Beyond the Boomers

Document Sample
Beyond the Boomers Powered By Docstoc
					Reprinted from LOMA’s Resource, April 2008. Visit LOMA at

Beyond the Boomers
Forward-thinking life insurance companies aren’t just targeting affluent Baby
Boomers any more. Who’s doing what—and why?

By Jennifer C. Rankin

Move over, Baby Boomers. You’ve been the center of attention since 1946. Believe it or not,
it’s not all about you anymore. This year, the first wave of Boomers started to retire and the
recent media build up has been hard to miss. Who knew tie-dye, the Volkswagen bug, and
Dennis Hopper would make such a comeback?

The good news? Consumer product manufacturers and financial services companies are still
lining up to woo us with the images and sounds of our youth and to cater to our every need,
real and imagined. The bad news? We’re being edged out by our children, emerging ethnic
and cultural groups, and lower-income Americans.

A huge driver is demographics. Sometime between 2020 and 2025, the foreign-born will
account for 15 percent of the American population, or more than one in seven residents,
according to the Pew Research Center. The nonpartisan research group also predicts that in
2050, 19 percent of Americans will be foreign-born; the Hispanic population will more than
double to 29 percent; and the proportion of Asians will almost double to nine percent. The
share of African Americans in the population will hold steady at about 13 percent, but the
proportion of non-Hispanic whites will drop to 47 percent, or less than half of the

Hispanics are now the largest multicultural segment in the United States, accounting for
about 14 percent of the population, according to the U.S. Census Bureau. The Hispanic
population continues to grow at five times the rate of the total population. In the past
decade, their buying power has increased by 260 percent; the buying power of Asian
Americans, who now make up about five percent of the population, has increased by 252

This places insurance companies in the position of figuring out how best to meet the needs
of an array of cultures and ethnic groups.

Habla Espanol?
An obvious start is translating marketing materials into different languages and selecting
images from a cross-section of cultures.

According to research conducted by LIMRA, the importance of in-language representation
among both Spanish-dominant and bilingual Hispanics is very high, with 94 percent of
Spanish-dominant and 75 percent of bilingual respondents feeling it was important to have
a Spanish-speaking representative to discuss their insurance needs. The same report,
published in 2007 and titled Targeting the U.S. Hispanic Market, said that regardless of their
language use, Hispanics want bilingual printed material for financial products in order to
better understand the products and to share the materials with family and friends.

Version 1.1                                     Beyond the Boomers                                                 Page 1 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
In addition to in-language marketing collateral, it is vital to build multicultural sales and
service teams as well as to develop an understanding of different cultures and their sub-
cultures. Consumers in the Hispanic market, for example, may come from Central America,
Cuba, Mexico, Puerto Rico, South America, or Spain. Some are foreign born, others are
native. Some are bilingual; others speak only Spanish or English. There are similar nuances
in the Asian market, which is further complicated by wide dialectical differences.

Let’s take a closer at the Hispanic market.

The Hispanic population is not only growing, but also is technology savvy. That’s why
multicultural marketers are leveraging digital media—that is, company Web sites, online
ads, e-mail marketing, search-engine marketing and optimization, mobile technologies, and
blogs and social networks.

In particular, they are ahead of the curve with respect to mobile marketing and social
networks. The Association of National Advertisers (ANA) recently surveyed its members and
found 38 percent of multicultural marketers are using mobile marketing, compared with just
28 percent of general-market advertisers. While respondents in the general market and
those working in multicultural areas both use social networks (20 and 16 percent,
respectively), twice as many multicultural marketers (36 percent) say they plan to start
using social networking for the first time next year, compared with 19 percent in the general

Hispanics are heavy technology users. According to a recent Forrester Research phone
survey of 3,000 Hispanic adults, Hispanics are more likely than non-Hispanics to have cell
phones with cameras (65 versus 48 percent), video (41 versus 17 percent), music (42
versus 15 percent), and Internet access (57 versus 39 percent).

