Mary Furlong & Associates' Boomer/Senior Market Report
Exploring the 10 Trends Powering the Age Boom
June 2008 - Vol. 5, No. 3
In This Issue:
- LETTER FROM MARY
- FINALISTS NAMED IN THE SILICON VALLEY BOOMER VENTURE SUMMIT & BUSINESS PLAN COMPETITION
- WHAT'S NEXT WRAP-UP
- INTERVIEW
- NEW MARKET FINDINGS
- NEWSWIRE
Dear Friends and Colleagues,
There are a few more seats available at the 5th Silicon Valley Boomer Venture Summit and Business Plan Competition on June 17 at Santa Clara University. We have a special rate for our community members and colleagues -- use the password FURLONG to get the $99 rate.
We are very fortunate to have Ladan Manteghi, president of AARP Global Network as our keynote and Samer Salameh, founder and CEO of Livtopia as a respondent. We will be giving away two $10,000 prizes -- one in the Health Care category and one in the General category. The finalists teams this year are quite strong. One of the conference highlights is the opportunity to have lunch with a venture capitalist or a business executive or nonprofit leader who is in the boomer marketplace. That alone is worth the price!
Some of the table hosts at lunch include Dr. Sandra Timmermann of the MetLife Mature Market Institute, Andy Donner of Physic Ventures, Jon Staenberg of Rustic Canyon Partners and Emilio Pardo, chief brand officer of AARP.
We are also grateful for the sponsors that are helping to underwrite the event including AARP, MetLife Mature Market Institute, Posit Science, Microsoft, The Health Trust, Robert Half International, Silicon Valley Bank, Retirement Living TV, Morrison and Foerster and the Council on Aging Silicon Valley.
For the first time, we have been able to look to our previous winners and finalists to help provide the prize money for the 2008 competition. The following companies have made a contribution: PetPlan, LifeBio, ALCiS, and Moving Solutions. In addition, a group of emerging companies in the marketplace are providing support. These include: Caring.com, Care2, Life Stages Financial, SmartSilvers Alliance and SilverRide. Finally we have several nonprofit institutions contributing to the cause including California State University Northridge and FIK International in San Sebastian, Spain.
Together this event and others we are planning are helping to establish the Silicon Valley as one of the first Silver Enterprise Zones. These are regions where there is a focus on innovation, entrepreneurship, capital and community focused on the silver marketplace. In some cases, corporations are developing exciting new products aimed at the market -- such as Intuit. In other cases, the venture community is funding companies aimed at this consumer. We were thrilled to hear Steve Jurvetson of Draper Fisher Jurvetson announce that "demography is destiny" on a panel at the Churchill Club on future trends over the next year. What was even more amazing was that over 80 percent of the 550 venture capitalists in the audience agreed with him. I predict longevity funds within the next three years!
Increasingly people are turning to the web to gain support for causes that matter. One of my friends shares his story of the AIDS/Lifecycle bike ride. He was one of the top fund raisers. We will be sharing more about eRevenue in the next issue. But -- take a moment to follow Ken's path here. It was an inspiring story.
I will write a longer letter in the next newsletter. I do want to share a little about my experience in San Sebastian, Spain and Pisa, Italy last week. I had the privilege of speaking at the Gerontechnology Conference. It was such an amazing group of researchers and business thought leaders who are designing cutting edge applications for the silver marketplace. It was inspiring to hear the stories from Singapore, Belgrade, Japan and the Netherlands.
So, on to next week. We are pleased that the finalists again represent universities from around the world as well as mid-career entrepreneurs. We are looking forward to a beautiful day at Santa Clara University. Our co-producer Jan Sola has done an amazing job of recruiting talent. Do come if you can.
All best,
Mary
PS: While here in Sarasota I gave an interview to the Herald-Tribune newspaper about how boomers present area businesses with a unique marketing opportunity. You can read that interview here.
FINALISTS NAMED IN THE SILICON VALLEY BOOMER VENTURE SUMMIT & BUSINESS PLAN COMPETITION
Ten finalists have been named in the 2008 Silicon Valley Boomer Venture Summit & Business Plan Competition. The finalists will compete for two $10,000 prizes in the competition to be held June 17 at Santa Clara University. Presentations will be given by five finalists in each of the following categories:
HEALTH
- Cansil Diagnostics, a manufacturer of diagnostic devices.
