The demographic drivers are clear. There will be more older people living for longer. By 2030, 13 percent of the global population will be over 65, compared to 8 percent today1. But other trends such as the changing role of women, growth of the middle class, increasing mobility and growing economic influence of the developing world will help to make gender, culture and even religion more important drivers of change.
But perhaps more importantly for the industry, individuals will need to take greater responsibility for their retirement planning. It is clear that no one else will do it for them given the decline of state provision in many countries and continued pressure on the traditional annuity models.
Today’s younger generations will see first-hand how their parents’ and grandparents’ higher lifestyle expectations, coupled with rising healthcare commitments, eat into retirement nest eggs. An increasing number of people will simply run out of money in retirement. The prospect of having to take care of parents and far lower inter-generational wealth transfer will, in our view, shape future generations’ attitude to savings. They will not be able to afford to ignore the issue.
This presents an opportunity for the industry to capture clients earlier and build a cradle-to-grave relationship, rather than only focus on attracting clients when they have assets to invest, an approach which has been prevalent to date.
The net result is likely to be a much broader, younger, more diverse, multi-generational and multi-cultural client base. This opens up a great opportunity. However, each client segment will have very different requirements, needs and expectations. Herein lies the challenge for an industry which to date has largely served a relatively narrow demographic.
1National Institute on Aging. “Why Population Matters: A Global Perspective”, March 2007