In response, a number of general-market sites have added Spanish-language pages, such
as MySpace Latino, which has some nine million Hispanic profiles, and LinkedIn is now

And if a growing population that’s tapped in electronically wasn’t tantalizing enough, there’s
lots of room to maneuver in the financial services arena.

According to the U.S. Diversity Markets Report, which research company Synovate released
in February, just 77 percent of Hispanic adults have any kind of bank account, compared to
90 percent of African-Americans and 98 percent of general-market consumers. Synovate
also found that only 61 percent of Hispanics have a savings account; 32 percent have a
retirement account; and 18 percent have invested in stocks or bonds. In other financial
services, just 51 percent of Hispanics use credit cards; 40 percent buy life insurance; and
26 percent have a mortgage.

This low penetration represents a big opportunity for financial services players such as
insurers, especially those willing to take a relationship-building—as opposed to a
transactional—approach, because conventional wisdom holds that Hispanics expect to form
a relationship with those with whom they conduct business.

If cultural markets are the wave of the future, which financial services companies are
leveraging them?

Version 1.1                                     Beyond the Boomers                                                 Page 2 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
New York Life was one of the first insurance companies to grasp—and act on—the changing
complexion of American demographics.

New York Life’s cultural markets division was formed in 1996, when the company began to
look at better targeting its communications to the Asian Indian and Chinese communities.
Today, the insurer also has targeted initiatives for the African-American, Korean,
Vietnamese and Hispanic populations as well as women. It has a separate Web site for each
group. The Chinese, Korean, Vietnamese and Hispanic sites are in-language sites. Bilingual
employees answer the toll-free phone line and bilingual agents sell products.

New York Life recognizes that today’s niche market may be tomorrow’s biggest opportunity.
Consequently, it has a strong commitment to diversity in the work place and to providing
funding and employee volunteers for projects in diverse communities. The company also
forges partnerships that support diversity; examples include its close ties to the Committee
for Hispanic Women and Families and the New York State Federation of Hispanic Chambers
of Commerce. Both Hispanic magazine and Latina Style magazine have honored New York
Life as one of the best companies in America for Hispanics.

Another insurer that’s mining the potential of cultural markets in the United States is ING

In February, ING introduced a Spanish-language option for customers calling into the
service centers for its U.S. Insurance division. Customers with individual life insurance and
group life, group disability and other workplace-based insurance policies now have the
option to speak to dedicated bilingual call center representatives who can service their
account in either Spanish or English.

“This is another step in our efforts to meet the needs of the rapidly growing U.S. Hispanic
population,” says Catherine Smith, CEO of U.S. Insurance for ING. “The Hispanic market in
the United States is diverse in terms of acculturation, language preference and country of
origin. To serve it effectively, you need more than just in-language brochures. You need
distribution and servicing representatives who understand the different cultures of these
customers, and of course, speak their language.”

ING’s involvement with the Hispanic community includes supporting programs locally and
nationally. For the past several years, ING has sponsored the Juntos en Concierto concert
series, most recently starring Jennifer Lopez and Marc Anthony. Proceeds from the series
benefited the ING Run For Something Better, a kids’ fitness program created by ING that
aims to reduce childhood obesity by introducing kids to the benefits of running, physical
fitness, and healthy lifestyle choices. In Miami, ING is the title sponsor of the ING Miami
Celebrity Domino Night. In addition, the ING Foundation sponsors the Hispanic Scholarship
Fund’s Steps for Success Saturday program, which offers educational sessions for students
and their parents about the importance of college and how to navigate the college and
financial aid application process.

MetLife is yet another example.

In August 2005, it launched a Chinese-American Web site that provides in-language
information about financial and insurance products and services.

