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Descending the Corporate Ladder

Top 10 Myths Surrounding Aging Baby Boomers & What Boomers Need From Employers. Descending the Corporate Ladder. The State of the Aging Baby Boomer Market – Canada – 2006 Sam Cukierman Managing Partner Strategic Guidance Consulting Inc. Research Sponsors: DeGroote School of Business

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Descending the Corporate Ladder

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  1. Top 10 Myths Surrounding Aging Baby Boomers & What Boomers Need From Employers Descending the Corporate Ladder

  2. The State of the Aging Baby Boomer Market – Canada – 2006 Sam Cukierman Managing Partner Strategic Guidance Consulting Inc. Research Sponsors: DeGroote School of Business Verity International Limited

  3. Research for building loyalty to capture this market segment • Survey sample: • 1,000 Canadians aged 47 – 64, • Working full-time, (company or self-employed) • Weighted by age, gender, and marital status (to reflect Canadian demographics consistent with 2004 Statistics Canada data). • Survey was conducted in November 2005. • Sample accurately reflects the views of the target group, within 3.1 percentage points 19 times out of 20.

  4. Age and Marital Status Age Distribution Marital Status 12% 9% 26% Married 47-49 23% Widowed, Divorced, Separated 50-54 25% 55-59 Single 60-64 68% 37% Income / Net Worth Household Income Net Worth 9% 23% 27% 32% 15% <$100,000 <$50,000 $100K - $249K $50K - $74K $250K - $499K $75K - $99K >$500,000 13% >$100,000 No Response 18% No Response 21% 16% 26% Research for building loyalty to capture this market segment

  5. Myth #1 Boomers will retire, find their place in the sun, and live happily ever after

  6. Myth #1 Boomers will retire, find their place in the sun, and live happily ever after Facts: • The word retirement is a misnomer – it is not a point in time – it’s a lifestyle • The lifestyle will engage boomers in work • More than half of Aging Baby Boomers plan to continue working on a part-time basis after they “retire”

  7. At Desired Retirement Age I Will ... … Continue Working On Part-Time Basis. By Age 8% 22% 50% 60-64 52% 55-59 50-54 52% 47-49 55% 18% By Net Worth 52% 59% >$500,000 $250K - $499K 50% Continue working on a full- time basis 50% $100K - $249K Continue working on a part- time basis 53% <$100,000 No longer work Not sure / don't know Myth #1 Boomers will retire, find their place in the sun, and live happily ever after

  8. Myth #1 Boomers will retire, find their place in the sun, and live happily ever after • … and their needs for monthly income will be about the same as they spend today • … to spend money on themselves as a reward for a lifetime of hard work, on travel, on hobbies, on helping their children At retirement I expect to need ... 7% 7% Less monthly income than today About same monthly income as today 49% More monthly income than today 37% Don't Know

  9. Myth #1 Boomers will retire, find their place in the sun, and live happily ever after • How many years of retirement income do you think you will require after retirement? This has implications for the social fabric of our society – with great influx of boomers wishing to work, where are the jobs? How will employers respond to meet boomer expectations (realistic or unrealistic)?

  10. Myth #2 Aging baby boomers are financially prepared for retirement today

  11. Myth #2 Aging baby boomers are financially prepared for retirement today Facts: • They are not financially prepared • 85% of aging baby boomers feel only somewhat prepared, not at all prepared, or simply do not know

  12. Financial Preparation For Retirement All Those Continuing To Work Self-Employed Continuing To Work Don't know Very prepared 3% 15% 28% 32% 21% 39% Not at all prepared 60% 12% Somewhat prepared 29% 61% With your current company With a different company Don't know Myth #2 Aging baby boomers are financially prepared for retirement today

  13. Myth #3 Baby boomers access advice and information and place their trust in one advisor

  14. Myth #3 Baby boomers access advice and information and place their trust in one advisor Facts: • 76% of baby boomers have started to “plan” for retirement • They begin with self-help modes of advice – websites, books, friends and family – and find the degree of helpfulness lacking • They progress to more credible professional sources of advice for planning; progression is slow and there is considerable room for growth