- CorTech Labs, a provider of unique medical device software products and online teleradiology services.
- Dialog Devices, a UK-based producer of innovative optical devices for convenient diagnostics.
- Niveus Medical, a developer of an intelligent electrical muscle stimulation system to help patients quickly return to their active lifestyles following critical illness.
- Radiogenic Therapeutics, a developer of an improved, less-invasive market implantation system for radiation therapy.
GENERAL
- About Face Technologies, LLC, a provider of simplified and visually-intuitive assistive technology products with universally-designed user interfaces.
- Caresquare.com an online service that connects seniors, their families and caregivers in a social network.
- Home Preferred, the first retail chain to serve baby boomers who want to age in place.
- In My Life, a producer and marketer of interactive entertainment, information web portal, and search engine.
- SecureALL, a developer of fully integrated, centrally controlled security and activity tracking system for seniors.
Honorable mentions went to COR Innovations, developer of minimally invasive solutions to prevent patients from developing heart failure after an acute heart attack, and Final Affairs, an on-demand software company that assists consumers with the estate planning and settlement processes.
Pitches from the finalist teams at the competition will result in two $10,000 prizes being awarded to the best business plan in each category. Short presentations from former competition finalists who now have viable businesses are also expected throughout the day.
Ladan Manteghi, president of AARP Global Network, will look at the “Global Marketplace for the Silver Economy” in her keynote presentation. She also will be part of a panel discussion on priorities of venture capital investments in the boomer healthcare marketplace. Other panelists: Jay DeCoons, Highland Capital Partners; Scott Moonly, Johnson & Johnson Development Corporation; Nancy U. Kamei, Intel Capital; Ajit Medhekar, ARCH Venture Partners; Vance Vanier, partner in Mohr Davidow Ventures; and Nate McLemore, vice president of Microsoft’s Health Solutions Group. Simmi Singh, managing director of Converge Partners, will moderate.
A panel on VC investments and trends in the general boomer marketplace will include Carole Anderson, vice president of the American Society on Aging; Ravi Belani, Draper Fisher Jurvetson; Emilio Pardo, AARP’s chief brand officer; Stephen Schmoll, executive director of the Council on Aging Silicon Valley, and Peter Ziebelman, a partner in Palo Alto Venture Partners.
Jeffrey S. Zimman, CEO of Posit Science Corp., will speak on “The Power of Partnerships.” During the day, Summit participants will be able to network with speakers and others during the “Authors, VCs and ‘Influentials’” luncheon and the post-event reception.
Participants may register online at http://scuboomerventure.com/register.htm by June 16 or at the door.
The Summit is co-produced by the Executive Development Center, Leavey School of Business at Santa Clara University and Mary Furlong & Associates.
As mentioned in the last issue, the What's Next Boomer Business Summit held in Washington, D.C., on March 26, was a great success as entrepreneurs, knowledge leaders, business leaders others gathered to hear the latest findings on such topics as caregiving, social media and mobile marketing, financing longevity, health and wellness and boomer entrepreneurship.
Some highlights:
- Many of the country's 77 million boomers face challenges caring for aging parents and spouses in addition to the demands of their work and home lives.
- Demand is high for products and services catering to caregivers' needs.
- Boomers are embracing mobile technology, catching up with the under-25 set.
- "Texting for Good" is a top trend to watch in 2008.
- Social networking is exploding with boomers.
- 7 in 10 boomers are unsure their retirement savings will be sufficient.
- Health care costs are the top worry for boomers.
- Boomers may find retirement appealing at first, but the quest to get "back in the game" and remain vital returns quickly for many.
For further insights on the summit, we have firsthand reports from Susan Devaney, CEO of Moving Mavins, and John M. Williams, editor of Assistive Technology News.
Devaney noted: "I came to Mary’s conference as a direct result of reading her book, Turning Silver into Gold, How to Profit in the New Boomer Marketplace.” Inspired by the ideas, the specific, detailed suggestions and links, I felt certain I would not be disappointed by the quality of information at the Summit. I wasn’t. It was excellent, from beginning to end."