Version 1.1                                     Beyond the Boomers                                                 Page 3 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
Shortly thereafter (March 2006), MetLife launched its first Spanish in-language Web site in
the U.S. The site provides product information, agency locations, Life Advice® brochures,
and career opportunities, as well as a phone number for its Spanish-speaking customer
service line. In addition, the site offers information regarding MetLife Auto & Home’s
products and services.

According to MetLife market research, Spanish-speaking consumers, though relatively new
to the online community are already highly engaged in Web activities. As a result, Spanish-
language sites are the preferred channels among Hispanic online users. Sixty-nine percent
of Spanish-speakers visit sites in Spanish to buy and research products and 49 percent are
more likely to buy from a Spanish-language site when shopping online.

In the past, MetLife focused on multicultural marketing through advertising, consumer
education programs, and event sponsorship. The new additions to its Web site affirm its
dedication to the Hispanic community.

Prudential Financial, which has long felt that a critical component of its success is its ability
to value and leverage diversity, also is working to meet the needs of different cultural

Prudential’s senior leadership team has formed a Diversity Council, which works closely with
the company’s chief diversity officer, who heads up the Equal Opportunity organization.

Prudential also encourages employees to participate in Business Resource Groups (BRGs),
which address topics of interest to African-Americans, Asians and Pacific-Americans,
Hispanics, sexual minority groups and individuals with disabilities. BRG members not only
participate in educational programs that foster understanding of differences, but also assist
with marketing programs aimed at targeted communities and participate in philanthropic
outreach activities.

An enthusiastic supporter of the diverse communities in which it does business, Prudential
spends tens of millions of dollars annually on a wide array of initiatives and community

Prudential also has a business diversity outreach program. Its Horizon Initiative builds
strong relationships between the company and diverse organizations and community groups
through event sponsorship and participation activities (about 100 per year).

Let’s look at a few concrete examples of how all this plays out for a specific group—the
Hispanic community.

Prudential has forged partnerships with several professional organizations, including
Hispanic CPAs and the National Society of Hispanic MBAs. It also sponsors the American
Latino Media Arts (ALMA) Awards and works closely with the National Hispanic Foundation of
the Arts and the U.S. Hispanic Chamber of Commerce. Its high profile in the Hispanic
community has earned Prudential many kudos—Hispanic magazine has named it a Top 100
employer for Hispanics and Latina Style magazine has named it a Top 50 company for
Hispanic working women—and lots of new customers.

And the list goes on:

Version 1.1                                     Beyond the Boomers                                                 Page 4 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
A little over a year ago, Old Mutual Financial Network (the marketing name for the U.S. life
insurance and annuity operations of London-based Old Mutual plc) launched OMFN En
Espanol, a Hispanic brand for OMFN life products and services. OMFN En Espanol includes all
the necessary capabilities and infrastructures to meet the needs of the Hispanic market,
including a dynamic Web site, updated marketing materials and a proficient bilingual sales
and customer services staff.

CIGNA now offers virtually all of its group insurance benefit materials—including insurance
applications, enrollment packets, and beneficiary designation forms—in Spanish.
Western & Southern Life now has a Spanish-language Web site, a toll-free phone line
dedicated to Spanish-speaking customers, and Spanish-English marketing brochures.

Middle Class
Life insurers not only are considering the potential of cultural markets, but also are taking
another look at the so-called middle market. Just what is the middle market and what
opportunities and challenges does it pose?

Although there is no universal definition, most financial services companies use the term
middle market to refer to households with an annual income between US$25,000 and US$
99,000. According to 2006 data from the U.S. Census Bureau, 56.8 percent of Americans
fall in this range. About one quarter of households (25.3 percent) have an annual income of
less than US$25,000, while 17.9 percent—the so-called mass affluent—have an annual
income greater than US$100,000.

The middle market is not homogenous. Those in the lower income range may have little, if
any, disposable income; those in the higher range are more likely to be able to afford
insurance, but also may have competing expenses such as mortgages and college tuition.
Almost everyone in the middle market struggles financially due to stagnant wages, rising
prices, and growing credit card debt.

