Some think of Merrill Lynch as a leader in retailing. But when the huge brokerage sought products to target retirees, it decided it needed an expert of another sort.
So it hired a resident gerontologist, Jane Frances E. Halloran.
Why a retail brokerage wanted an expert on aging says a lot not only about where the money's going in America, but also about how financial services companies are chasing it.
"What's prompted this is the older baby boomers have reached age 50. At that point, a lot of people got religion," said Michael Sullivan, principal of 50-Plus Communication Consulting, Charlotte, N.C.
In this case, "religion" was a crash course in marketing to the 50-plus market.
"Retirees have told us that they wished they had taken a more comprehensive approach in their planning and that their preference would be to receive financial, estate planning, health-care, and lifestyle information through one trusted source," said Ms. Halloran, who has an MBA in addition to a master's degree in gerontology.
Hence, Merrill has launched what it is calling a retirement management service. For an annual fee of $500, the company offers a range of products and services - from financial planning and discount pharmacy cards to bonus travel miles and VISA Gold Cards.
Merrill took the unusual approach of hiring the gerontologist, a Texan, in 1989. But KeyCorp, Barnett Banks, and BankAmerica, among others, have also been targeting the so-called mature market for some time.
"For years, we've known that a vast majority of assets have been in the 50-plus market," but the baby boomers hitting that age bracket brought a media spotlight to the phenomenon, said Stephen K. Heine, senior vice president of mature marketing management at KeyCorp, Cleveland. "So much advertising is aimed at younger people" that banks have basically ignored the needs of older consumers, he said.
KeyCorp has a 12-member board made up of depositors 52 to 78 years old. They help keep the bank focused on the age group's needs - for example, by demanding that it provide banking via personal computer.
"I always hear one or two things that surprise me," said Mr. Heine, who joined the department three years ago at age 35. "They want independence. They're not intimidated by technology. The perception is they hate ATMs; the reality is they want an ATM as another option."
Companies that have forged relationships with the massive American Association of Retired Persons have struck gold. Banc One, the Hartford, and Scudder, Stevens & Clark have exclusive arrangements to market Visa cards, insurance, and mutual funds, respectively, to the AARP's 30 million members.
At the Hartford last year, two-thirds of premiums from individuals - or some $1.3 billion - came from AARP members.
Merrill is not specifically targeting AARP members with its retirement management service, nor is the program endorsed by the AARP.
With Americans living longer and the nation's 77 million baby boomers starting to hit 50, financial service companies - particularly banks - have a lot at stake.
Because they can't conclude that customers will stay with them, banks work for multiple relationships including trust, securities, and insurance business, Mr. Sullivan said.
Nearly two thirds of bank deposits are held by people over 50, an American Bankers Association survey from 1994 showed. At thrifts, the group held 80% of deposits.
Among the over-50 market, a generation gap has emerged between World War II and Vietnam-era age groups (though a less pronounced gap than the one that produced campus riots, love beads, and Woodstock three decades ago). The AARP offers two editions of its Modern Maturity magazine, for working and retired readers.
"Over 50 can mean you still have children in school, you may have older parents you may help care for, there's single parenthood," said Mr. Sullivan. "A lot of people think anyone over 50 is pre-retirement and anyone 65 is retired. That's totally, totally wrong. You need to segment your marketing."
Most research indicates the under-59 consumer is interested in mutual funds, while those 60-and-older prefer blue chip stocks. But bankers need to be prepared for the exception, Mr. Heine said.
Indeed, Mr. Heine focuses on offering choices - for example, varied distribution channels, including branch offices, ATMs, and telephone banking.
"Right now, the market is being very polite about asking for choices," Mr. Heine said. "But when the boomers come along they're going to demand options, and they're not going to be nice about it."