Matt Smith wpb creative Equity Release Understanding The Senior Market

Matt Smith wpb creative

Equity Release

Understanding The Senior Market


The market opportunity

£1.71bn new business by year end 2007

Average loan size £50-60k

Outstanding lending end 2006 circa £6.5bn (0.6% of mortgage market)

Proc fees 1%


Product developments

Certificate stating cost of assets and estate

A portability provision

Allowing the borrower to choose the solicitor

A no-negative equity guarantee


77% improve their home34% holidays31% top-up income26% buy a large item 22% help family or friends 8% health care 4% IHT planning 1% buy property abroad

Source: Norwich Union, 2006

70% improve their home40% holidays31% repay debts16% treat family or friends14% invest for income14% IHT planning 9% special occasions 1% future care

Source: Key Retirement Solutions, 2006

The market opportunity

As the market grows so do expectations as to what ER can achieve



European wide phenomenon

Consumers aged 55 and over will grow by 60% in the next 15 years, whereas the under-50 age group will remain stable.

Economist magazine in 2002, companies still spend over 95% of their marketing and advertising budgets on the under-50s age groups.

The seniors are a difficult bunch with different needs and desires. Getting the right message across to this new target market is not an easy task.


Understanding the senior market

60 years plus

But this is too crude, consider

– Geographic

– Demographic

– Psychographic (Lifestyle, Status, Behaviour)

– Product e.g. health insurance



Boomers will begin retirement having earned more and borrowed more than their predecessors

In the US, 60% more are still making mortgage payments than in 1980

27% more have credit card debt than predecessors

Big concerns are typically “long term health care” and “running out of money” (US Today)



Things that appeal to today's seniors won't to seniors a decade from now. That's not to say they won't need some of the same features

– big alpha numeric characters compensate for poor eyesight

People perceive themselves very differently.

– if the target audience is 60 - 75 years then the photography will use people about 15 years younger

The disproportionate number of women to men

– a huge shift in the dynamic of many financial sales



Think about how different a 45 to 50 year old is in their interest and activity level than a person that age when we were young

The coming seniors use credit. It’s not only the numbers of people that is huge, but also their willingness to spend

– Seniors account for 25% of toy spend in US

Internet-savvy – Seniors also tend to have more available time to make purchase decisions. They

are life savvy and for the most part, research well. They will ask questions before making a purchase - sometimes many, many, many questions



Seniors may consider themselves younger than they are, different to their predecessors

But society reminds them!

– Membership discounts– Travel discounts– Social, health and wellness products– State benefits

Psychologically, there are many steps to overcome as behaviour changes to meet society’s expectations and reflect their pasts and preferences



Information asymmetry occurs when one party to a transaction has more or better information than the other party. (asymmetrical information)

The flow of knowledge is changing. Parents used to inform children, now children often inform parents



A new concept of the extended senior customer

More than any other market seniors will involve others in their buying decisions

More prevalent as age and importance of decision increase

US studies show that from age 75 joint decision making increases to 80% of the time



Family members become indispensable

They tour new accommodation, are present in most large decisions

Potential inheritance issues

Health care, long-term care and life expectancy eat into boomer inheritances



Third parties play their part

Neighbours and friends often know more about seniors and their needs than do their family

Other care-givers influence where family is not available

Professionals


Recalibrating our approach

They are not a homogenous market– The market has an age range of 40 years or more

They are not like their predecessors

Their perceptions are everything

Leading edge boomers are reaching 60 now

Build long and meaningful relationships for real rewards

Address third parties

Consider strategic relationships with other suppliers


Better Selling

Establish why the client wants ER

Check clients’ understanding of ER

Keep clear records

Patience

Allow clients to make an informed decision

Use the resources


A familiar pattern

Current Account Mortgages / Offsets

Difficult product

Press are sceptical

Education campaign

Positive case studies

Tipping Point

Product is established niche


Thank you

Documents

Matt Smith wpb creative Equity Release Understanding The Senior Market