When it comes to life insurance, the middle market has a low penetration rate. According to
a study by LIMRA, 26 percent of U.S. households with less than $75,000 of household
income have no life insurance coverage at all. That figure rises to almost 50 percent for
households that make less than $35,000.

LIMRA research also shows that many middle market consumers do not have insurance
agents or financial advisors. Four in 10 households with incomes below US$ 50,000 and
three in 10 households with incomes in the high middle market range make financial
decisions on their own. While not all middle market consumers are online, most are—more
specifically, 80 percent of those with incomes between US$ 30,000 and US$ 50,000 and 86
percent of those with incomes between US$ 50,000 and US$ 75,000.

While a cadre of mid-tier and smaller insurance companies has long served the middle
market, larger companies traditionally have found it difficult to earn a viable return on
investment. The Internet and new distribution partners, especially banks, are making it
easier and much more cost effective to reach the middle market and many insurers are
making a concerted effort to do just that.

Version 1.1                                     Beyond the Boomers                                                 Page 5 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
Insurance brokers were quick to realize the appeal term life and other simple insurance
products, price transparency, and the ability to comparison shop might have for the middle
market. Powered by the Internet, online brokers like Insure.Com, SelectQuote, IntelliQuote,
and AccuQuote also offer an alternative distribution channel for insurance manufacturers
with traditional agency systems. And Insure.Com now offers a choice of applying online or
talking with a licensed agent.

More recently, insurance manufacturers have begun to realize that simple products, issued
at warp speed, would not only appeal to the six in 10 middle-income American families, but
also be a way to grow organically and establish new customer relationships. As a result,
many are promoting their term life products, significantly reducing the price of those
products, and adding appealing features such as return of premium.

Evolving technologies have made this possible. In the past, technology was too expensive
for all but the biggest companies and did not help the very slim profit margins of term
products. Today, very robust technologies are affordable for even small- and medium-sized
insurers and the Internet is a cost-effective marketing tool and distribution channel. Newer
technologies also speed up underwriting.

Insurance companies also are launching consumer literacy initiatives (see “Money Matters,”
Resource, August 2005), especially via corporate Web sites, many of which are chockfull of
information on everything from money management to retirement planning.

Finally, insurers are enlisting new distribution partners, especially banks. One surprising
new partner is grocer Kroger, which has been quietly but steadily expanding its financial
services business. Kroger partnered with the Royal Bank of Scotland for its personal finance
launch. Three years ago, it launched a Kroger credit card. Stores now market mortgages,
home equity lines of credit and a just-expanded set of a half-dozen insurance products
ranging from identity theft coverage to home and life policies. Kroger reaps fees for the
services provided by partnering with conventional banks and insurance companies. At the
moment, it is trying out Kroger-branded ATM machines for its stores, which would bring in
fees from customers who access their bank accounts in its stores.

The grocery chain has been broadening its offerings at the same time as rival Wal-Mart is
expanding its financial services business. Stymied in its efforts to secure a bank license last
year, Wal-Mart has added a new prepaid Visa debit card to its branded credit card and other
money services. It also will increase the number of MoneyCenter alcoves in its stores to
1,000 by the end of 2008. The centers, which are geared toward customers who are outside
mainstream banking, offer money services such as check cashing, money orders, bill
payment and money transfers. If it intends to compete head-to-head with Kroger, insurance
products may be next.

Just who is reaching out to the middle market and why?

SBLI USA Mutual Life has built its business model around the middle market.

The company does not use a traditional agency system to sell product. Its distribution
channels are banks, five walk-in retail stores, telesales, direct mail and the Internet. About
half of its policyholders are age 55 or older and most have a household income of less than
US$ 100,000. That demographic is changing, however, and the company has seen a big

Version 1.1                                     Beyond the Boomers                                                 Page 6 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
uptick in the number of Latino, African American, and female applicants, most of which are
younger and make far less money.

