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AARP: Lending Boomers a Helping Hand

As asset managers gear up for Baby Boomers' retirement years, Richard "Mac" Hisey, chief investment officer at AARP Financial, took some time out last with to speak with MME Senior Editor Brent Shearer about how investment firms are trying to reach out to Boomers.

Prior to joining AARP Financial, Hisey was executive vice president and chief investment officer of Cole Management Inc. a venture capital firm focused on early-stage investments in Russia. Before that, he was with MFS Investment Management, serving as treasurer and chief financial officer of the MFS Group of Mutual Funds.

Earlier, Hisey was a SVP with The Bank of New York, with responsibility for global investment fund accounting and administration. He also spent 15 years at Lexington Global Asset Managers.

Founded in 2005, AARP Financial, a wholly owned subsidiary of AARP, aims to help people age 50 and over prepare for a more secure financial future by offering products and services designed to meet their retirement needs.

MME: What's are likely to be the most effective technique for marketing mutual funds to Baby Boomers?

Hisey: This ties into how the industry is changing and is part of how we designed our entire approach.

We think that the big thing is going to be keeping it simple. That is a big deal. We've done a lot of surveys in this area. Also, it will be important to use plain language. We have found across our businesses at AARP that Boomers, in contrast to the generation before them, have a much greater curiosity and desire to take ownership for their decisions, and they like to educate themselves. So, they are not going to just take things at face value. They want to be able to get their hands on and learn about something themselves before they make any decisions.

So, I think another key technique will be facilitating the desire of Boomers to educate themselves. To turn that into a real-life example, a lot of what we do at AARP Financial is to put this kind of content on our website and enhance our offerings.

For example, how do you facilitate your retirement income, how do you manage it, how do you figure out what it is and what it ought to be? We've been rolling out a bunch of things about helping people educate themselves about retirement income-what it is, and how you get there.

Those three things will be the most important: Keeping it simple, using plain language and helping people get up to speed and educate themselves.

Another example from one of our sister businesses in the healthcare arena is a good comparison. The generation before us Boomers, whatever your doctor told you to do, you did. But now, it's like I want a second opinion. I want to go on and research. I'm going to talk to another specialist.

It really is an attitudinal change when you get to the Boomer level. The other thing we have done in the financial area is a number of Boomer surveys. One of the things we're found-and this is why we've tailored our marketing along these lines-is Boomers have a perception that financial advisers are more interested in their fees than their clients' futures.

That kind of conflict, whose interest is the financial adviser looking out for, is that people do want counseling and investment advice, but they don't tend to trust the traditional advice that they're had.

I think that's going to be a big challenge for how mutual funds are marketed.

MME: Many marking experts say there is too much clutter in mutual fund ads. What is the trick for cutting through the noise?

Hisey: There is a lot of work in the area of behavioral finance around this. If you give people too many options, they become paralyzed and don't make a choice.

If you give them three or four things to think about, they tend to get confused. It's the same thing for company presentations. If you just keep it simple, use limited options, make it understandable and, obviously, offer high-value products-that's the way to succeed.

As to the clutter issue, McKinsey did a study on this finding that people have a view of retirement from watching TV commercials that they'll be on a beach, waving to their spouse out on the yacht. That is not a realistic situation for most Americans.

The McKinsey study found that especially with Boomers, there is this disconnect between how they envision retirement and how prepared they are to really achieve that vision.

MME: Should education go hand in hand with marketing?

Hisey: Sadly, the answer is there's a pretty big disconnect between the two. Part of what we're trying to do at AARP Financial is build awareness through educational materials that help people assess their own situation.