security benefits alone.
If the answer is no, then ask if Social Security and their pension will be enough, Mr. Thornhill said.
"When they see that they can't count only on those, they'll understand that they need something additional," he said.