SBLI USA can process simple-issue applications in four days or less. Among its customer
service options are electronic payment, a bilingual (English and Spanish) call center, and
bilingual (again, English and Spanish) self service on the company Web site.

The company was founded on the belief that ordinary working people should have access to
affordable, quality life insurance. To deliver just that, SBLI USA embraces diversity and high
technology. Its associates are 57 percent female and 62 percent multicultural. And it just
snagged a coveted Cisco award for its state-of-the-art technology infrastructure. SBLI USA
also has made a major commitment to public service. It supports more than 50 different
community initiatives with both money and volunteers, who are employees to which the
company gives paid customer service days.

All of these efforts have paid off in a big way. SBLI USA has enjoyed several years of
double-digit sales growth since 1999 as well as consistent customer satisfaction ratings of
97 percent—accomplishments that top tier insurers would love to emulate.

Prudential Financial is another example.

In December 2007, Prudential introduced MyTerm, a simplified-issue term life insurance
policy that’s targeted to the middle market consumer. The product is available over the
Internet for customers of select banks. Through a completely online and automated process
that can be accessed from virtually anywhere, MyTerm can deliver a policy in about 10
minutes to qualified customers that may then be saved electronically or printed locally.

“We’ve created this new access point for consumers who look to their financial institution as
their trusted advisor,” says Jim Avery, president of Prudential’s Individual Life Insurance
business. “MyTerm provides a fast, easy and convenient way for many consumers to select
a high-quality life insurance product that fits within their budget.”

The buying process and service of MyTerm is supported by state-of-the-art technology
operating in a real-time environment. From a secure Web site, customers choose from a
10-, 20-, or 30-year level term policy with face values between US$ 50,000 and 250,000.

The ING Group is also going after the middle market in a big way.

Late in 2005, ING announced that it was looking to significantly increase its term life
insurance business with more competitive pricing and the introduction of new products. The
company has since introduced new products, including return-of-premium term life
insurance, lowered its term life insurance rates several times, expanded its distribution, and
streamlined much of its term life insurance underwriting processes.

The ING life companies’ half-year term life insurance sales grew 232 percent from 2006 to
2007. According to sales numbers posted by LIMRA, total term sales grew industry-wide by
eight percent over the same period.

Version 1.1                                     Beyond the Boomers                                                 Page 7 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
ING TermSmart and ING TermSmart*NY, are offered at 10-, 15-, 20- and 30-year terms.
The product can be converted to select cash-value policies issued by a member of the ING
family of companies without evidence of insurability.

ING is determined to meet the financial needs of what it dubs Main Street, USA , especially
through its online bank, which operates under the name ING DIRECT.

ING DIRECT offers Electric Orange, an easy-to-use paperless checking account that pays a
high interest rate, and the Orange Savings Account, which has no fees, no minimums, and
also pays a high interest rate. The Orange Mortgage has no application fee, a simple
application, and a low interest rate, as does Orange Home Equity. For further savings,
consumers can purchase Orange CDs and no-load mutual funds. ING DIRECT recently
purchased ShareBuilder, a low-cost provider that lets investors buy fractional shares of
stocks and exchange-traded funds (ETFs) with no account minimum. And its innovative ING
DIRECT Cafés, which are located in Wilmington, Philadelphia, New York City and Los
Angeles, are a big hit with consumers. Decorated in ING’s signature color (orange), they
offer café seminars and Web seminars on a wide variety of insurance, investing and money
management topics. To date, ING Direct has more than 4.5 million customers.

Another insurer targeting the middle market is AXA Equitable.

About a year ago, AXA Equitable introduced a new series of term life insurance products.
The five-product Term SeriesSM includes redesigned 10-, 20- and 30-year level-term
products, a new 15-year level-term product, and a redesigned annual renewable term (ART)
product. With the product suite, AXA Equitable hopes to reach consumers who don’t have
the money to purchase more expensive whole life products. It built longer-than-average
conversion periods into each product to give consumers more time to save for whole life
insurance, to which the company makes it easy to convert.