  15. Financial planner with financial institution 34% Family member / friend / colleague 31% 31% Books, articles, newspapers Independent financial planner 27% Life insurance agent 18% Financial institution manager / acct. manager 18% Human resource person at place of employment 15% 14% Accountant 7% Broker 7% Someone in government 6% Lawyer Real estate agent 5% 2% Career counseling firm Myth #3 Baby boomers access advice and information and place their trust in one advisor • Financial planners are the predominant source of advice – financial planners in banks, trusts, and credit unions get highest usage scores Which of the following people / resources have you talked to or consulted with regarding your retirement planning? – note HR resource ranks 7th

  16. Myth #3 Baby boomers access advice and information and place their trust in one advisor • The degree of helpfulness varies among advice providers - among those who have sought professional advice, independent financial planners rank highest in degree of helpfulness • Those who use accountants (only 14%) rank them as high as financial planners for helpfulness

  17. 33% Independent Financial Planner 81% 21% Financial Planner with F.I. 76% 22% Accountant 76% 25% HR & Workplace 71% 19% F.I. / Account Manager 70% 14% Someone in Government 67% 15% Broker 67% 27% Lawyer 64% 18% Books / articles / magazines 61% 19% Web sites 59% 16% Family / friend / colleague 59% 16% Real Estate Agent Extremely Helpful 57% 25% Extremely + Very Helpful Career Counselling Firm 56% 19% Life Insurance Agent 52% Myth #3 Baby boomers access advice and information and place their trust in one advisor Degree of Helpfulness

  18. Myth #4 The 4 traditional cornerstones for retirement - savings, health, life insurance, and investment plans - are well-covered

  19. Myth #4 The 4 traditional cornerstones for retirement - savings, health, life insurance,and investment plans - are well-covered Facts: • Life insurance and RRSPs dominate financial holdings • Significant opportunities for growth exist in health, disability and critical care insurance and estate planning

  20. Assets Currently Held by Aging Baby Boomers Life insurance 77%* Registered Retirement Savings Plan (RRSP) 68% Health insurance 64%* Disability insurance 59%* Will 57% Company pension plan 48% Through Work Only 40%* Long term care insurance Acquired Personally Insurance Coverage * Critical care insurance 39%* Both 39% Stocks / bonds outside of RRSP 27% 6% 15% 18% Critical care 40% Mutual funds outside of RRSP 24% 5% 17% 18% Long term care 59% Power of attorney 21% 42% 10% 7% Disability 64% GIC outside of RRSP 16% 47% 13% 4% Health 77% Estate plan 10% 23% 24% 30% Life Registered Retirement Income Fund (RRIF) 7% Myth #4 The 4 traditional cornerstones for retirement -savings, health, life insurance,and investment plans - are well-covered

  21. Myth #5 Enormous generational wealth transfer through inheritances are occurring or will occur

  22. Myth #5 Enormous generational wealth transfer through inheritances are occurring or will occur Facts: • Only 11% of aging baby boomers have inherited any kind of assets in the past 5 years • 55% of aging baby boomers do not anticipate inheriting any assets in the next 10 years – this holds true even for those aged 60-64 • 26% do anticipate inheriting some wealth bequeathed by an estate, but this will not occur until their very late sixties / early seventies Facts:

  23. Yes 11% Yes 19% Don’t Know By Net Worth 26% 35% 32% No 29% 19% 89% No <$100,000 $100K - $249K $250K - $499K >$500,000 55% Myth #5 Enormous generational wealth transfer through inheritances are occurring or will occur Have you inherited assets from an estate that was bequeathed to you in the past five years? In the next ten years or so, do you anticipate inheriting assets from an estate?

