Empty nesters and financial services

TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 3
Introduction 3
The future decoded 3
The number of Empty Nesters is growing 3
Important changes occur in Empty Nesters’ lifestyles 4
Price is a key driver of Empty Nesters’ consumption behaviors 4
Borrowing is becoming more of a way of life for Empty Nesters 4
Action points 4
CHAPTER 2 INTRODUCTION 14
What is this report about? 14
Who is the target reader? 14
How to use this report? 14
CHAPTER 3 THE FUTURE DECODED 16
Introduction 16
Trend: Empty Nesters are a rapidly growing group 17
The number of Early Empty Nesters is growing faster than the number of Late Empty Nesters 18
Empty Nesters change their attitudes and behaviors 19
Trend: Empty Nesters’ incomes vary according to age 21
High earning power boosts Early Empty Nesters’ disposable incomes 21
Late Empty Nesters’ disposable incomes suffer from retirement 22
Empty Nesters are a large, wealthy group that financial services providers should target 23
Insight: Price is a key driver of Empty Nesters’ consumption behaviors 23
In most purchasing decisions, an Empty Nester will compare price tags before buying a product or service 23
Age impacts the purchasing criteria of Empty Nesters 24
Empty Nesters have varying demands when they are picking their financial services providers 26
Providers must realise that price will get Empty Nesters through the door but customer service will be the key driver of retention rates 28
Insight: Borrowing is becoming more of a way of life for Empty Nesters 30
Of all seniors, Empty Nesters show the greatest willingness to borrow 31
Providers need to be aware of country-level variations in Empty Nesters’ borrowing preferences 32
Age impacts the attitudes of Empty Nesters towards borrowing 33
Insight: newly-found spare time means that convenience is less important for Empty Nesters 34
Increased control of their time reduces the need for convenience 34
Financial services providers can exploit Empty Nesters’ behaviors to maximize their revenue growth 36
CHAPTER 4 ACTION POINTS 38
Introduction 38
Target Empty Nesters’ attitudes, not their age 38
Use marketing campaigns to shift the “center of gravity” 38
Saga’s marketing strategy is targeting most Empty Nesters effectively 39
Use ageless marketing to target Empty Nesters 40
Focus product development around price 42
Companies can analyze Empty Nesters’ unique characteristics to design cheaper products 43
Communicate effectively with Empty Nesters 44
Play on Empty Nesters’ sense of pride 44
Do not patronize Empty Nesters and avoid stereotyping 45
Avoid using a ‘glitzy’ approach 46
Keep messages honest, transparent and literate 46
Provide information to satisfy Empty Nesters’ thirst for knowledge 46
Avoid being too negative in advertising campaigns 47
Focus on certain channels to reach Empty Nesters 47
Use partnership marketing to increase brand appeal 48
Charity credit cards have already been introduced to appeal to consumers with a social conscience 49
Target the growing willingness of Empty Nesters to borrow 50
Financial services providers should seriously consider offering equity release products 51
CHAPTER 5 APPENDIX 53
Supplementary data 53
Definitions 61
Research methodology 62
Future readings 62
Report writing team 63
Datamonitor’s custom research capabilities 63


LIST OF TABLES
Table 1: Empty Nesters as a percentage of all Seniors, 1999-2009 17
Table 2: Number of Empty Nesters in Europe and the US (m), 1999-2009 19
Table 3: Annual per capita disposable income of Empty Nesters (€ & US$), 204-2009 22
Table 4: Decision-making criteria when purchasing a good or service 25
Table 5: Empty Nesters in Europe and the US (m), 1999-2009 53
Table 6: Late Empty Nesters in Europe and the US (m), 1999-2009 54
Table 7: Early Empty Nesters' disposable income as a percentage of the national average, 1999-2009 54
Table 8: Late Empty Nesters' disposable income as a percentage of the national average, 1999-2009 55
Table 9: Annual per capita disposable income for Early Empty Nesters (€ and US$), 1999-2009 56
Table 10: Annual per capita disposable income for Late Empty Nesters (€ and US$), 1999-2009 57
Table 11: Decision-making criteria when opening a bank account 57
Table 12: Decision-making criteria when purchasing an insurance policy 58
Table 13: Empty Nester’s reaction to poor customer service 58
Table 14: Empty Nester’s reaction to poor customer service from financial services providers 59
Table 15: Agreeability of Empty Nesters and Seniors to the proposition of borrowing money in order to better manage their finances 59
Table 16: Agreeability of Empty Nesters to the proposition of borrowing money in order to better manage their finances, by country 60
Table 17: Agreeability of Empty Nesters to the proposition of borrowing money in order to better manage their finances 60
Table 18: Importance of time-saving products and services to Seniors and Empty Nesters 61
Table 19: Propensity of Seniors and Empty Nesters to spend more on time-saving products and services 61
Table 20: Definitions of terms used in the report 61


LIST OF FIGURES
Figure 1: In the US, Early Empty Nesters are particularly valuable, earning considerably more than their European counterparts 21
Figure 2: Empty Nesters choose most of their products and services based on price and customer service 25
Figure 3: Customer service is the main factor affecting Empty Nesters’ choice of bank 27
Figure 4: Late Empty Nesters are customer service driven even when it comes to picking their insurance provider 28
Figure 5: Empty Nesters do not tolerate bad service 29
Figure 6: Empty Nesters react differently to poor customer service depending on the financial services product that it relates to 30
Figure 7: Empty Nesters are more inclined to borrow to manage their finances 31
Figure 8: Swedish and Italian Empty Nesters are the most willing to borrow money to finance their purchases 32
Figure 9: Early Empty Nesters are more willing to borrow than Late Empty Nesters 33
Figure 10: Time-saving products and services are less important to Empty Nesters 34
Figure 11: Empty Nesters are less willing than other Seniors to pay more for convenience 36
Figure 12: Target Seniors by shifting the “center of gravity” in marketing campaigns from their chronological age to their desired age 39
Figure 13: Saga has built a business that only provides services for the over 50s population in the UK 40
Figure 14: The Co-operative Bank’s strategy has been to build a brand which would appeal to ethical consumers 42
Figure 15: RIAS has specifically targeted the over 50s group with cheaper insurance products 44
Figure 16: Television and newspapers are the most effective marketing channels for targeting Empty Nesters 48
Figure 17: MBNA is actively targeting ethically minded consumers with its range of charity credit cards 50
Figure 18: The equity release schemes market is forecasted to exhibit stronger growth rates than the general mortgage market over the next five years, 2004f-2008f 52
Figure 19: Datamonitor’s core consulting capabilities 64