Are the baby-boomers, as a generation, ever going to grow up before they die?
I keep seeing advertisements from financial service companies, all apparently aimed at baby-boomers in their fifties. Without exception, all the ads have the same theme and tone. They use a lot of sixties imagery and they all basically say, “We’re really sorry you had to accept responsibilities and have made enough money that you need to invest it but we know deep down you’re just the same wild irresponsible person you were when you were 20!” One ad features singer Paul McCartney as a “rock star,business tycoon, philanthropist and Knight.” See, if somebody as cool as McCartney can pay attention to business and money then, by golly, boomers can too!
It’s as if the financial service industry thinks it has to apologize to the baby-boomers for bringing up the unpleasant subject of money and thereby implying that the boomers are not motivated by pure idealism. You would think they were talking to a medieval nobleman or a samurai! Since many different companies use the same theme, you can bet that their marketing researchers have all independently discovered that this is the message that the boomers want to hear.
The boomers’ obsession with the ’60s and their youth gives off the same kind of creepy vibe as the fat middle-aged man sitting in his basement den, drinking beer while surrounded by his high-school sporting trophies. They think they hit their peak in their early 20s and that it has just been downhill from there. Their positive self-image is attached wholly to their collective narcissistic youth and not to their families, careers or individual accomplishments.
The ads show that boomers do not want to think of themselves as responsible, temperate people who get the job done. They would rather think of themselves as forever-free-spirited children. Too bad life isn’t like that.
Grow up and die already.
[Note: I should add the disclaimer that by baby-boomers I actually mean a large subset of the actual age cohort. Not all members of the cohort behave in this way but unfortunately, as evidenced by the ads, they are representative of the generation .]
The other variant of this is the ads focused on how your “financial advisor” will understand your deepest hopes and dreams. These ads seem to have a much broader target than just baby boomers.
I think most people would be better off if their advisors would spend more time learning about various markets and industries, rather than empathizing…
An unspoken related point is the effect of boomers buying into the market. The rising value of issues on the stock market is caused largely by excess investment money chasing limited buys; i.e., as more people try to buy in, the price rises. So what happens when the median age boomer is 80, and they all want to extract their cash?
Ed,
Share prices reflect capital flows to some extent, and clearly there are times when valuations go to unsustainable extremes. However, the overall level of share values tends to increase as companies grow and productivity increases–wealth accumulates. Perhaps a wave of selling by aged boomers will depress share prices, other things being equal, but if share values continue to increase at their long-term average rate of 5-10% annually, the overall increase in the value of the boomers’ investments should more than make up for any market setbacks due to mass selling.
You might want to read the argument for Social Security yet.
BEST argument yet.
Ed…also, the “wave of selling” phenomenon should be damped somewhat by an increase in dividend-paying stocks…to the extent that people can support themselves on dividend income from their portolios, there will be less need to sell the securities.
Which is, I think, a valid public-policy argument for the lowering of dividend tax rates.
I love the first comment in the post aaron links, which I’ve paraphrased as “taxing the future. Now that’s taxation without representation!” because I’m too lazy to re-open the window. That’s exactly right… deficit spending = taxing the future. (Though, cutting taxes = reducing taxes on the present and the future, provided it forces spending cuts as well. I’ll endure some deficit spending if it means the government will ultimately have to cut its spending overall!)
I’ve noticed the same pattern in some investment ads… they seem geared toward old people who want to live like crazy college students. There are some exceptions — some ads about taking care of your family, for example — but not enough.
The other half of investment ads seem to be targetted at extremely highly paid, “my job is my life” types — lawyers in suits seem to feature prominently in their commercials. It’s surprising none of the investment companies seem interested in targetting all of us 20-something engineer types with decent salaries and few commitments who’d like to invest now so we’ll be in good shape when it comes time to send our (future) kids to college.
What’s up with that?