  24. Myth #5 Enormous generational wealth transfer through inheritances are occurring or will occur Does this make sense? Yes because… • They are spending money to help their children financially and will do so for the next 10 years • Only after age 64 do the number of children that are financially independent exceed the number of children receiving financial help • They expect to live well into their eighties, remain mentally and physically active, and be vigorous consumers, believing the monthly income requirements will be at least the same as what they spend today

  25. Respondents with children By Age Group ALL 47-49 50-54 55-59 60-64 79% Provide financial help to children 89% 76% 77% 47% 21% Children financially independent 11% 24% 23% 53% Myth #5 Enormous generational wealth transfer through inheritances are occurring or will occur

  26. Myth #6 Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs

  27. Myth #6 Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs Facts: • Human resource management for career planning and advice is weak – research anecdotes from personal one-on-one interviews backed by quantifiable results • Career management consulting firms can fill the gap if company HR function is unable to fulfill boomer needs

  28. When you retire, will you be entitled to receive any continued benefits from your existing employer? What benefits will you be entitled to receive? Don’t Know 16% Yes Health care benefits 77% 31% Dental benefits 60% Insurance 58% Other 7% Don't know 1% No 53% Myth #6 Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs

  29. Importance of Topic in Retirement Planning - Very Important / Somewhat Important Rating- 92% Benefits you will be entitled to 81% Legal matters (wills, power of attorney) Financial counseling 74% Understanding what to expect in retirement 72% Prepare you in event of early retirement 64% Suggestions for new activities to be involved in 60% Advice on adjusting to retirement 59% Evaluating personal strengths for new career choices 49% Seeking new career choices after retirement 47% Offering outside consulting / counseling 43% Myth #6 Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs

  30. Myth #7 After retirement, baby boomers will move, downsize their homes, and live out-of-country

  31. Myth #7 After retirement, baby boomers will move, downsize their homes, and live out-of-country Facts: • Two thirds of aging baby boomers will stay in their current residence • Only 20% of aging baby boomers will live any part of their retirement outside of Canada

  32. Which of the following best describes where your main residence will be when you retire? Plan on Living Any Part of Retirement Outside Canada Yes 20% City / town / area 73% where currently reside Different city / town 13% /area in same province No Don't know 80% 9% Different province in Canada 4% Somewhere other than 1% - Where ?- Canada or U.S. United States <1% United States 52% Caribbean 21% Asia, Australia,Other 18% Europe 14% South America 7% Myth #7 After retirement, baby boomers will move, downsize their homes, and live out-of-country

  33. Myth #8 When the boomer works less they will do less

  34. Myth #8 When the boomer works less they will do less Facts: • Aside from part-time work, caring for physical appearance, exercise, travel, cooking, home renovations, gardening, charity and volunteer work will dominate retirement time • Standard of living, CPP availability, medical and dental affordability are key issues

  35. Currently Plan To % Current Activities - Do / Plan To Do When Retire Do Do * Change 86% Walking 75% 11% 68% Travelling 43% 25% 68% Cooking 57% 11% 62% Volunteering 30% 32% 61% Gardening 50% 11% 49% Home renovation / repairs 46% 3% 38% Charity work 17% 21% 34% Home decoration / décor 6% 28% 34% Photography / art 25% 9% 33% Exercise classes 19% 14% Golf 21% 11% 32% Wine tasting 15% 7% 22% Knitting / sewing 18% 3% 21% Sitting on board of directors (paid or unpaid) 13% 7% 20% Weight training 15% 4% 19% Social club member 10% 8% 18% Religious classes / committees /services 12% 16% 4% Social work 6% 12% 6% Running 8% 1% 9% Sailing 3% 6% 3% 5% Tennis 4% 1% * includes those who currently do and those who plan to do after they retire. Myth #8 When the boomer works less they will do less

  36. Myth #9 Boomers are not web savvy – their thirst for information will dry up

  37. Myth #9 Boomers are not web savvy – their thirst for information will dry up Facts: • Boomers want a website dedicated to their needs • Three out of every four (74%) aging baby boomers indicated they would definitely / probably be interested in accessing a website specifically geared to serve their needs. This is consistent across all age, income and net worth groupings (Note: This survey was conducted on line. Results of data presented in this section may contain some bias given the respondent’s predisposition to a comfort level with the web).