It also is encouraging consumers to take a “laddering” approach to term life to
accommodate a variety of life events. For example, a couple both 40 years old with children
ages 11 and 14 might both purchase US$ 250,000 10-year level term policies. At the same
time, they might purchase a US$ 500,000 20-year level term policy for the husband and a
US$ 250,000 20-year level term policy for the wife. Then, when their oldest child is 21 and
self-supporting, they might drop the 10-year policies.

More and more insurers are following the lead of SBLI USA Mutual Life, Prudential Financial,
ING U.S. and AXA Equitable to meet the needs of the middle market. In doing so, they are
extending the reach of their brand, which will be upper most in those consumers’ minds as
their financial resources grow, making them logical customers for other products such a
whole life insurance and annuities. It’s a smart strategy that enables a company retain a
consumer’s assets over time.

New Generation
In addition to mining cultural, ethnic and middle-income markets, insurance and financial
services companies are embracing generational marketing.

Defining the generations is not an exact science. The breakdowns are subjective and
generalized. Nevertheless, there is solid evidence of generational differences, according to

Version 1.1                                     Beyond the Boomers                                                 Page 8 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
Neil Howe, a renowned authority on generations in America, who has coached everyone
from Merrill Lynch to Ford Motor. And there are dozens of research and trend tracking
groups that agree.

The first wave of Baby Boomers, who were born between 1946 and 1964, retires this year,
as anyone who watches television knows. During the past couple of years, insurance and
financial services companies have saturated the market with iconic Boomer images and
music in highly targeted marketing campaigns (see “Forever Young” Resource, April 2006).
They are going after the Boomers in a big way with products designed to turn their assets
into an income stream.

But the Boomers aren’t going to be around forever, even if it seems that way.

Nipping at their heels are Generations X, Y and Z, who are ready for their moment in the
sun. Generally speaking, they are wired to max, with iPod buds in their ears, cell phones
and digital cameras in their pockets, and laptop computers within reach. It is impossible for
most Boomers to fully understand how fluent, fast and flexible today’s young people are
with technology, which is an extension of their senses and intuitive to them. They are major
multitaskers, who work and play simultaneously.

In fact, the 2007 book Connecting to the Net.Generation points to a recent survey of 7,705
college students that found 97 percent own a computer, 94 percent own a cell phone, 76
percent use instant messaging (15 percent of which are logged on 24/7), 34 percent use
Web sites as their primary source of news, 28 percent own a blog and 44 percent read
blogs, 49 percent download music using peer-to-peer file sharing, 75 percent have a
Facebook account, and 60 percent own some type of portable music and/or video device
such as an iPod.

They also are much more diverse racially, culturally and ethnically than previous
generations. Community service has been built into their school curricula, giving millions of
them an opportunity to engage society at large in highly meaningful ways in their home
towns and abroad. Large numbers are environmentalists, organic food fans, and, dare we
say it in these conservative times, Democrats.

Just how are insurers, banks and brokerage houses positioning themselves for this brave
new world?

For starters, they’re getting the word out about the billions of dollars and thousands of
volunteers they commit every year to causes ranging from Habitat for Humanity to inner
city cooperative gardens. Insurance companies have long been some of the most quietly
involved and generous corporate citizens in America. At the moment, environmentalism is

Allstate, for instance, has launched Allstate Green, an innovative eco-friendly insurance
option that helps offset auto emissions by funding reforestation and clean energy projects in
the United States. The insurer also intends to significantly advance its environmental
leadership, starting with investing US$ 200 million over the next three years in wind, hydro
and geothermal energy projects.