LotharBot…there’s apparently research out there showing that it’s very difficult to get people in their early ’20s to even *think* about retirement (someone once remarked that a 20-year-old can no more imagine being 50 than he can imagine being a giraffe)
Financial Times has a periodic contest for advertising people, which involves creating ads for a sell which is supposed to be especially difficult. One of them was for getting early-20s people to participate in pension funds.
Lotharbot: Fund your 401(k) and your Roth to the max now, and you can ignore these “advisors” for the rest of your life, including retirement. Using the historic 8% return (net of inflation) in US stocks, a 25 year old retiring at 65 can expect 20 times his original investment at the time of retirement if he just puts money away for the next 5 years. To hell with the “advisors”! Nothing they can do is more powerful than compound interest.
As to “they seem geared toward old people who want to live like crazy college students,” that’s because they’re probably doing just that right now. The pitchmen are trying to tell the suckers that they can make up for lost time (true) without much pain (false). Free lunch & all that.
The financial-services industry can use one of two basic appeals: 1) make money or 2) save for retirement. “Make money” appeals to people at all stages of life. The problem, from the marketers’ POV, is that you can lose money too, so there’s a lot of risk for the financial companies in making that kind of appeal. Much safer for them to encourage “saving for the long term” (market volatility? no problem! it’s part of the long term and wise customers should ignore it).
From a portfolio-management standpoint there’s no difference between saving for retirement, investing and trying to make money. It’s all about maximizing your wealth in the long term. What you spend that wealth on — college for the kids, your retirement, high living, bequests — is a separate topic.
Of course, the real fun will begin when all the boomers who haven’t set much aside for retirement discover they have enough electoral clout to vote themselves as luxurious a retirement as they want. Given that the generation is not exactly noted for self-denial or restraint the prospect of them dominating elections for the next 30 years should fill everyone paying social security taxes with dread.
“Fund your 401(k) and your Roth to the max now, and you can ignore these “advisors” for the rest of your life”
I’m already on top of that.
But, unless I suddenly start spending a lot more, I’ll still want to invest above and beyond that. Anyone want to sell me on their plan?
Mitch’s advice seems good to me.
8% after inflation in diversified mutual funds, then, paying some small attention, and using common sense; sell a bit when the price seems overhigh and buy a bit when prices are unreasonably low. Two or three trades a year and it seems not unreasonable to get 12% after inflation regularly.
Lotharbot:
Sorry, my bad. I must have picked up the wrong figure. That 25 year old would actually have 93 times his original payments if he does it for 5 years. He got 21 times for his first year’s contribution. Formula: 1.08^40 + 1.08^39 + 1.08^38 … See if it gets you to a “target” amount. There are annuity formulas that get you the result quicker.
Oh puhleeze, Shannon.
It only stands to reason that media types would adopt the “old-hippie” image of the baby-boomers as its template. Here’s a flash — MOST OF US WEREN’T HIPPIES! We went to college, some to Viet Nam (without complaining — much,) got jobs, raised families, led Boy Scout troops, and tried to save some money along the way.
And, oh yeah, we managed to make the country even more prosperous than our parents did.
That the media and the ad industry still have the same trite opinion of us (one that you seem to share) only speaks to their and perhaps your shallowness. Give up on the boomer-bashing already.
We’re actually learning how to use computers — and we’ll be back for you (if we can just figure out how RSS works.)
Hey,man. Cut some slack. They act young because they feel young. My grandmother (52) is a boomer. She saw the Beatles at the hollywood bowl and even tuched Paul McCartneys arm. I know plenty of boomers, and you know what, they are some of the coolest people i know. I went to the McCartney conert that was held here on October 26, 2005. Im 15 years old, and I personaly think that if the boomers ‘grew up’ the world would be an incredebly dull place. And if they died, well the thought of that is just depressing.
Craig,
That the media and the ad industry still have the same trite opinion of us (one that you seem to share) only speaks to their and perhaps your shallowness.