Read her complete report here.
Williams wrote: "I have attended aging conferences before. But none of them provided the topic versatility, the excitement that the boomer market provided and the knowledge thirst that the attendees savored. The attendees were targeted on their specific areas and were eager to attend the sessions."
Read the rest of his account of the conference here.
We asked Bart Johnson, president and CEO of Life Stages Financial, to talk about some of the financial issues his new company will be addressing.
Q. Describe your new business venture, Life Stages Financial.
A. Basically, I intend to create liquidity for maturing Americans (mostly by converting equity they have built in their homes to cash), then help them invest that liquidity intelligently to maintain financial independence while enjoying the lifestyles they expect and deserve.
Q. We've heard you talk about monetizing home equity. Can you explain what that means?
A. Many Americans have made payments on amortizing mortgages, on properties which (until recently) were consistently growing in value, thus they have built equity in their homes. So, theoretically, they could sell their homes at market value, pay off remaining mortgage balances owed, and pocket considerable cash (the net equity). But most may not want to sell their homes, so converting some portion of that equity to cash would require them to borrow against it. That could take the form of a traditional mortgage (i.e. refinance an old, smaller mortgage balance into a new, larger mortgage in order to get cash out), or a HELOC (second mortgage). But in both cases the borrowers would end up with higher monthly payment obligations than they had before, and many older Americans cannot afford higher payments. Thus, in many cases, a reverse mortgage is the preferred vehicle. The borrower ‘monetizes home equity’ (converts some portion of owned home value to cash) by borrowing against it, with no monthly payment obligation.
Q. What would be the reasons for doing this? In what ways would the money be used?
A. Generalities: Older seniors are ‘in decline’ (they expect to live less well in retirement than they did while working?), they consider the home to be a ‘sacred’ asset that represents security and thus are reluctant to re-mortgage, they therefore consider a reverse mortgage to be a product ‘of last resort. Therefore to date most reverse mortgages have been need-based products (used to pay off debt to eliminate monthly payments, or to maintain the house, or to pay living expenses, etc.). Boomers on the other hand want to celebrate the 2nd half of life (they expect to live better in retirement than they did while working), they consider the home to be a financial asset in their broader portfolio of assets, all of which need to be restructured in order to create the financial independence necessary to achieve desired lifestyle during their extended longevity. Variations of reverse mortgages become want-based and planning-based products for these people (used to buy second homes, or pay for world travel, or help grandkids though college, etc.).
Q. What age group(s) are you shooting for?
A. My ‘50+ financial institution’ would serve all. Life events thrust people into different life stages, which determine their requirements (needs and wants) at that point in their lives, which invite product bundles custom designed for each segment. And people are constantly morphing from one life stage to another, as life events occur, changing their requirements and rendering different solutions.
Q. What effect do recent home price trends have on this financial option?
A. House prices have appreciated fairly consistently over a long period of time, and the national market is now experiencing a ‘correction’. Said differently, in general, house values had become overstated and prices are declining now to a more realistic level. This certainly affects reverse mortgage lending (which gives the borrower some portion of a now lower home value, so less cash is available), but less profoundly than you might imagine. There will be some subset of the population that would have qualified for a reverse mortgage (at the higher home valuations) but no longer does (at the lower valuations), but most eligible homeowners would still qualify (for a smaller loan than they would have received had the decline in value not occurred, but they probably don’t even know the difference?). Contrast that with the traditional forward mortgage market where a decline in home values has a much more severe impact. As an initially high LTV (loan-to-value) product, declines in property value can actually reduce collateral below the loan amount of a forward mortgage. Conversely, the reverse mortgage is an initially low LTV product which does not share that same type of risk; the challenge is for the reverse mortgage industry to price declines (or future, longer-term reduced home appreciation rates) into the formula in the form of lower percentages lent against home value up front, so that the loan will grow to a level more in line with the likely home value at the expected date of the future ‘liquidity event’ (move out, death, etc.).