  38. Entertainment discounts 88% Medical services 85% 84% General newsletter 82% Food products 82% Food preparation / recipe information Hobbies 81% Books 81% Travel specials 78% Computer products / services 75% Health and fitness products / services 74% Dining recommendations 74% Financial services 70% 68% Consumer electronics 66% Volunteer opportunities 65% Home renovation / repair services 63% Hardware products 63% Employment opportunities 61% Automobile service Clothing for sale 61% 50% Municipal or other political issues 47% Automobile sales Recreation products 46% 42% Art and collectibles Myth #9 Boomers are not web savvy - their thirst for information will dry up Respondents interested in accessing website (definitely / probably) for ... “Top Ten”

  39. Myth #10 THE BIGGEST MYTH OF ALL – we’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

  40. Myth #10 We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today Facts: • Everyone wants the business of this “brick-rich / cash rich” group • Few are meeting their expectations today • Opportunity abounds

  41. Ranked in order of “above average” in meeting the needs of aging baby boomers, the following “top 12” businesses, services or professions are shown: Above Below Don't Average ALL RESPONDENTS Average Average Know 31% Pharmacies 57% 8% 4% 27% Vacation destinations 54% 9% 10% 25% Seniors clubs / associations 48% 7% 20% 20% Book stores /sellers 64% 7% 9% 20% Specialty magazines / books 60% 8% 12% 19% Specialty food stores 58% 10% 13% 19% Restaurants 67% 9% 4% 19% Doctors 58% 20% 4% 18% Health / fitness clubs / gyms 53% 16% 14% 18% Pharmaceutical companies 56% 19% 7% 18% Travel agents 58% 10% 14% 17% Hotels 65% 9% 9% Myth #10 We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

  42. FINANCIAL SERVICES - ALL Above Below Don't Average RESPONDENTS Average Average Know Financial planners associated with 16% specific financial institution 57% 12% 15% 14% Independent financial planning 60% 11% 15% 14% Banks 59% 22% 5% 13% Credit unions 53% 12% 22% 12% Mutual fund companies 57% 14% 17% 11% Life insurance companies 61% 18% 10% Myth #10 We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today Financial services industry falls into a middle category among the forty businesses, services, and professions surveyed :

  43. The businesses ranked most negatively – the percentage aging baby boomers who believe their needs are met on a “below average” basis : Above Below Don't Average ALL RESPONDENTS Average Average Know 56% Gasoline companies 3% 33% 8% 50% Provincial government 4% 40% 7% 49% Federal government 3% 41% 6% 43% Municipal government 4% 47% 7% 25% Retirement homes 15% 44% 17% 24% Automobile dealers 7% 58% 11% 23% Automobile manufacturers 8% 59% 10% 23% Airlines 8% 57% 12% 23% Home builders 7% 57% 14% 22% Banks 14% 59% 5% Myth #10 We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

  44. KEY IMPLICATIONS

  45. Key Implications • Life expectancy and expectancy for what life offers are high – catch the wave • Health conscious and confident – focus on wellness • Spenders – careful, and demanding a value proposition that makes sense • Branding is key – talk to them in their language – keep it simple - deliver messages from respected sources through an attention span that filters what they see, find credible and believable • Ethics will grow in importance

  46. Key Implications • Be innovative – create a value proposition on your own, or seek strategic alliances that twin those who are serving boomers well with those who need to break through and profit from this market segment • Case histories: AMEX / insurance; the GAP / Forth and Towne; Vespa / homebuilders; Shoppers Home Health / TEMPUR; Kellogg / Smart Start pedometer; Dove / Mirrors; Proctor and Gamble / make-up selling “hope”; Honda, Lexus, Chrysler • BIG GROWTH: estate planning; health insurance; cooking, specialty foods; wellness; account management cross- sell ratios

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