Version 1.1                                     Beyond the Boomers                                                 Page 9 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
Intent on becoming entirely carbon neutral through the reduction and/or compensation of
all its global carbon emissions that result from energy usage and travel, the ING Group has
just purchased wind energy credits to offset 100 percent of the electricity used by its U.S.
operations. Its commitment has earned ING a spot in the Environmental Protection Agency’s
Green Power Partnership 100 Percent Club. Now ING is beaming in on increasing energy
efficiency, buying more green energy, and offsetting all remaining CO2 emissions through
reforestation projects. Its most visible commitment to environmental responsibility in the
U.S. is a 500,000-square-foot, eco-friendly office building, which it just finished building in
Windsor, Conn.

Other insurers embracing the green movement are MetLife, which has reduced its energy
consumption by 15 percent and carbon dioxide emissions by 17 percent since 2005;
Prudential Financial, which has invested a half a billion dollars in wind energy projects and
reduced its net greenhouse emissions by 33 percent over the past decade; and Travelers,
which has pledged to reduce its total U.S. greenhouse gas emissions by seven percent by

Life insurers also are making socially responsible investment choices and offering so-called
social mutual funds as an investment choice in variable life insurance and annuity products
as well as in 401(k) and other retirement products. Brokerage houses offer dozens of
mutual funds from which they can choose. Discount brokers are also in the game.

Simple, cost effective insurance and financial service products are ideal for Generations X
and Y, who will have more college debt—and minimal, if any, employee benefits to
ameliorate the cost of health care or eventual retirement—than any previous generation.

Recognizing this, Charles Schwab launched a Generation X initiative in late 2007 to create
products and services that will attract younger investors. The company revamped its
processes to create what it calls a 15-minute individual retirement account, which allows
investors to open an account online quickly. It also introduced linked checking and
brokerage accounts that require no minimum balances. The free checking account pays a
high interest rate and has no monthly service charges or fees for ATM use or bill paying. On
the investment side, Schwab lowered the minimum investment for Schwab funds to US$
100; originally the minimum investment ranged from US$ 1,000 to US$ 2,500. It also
lowered its account opening minimum to US$ 1,000 from US$ 2,500 for brokerage
accounts, IRAs and educational savings accounts.

Fidelity has launched an online tool that helps young investors develop a simple financial
plan and now offers a SimpleStart IRA that helps them start saving with as little as US$
200. American Century has rolled out an inexpensive program for younger clients called the
My Whatever Plan.

Younger investors also seem to be fueling the popularity of target date funds. In June 2007,
Edward D. Jones & Company commissioned a study that found younger workers are ahead
of other generations when it comes to saving for retirement. Sixty-eight percent of workers
between the ages of 25 and 34 have already begun to save for retirement. Only 34 percent
of those over 65 said they have begun saving before they were 34.

Version 1.1                                     Beyond the Boomers                                                Page 10 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
Another important strategy for insurance and financial services companies who want to
capture the business of post-Boomer generations is getting comfortable with newer
technologies for electronic education, sales and service.

Hitwise, a compiler of Internet-usage data, says the top three financial Web destinations for
18-to-34-year-olds are, and Fidelity Investments’
Portals like Yahoo! Finance and MSN Money also receive substantial traffic from this age
bracket. Financial news and advice video clips are beginning to show up on YouTube and
teen investing Web sites are proliferating.

Which companies are targeting generational markets effectively and how are they doing it?

One leader is Ameriprise, which has spent nearly US$ 150 million courting Baby Boomers
since the fall of 2005 with a compelling—and highly effective—marketing campaign
featuring Dennis Hopper. The result? Brand awareness has grown from zero to 56 percent,
revenue has grown from US$ 6.8 billion to US$ 8.1 billion, and it is now the country’s
largest financial planning company.