Q. Where do you see the housing market going and what does this mean for boomers/seniors and your business?
A. The boomer cohort provided the market demand for housing that fueled the price appreciation in the first place (more demand than supply equals home building and higher prices for re-sales). Now the boomers will be ‘net suppliers’ of housing (downsizing, moving into group homes, etc.), and that will (on a macro level) drive values lower (more supply than demand). Same conclusion as above, the economists that provide the analytics and metrics behind the pricing of reverse mortgages need to dial that into their modeling in the form of less aggressive home appreciation assumptions, resulting in lower LTV curves (lenders will lend a lower percentage of home value than they otherwise would have if expectations for growth in home values were higher). But, again, that doesn’t really take people out of the market, it just reduces the amount they can borrow.
New field of research focuses on anti-aging.
With a record number of Americans turning 60 - an estimated 8,000 baby boomers a day - the search for the fountain of youth is quickly turning into a race.
"There are major challenges out there in thinking about human aging. The biggest challenge is disease," said Gordon Lithgow, of the Buck Institute for Age Research.
That challenge is the concept behind the newly emerging field of aging research called geroscience Read more here.
Energy drinks trying to lure niche audience -- including boomers
In 2007, people drank 14.7 billion gallons of carbonated soft drinks and 8.7 billion gallons of water (not counting flavored and enhanced water), according to Beverage Marketing Corp. That's compared to 313 million gallons of energy drinks.
"There are a lot of new entrants because the segment is still pretty small," says Garima Goel Lal, a senior analyst at Mintel, a Chicago market research firm.
But it's clear there is not much room to grow for the traditional Red Bull, Monster-like drinks, says Judy Ramberg, vice president and consumer strategist for Iconoculture.
She calls those "Up Energy with a physical component" because of their association with sports, the caffeine rush and young males who want "power, strength and endurance." She says the market for these drinks is saturated. So some beveragemakers are tapping into new markets: baby boomers, Gen X-ers, the calorie-conscious person.
They're asking themselves, "Who else can be a part of this?" says Ramberg. "Would a 30-year-old woman be comfortable picking up a Monster and drinking it? Would a boomer feel comfortable putting their body into a rush and then crashing?"
More details here.
Single boomers enjoy sex and do not want to wed: poll
Single baby boomers are enjoying better sex, are open to threesomes and are not looking to get married, according to a new poll.
Forty-six percent of the 1,000 adults born between 1946 and 1964 who were questioned in the survey said they enjoyed sex more now than they did during their 20s and 30s.
"I think we're looking at a generation that really sees this time as a great period in life," said Marina Glogovac, of the online dating site Lavalife which conducted the poll.
"Most of these people are looking to enhance their lives, so they're not really sitting there and saying I'm desperate, I need to live with someone. Their attitude is, we want to meet interesting people."
Details here.
Age-based stereotypes go unchallenged as campaign unfolds
At a time when thoughtful people are examining the challenges and possibilities associated with the aging of America, prominent comedians and some commentators are ridiculing John McCain over his age. Sen. McCain, the presumptive Republican nominee for president, has shrewdly played along -- his only real option -- by challenging the wisecrackers and relying on self-deprecating humor.
Most nursing homes are currently on solid finanial ground. But shifting demographics may challenge profits in the future, experts say
Most nursing homes in Riverside County California make a profit, even if it's a modest one. But owners aren't sure what the future holds as aging -- and demanding -- baby boomers choose other long-term care options, leaving nursing homes with the people who are most medically needy and least able to pay for their care. Economists and researchers say nursing homes will be more likely to lose money and the quality of care will diminish if facility operators accept too many patients who rely on Medicaid to pay for their care.
Economic woes force consumers to change prescription use
Anyone taking prescriptions these days is becoming savvy with how to shave expenses to compensate for higher gas and food bills. With the current economic tailspin, it’s not just the elderly feeling the pain, according to AARP.
Mature stars scoring big at box office
Look closely at the top summer movies and notice the special effects they're having on the perception of age. As summer trends go, gray is definitely the new black. Or put another way, older is the new hip.
Boomer/Senior Market Report
Published by Mary Furlong & Associates3527 Mt. Diablo Blvd.
#128, Lafayette, CA 94549Telephone: 925-283-7698
http://www. maryfurlong. com