Seventy-eight million baby boomers entered their 60s last year--and that's just the first shock of a demographic earthquake. By the year 2020, more than 115 million Americans will be over 50 and nearing retirement. The boomers represent the largest retirement market in history; and, as a recent Forrester Research report states, "They will also represent the richest retirement market in history."

What a sweet spot for you, the financial advisor. Millions of boomers, aging and rich, will need your help planning their retirements. Unfortunately though, it's looking less like they'll get the help they need. Why? Because boomers are totally delusional when it comes to their retirement planning assumptions.

Delusion No. 1: I'll keep working until I turn 70. According to a recent study by Pew Research, 77% of American workers expect to work for pay after they reach retirement age. Unfortunately, based on recent history, this expectation has little basis in reality: Today, the survey found, only 12% of retirees surveyed held down a paying job. In addition, many of the so-called retirees surveyed had been pushed into retirement by downsizing or layoffs. What this means to your boomer clients is they should not count on keeping their jobs, but should instead consider preparing for retirement careers as consultants or entrepreneurs, as Sherrill St. Germain discusses in "Your Client's New Career," on page 70.

Delusion No. 2: I'll have a pension. EBRI's April 2006 Retirement Confidence Survey showed that while only 40% of respondents or their spouses were enrolled in defined benefit plans, 61% expected income from such plans during retirement.

Delusion No. 3: I'll be able to cut my spending. Currently, 14% of workers surveyed by EBRI thought that they could retire on 50% or less of their current income. Another 36% believed they could retire on 70% or less of their current income. Only 12% believed that they will need the same income or more in retirement. In reality, advisors working with new retirees report that they spend 85% to 100% of their pre-retirement income.

One could argue that when it comes to retirement planning, advisors are part of the problem rather than solution. That's because most top firms target households with investable assets of at least $1 million--about 3% of boomer households, according to Forrester. Most of the rest target the "mass affluent," the 30% of boomer households with investable assets between $100,000 and $1 million. In other words, the typical financial advisory firm has little interest in serving two-thirds of boomer households.

While there's no denying that the top third of boomer households represent an attractive market, they are also a highly sought-after group. In order to compete effectively for these customers, advisory firms will need to squeeze every ounce of efficiency they can out of their operations.

It may also be time for advisors to reexamine their attitude toward the two-thirds of boomer households that they tend to ignore. Advisors who can leverage the tools they need to service their traditional mass-affluent niche may be also be able to service less wealthy clients profitably. And that's a huge potential market.

LESSONS FROM MASS MARKETERS

Boomers are relatively tech-savvy, and are accustomed to finding financial information online. According to Forrester, whereas 42% of seniors go online at least monthly, a whopping 71% of older boomers (born 1945 to 1955), and 78% of younger boomers (born 1956 to 1965) do so. While 13% of seniors regularly use the web to check account balances, 34% of young boomers do. Boomers are willing to use technology on their own; however, Forrester says, "a clear majority of boomers want guidance from experts." They want the help of capable advisors combined with quality, easy-to-use web tools they can use by themselves.

This combination of desires points to an opportunity to create an inexpensive hybrid service model that draws on the strengths of both self-help tools and knowledgeable pros. Several mass marketers of financial products are already creating solutions that advisors can learn from. Two of them are worth a visit.

Retirement Income Calculator: According to Christine S. Fahlund, a senior financial planner with T. Rowe Price, "the first and perhaps most difficult challenge is getting people engaged in the retirement planning process." It appears that the best way to do that is to make software available 24/7.

T. Rowe Price was an early leader in this field. In 2000, they began offering an online Retirement Income Calculator (RIC), one of the first free, widely distributed, consumer-targeted calculators capable of delivering Monte Carlo simulations to do-it-yourself investors. The RIC (www3.troweprice.com/ric/RIC) requires only seven inputs: the age retirement will begin; the anticipated length of retirement; marital status; anticipated retirement assets; monthly income goal; portfolio asset breakdown (stocks/bonds/cash); and the required success rate (how much certainty the user wants).