The problem is that these are ads from multiple sources and such ad campaigns are based on extensive research about what the target audience wants to see. These ads feed this “hey your still the same as when you were at you pinnacle at 20” because that is what their research tells them that the boomers want to hear. Yes, I find that disturbing and all the more so because it reveals as systematic anti-capitilist world view were money is ugly and tacky.
Give up on the boomer-bashing already.
You can have my boomer basher when you pry it from my cold dead fingers.
bree,
I personaly think that if the boomers ‘grew up’ the world would be an incredebly dull place.
Dull is good. Farmer are dull. Accountants are dull. Engineers are dull. Middle managers are dull. In fact, virtually everyone who actually makes the world work is stereotyped as dull. This might be hard to grasp at 15 but being entertaining and interesting is not the highest good that a person can aspire to.
The boomer have, more than any other generation, resisted the inevitable transition from childhood freedom and caprice to adult responsibility. I think the ad campaign just shows this in a highly visible form.
Dull is good. Peter Drucker said that a well-run factory exuded nothing of the “drama of industry”, but rather, on the surface, the dull steadiness of properly working people and machinery. Achieving this kind of dullness is one of the most amazing achievements of our civilization, and supports and sustains the lives of all of us. Dull electric power stations, dull trains that run on time, dull internet that works all day long, dull old telephones that always work. Dull grocery store that has fresh vegetables in February in Chicago. Dull recorder of deeds office that keeps the dull records of every inch of land in this county so everybody knows exactly who owns what — deadly dull property rights.
Bring on the dull. More dull, please. Faster.
Dull brings reliable TV service that shows commercials promising baby boomers that they can save for retirement while still acting young.
Outside of the realms of sports, entertainment and personal recreation, excitement is usually an indicator of bad management or bad planning.
And the great curse: May your times be interesting ones.
Bree, I’ve got 2 years on your Grandma (sob). Ginny, could you please hold Shannon while I whack her with my cane? With my arthritis, I don’t think I could get a firm grip.
Oh, puleeze!
Try being a tail-end boomer.
You try coming behind that narcissistic navel-gazing religion of me all your life.
As to retirement – I jumped at the chance of 401Ks when they were 1st introduced by my company, funded them every year, tho not to the max like I should have.
My 19 y.o. niece even has 1.
She listened to her elders – and it wasn’t me. I just reiterated that it’s easier to save it now when you’re young and no responsibilites than when you’re married and have kids. The more you save now, the less you’ll have to save later.
Shannon – bless you. That Amer***** ad campaign has got to be the MOST annoying one on the air today. Everytime I see it I vow that they will be the last ones I ever do business with. I guess I am not their target market
So Andrewdb, you didn’t mind the Cadillac SUV ad with Led Zeppelin? [shudder]
Seriously, I can’t figure out who those ads are targeting. They sure don’t do much for me. If you’re comfortable with numbers, you’ve probably already roughed out a retirement strategy. It probably doesn’t include turning everything over to a company with slick ads, high fees, product tie-ins (motive for cross-selling), and mediocre performance. If you’re not comfortable with numbers, either get a dummies guide (cheap) and take charge or hire a fee-only financial planner, not one of these guys with the ad.
“But, unless I suddenly start spending a lot more, I’ll still want to invest above and beyond that. Anyone want to sell me on their plan?”
Not that it’s a plan or anything, but if you’ve maxed out your 401ks and your Roth, there are a variety of “tax-efficent” funds out there which are managed to minimize your tax bite. From my knowledge of them, they stress non-dividend paying equities and use careful selling programs to minimize capital gains. I always recommend Vanguard for their cheap fees (and I can’t stress enough how important it is to watch out for high fees), but there are other responsible fund companies out there who don’t charge an arm and a leg. However, I cannot attest to the Vanguard fund’s performance, so do your research.
Oh, and the boomers? Fie on them, and the media that still tickles them under the chin like the spoiled toddlers that they are.
–So Andrewdb, you didn’t mind the Cadillac SUV ad with Led Zeppelin?–
I thought, My God, I’m getting old.
The Stones is muzak.