Seniors prefer the personal touch, study suggests

A new generational study of financial consumers reveals that seniors are more likely to rely on advisors, despite anecdotal evidence that many retirees prefer the do-it-yourself approach.

The Forrester survey found that 35% of seniors are “delegators” — leaving all their financial decisions to a professional. That compares to 31% of boomers who described themselves as delegators and 28% of younger investors.

“Seniors don’t like to shop around, they like to deal with people,” says the report’s author, Bruce Timkin. “They also prefer the human touch when viewing account balances.”

Still, across all age groups, the most common segment of consumers are “validators” — clients who use professional help but confirm decisions with their own research. That category includes about half of younger investors and boomers, and roughly 47% of seniors.

One in five validators are also affluent, Forrester says, and to date, no brokerage firm has captured a disproportionate share of these investors. “To serve this market, direct brokerages will need to add the human touch, while full-service firms will need to beef up their online tools.”

Forrester’s third category, “soloists,” was the smallest, encompassing about 18% of those participating in the firm’s Consumer Technographics Q3 2005 North American survey.

Although seniors prefer working with a full-service brokerage firm, they were also the most active traders among the four age groups Forrester surveyed.

The study also found that ownership of investment products, such as stocks and mutual funds, peak with the boomer generation, with seniors more likely to own bonds and other fixed income products.

Generation X, born between 1964 and 1975, had the highest percentage of RRSP ownership, at 48%, followed closely by boomers at 44%.

Surprisingly, Generation X was also at the top of the list in the life and disability insurance categories, at 71%. Ownership of disability insurance has an “unusual” characteristic, Timkin says, dropping dramatically from 30% to 14% from boomers to seniors.

The percentage of consumers who own long-term care insurance increased steadily with age, growing from 5% in the youngest group to 17% of seniors.

The study concludes that while financial institutions need separate strategies to meet the needs of each generation, there are some common themes.

For instance, despite increased use of web technology, bank branches still serve an important purpose. Seniors are the most likely to use the branch channel, but a significant number of younger consumers prefer going into branches to purchase new products and solve problems.

Firms will also need to focus on products, services and marketing plans to meet the surge of boomers nearing retirement, Forrester found, adding that younger consumers are worried about having enough money to retire. “A strong retirement campaign will bring dividends beyond the boomer generation.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com