In September 2007, it turned its sights to Generation X with another wave of targeted
advertising. While the new campaign will spanning TV, radio and print, Ameriprise will rely
heavily on Web advertising. Ameriprise also has partnered with National Geographic to
produce a series of documentary Webisodes featuring people who embody the idea of living
out their dreams. One vignette is about a Chicago couple who start a green recording

USAA is another company that’s mining generational markets very effectively.

Based in San Antonio, Texas, USAA holds an interesting—and greatly admired—place in the
financial services sector.

USAA is unique in that membership is restricted to military officers, enlisted personnel, and
their children. In addition, it does not have a field force—that is, traditional agencies or
agents. Its very uniqueness, however, made it an early champion of advanced technologies
and how to use them for rapid product development and deployment, for customer service,
and for customer-initiated transactions, such as checking account balances and paying bills.
How else could USAA meet the needs of military men and women, who were constantly on
the move and whom no one else would insure?

Decades of serving a fluid and remote customer base have positioned USAA perfectly for
today’s market place and it is reaching out to post-Boomer generations as well.

USAA’s Web site houses a comprehensive mix of information on financial topics ranging
from setting goals to buying long-term care insurance. The information, which is organized
into five broad categories (vehicle, family, financial, insurance and house), spins off specific
actions such as going to college, buying a home and coping with loss. The Web site is highly
interactive, enabling customers to deposit checks online, pay USAA and non-USAA bills, and
update their personal property policies. USAA also conducts regular Webinars and podcasts
at the site.

Version 1.1                                     Beyond the Boomers                                                Page 11 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.
A major component of the Web site is its Advice Center, which offers tips on everything
from money management for young adults to teaching kids the value of money.

USAA also publishes five print magazines: USAA (for those of middle age and older),
USAA.COM (for thirtysomethings), U.25 (for twentysomethings), U-TURN (for teenagers)
and U MAG (for children aged eight to 12). Each features real-life financial and lifestyle
stories, financial primers, fun stuff that’s age appropriate (such as the directions for making
a duct tape wallet in U MAG), and more. Both the content and design of these publications
is top-drawer.

Complementing the U-TURN magazine for teens are and

USAA provides competitive products and services for kids, teens and young adults through
the USAA First Start® Program, which consists of USAA First Start Savings®, USAA Prepaid
Card®, USAA Teen Checking, USAA First Start Growth Fund®, and, which lets
teens view their accounts, transfer money and make check deposits from home.

Other examples include ING and Nationwide.

To reach out to elementary school children, ING created Planet Orange at, where they meet guides Cedric and Amy, who take them to four
continents—the Republic of Saving, Moneyland, Investor Islands and South Spending—to
learn about earning, spending, saving and investing. Filled with clever graphics and
animation, the site is engaging, interactive and filled with useful information. Planet Orange
also features a Teachers Resource Center, which offers free, downloadable lesson plans, a
teacher’s tutorial and a curriculum matrix to help teachers learn how Planet Orange fits into
the financial education standards in their state.

To teach children about the importance of financial management, Nationwide has launched

As you can see, many insurers active in the life, pension and annuity markets are beginning
to look beyond the Baby Boomers to grow business.

While cultural, generational and middle markets are getting the most buzz, it’s important to
remember these markets are not silos. Forward-looking insurers are drilling into and cutting
across demographic data to pinpoint customer needs. Recent immigrants may have
different needs and a different perspective than second- or third-generation immigrants.
Generations X, Y and Z will move through the same life stages previous generations have
and as they do, their financial needs will change. Women and African Americans—which
some insurers segment and others fold into the general population—may have unique
needs. Even the middle market is in flux, with some analysts saying it’s a prime segment for
organic growth and others saying it will disappear as America devolves into a country of
haves and have nots.

As these new markets for insurance and financial services products evolve, Resource will
continue to keep you up to date.

Version 1.1                                     Beyond the Boomers                                                Page 12 of 12

   This document contains confidential proprietary information that is the sole and exclusive property of COSS and may not be
       disseminated to third parties or used for any purpose other than that which is expressly set forth in this document.