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Marketing Idea for Financial Advisors: Americans Who Retire Abroad

By ClientWise | July 19, 2012

There’s some interesting research that indicates the number of Americans who will retire abroad is likely to grow by 9 times, over the next few years. As a marketing idea for financial advisors, why not build an expertise in the needs, concerns and aspirations of soon-to-retire Americans who are considering an overseas move?

At the moment, 350,000 American retirees receive Social Security benefits in countries other than the U.S., according to the Social Security Administration’s annual statistical supplement. Yet according to the Travel Market Report, an industry publication, this number is likely to grow to as much as 3.3 million as American baby boomers retire.

Why is this happening?

To a great extent, this trend is driven by money concerns, as retirement savings and home values have collapsed over the past few years. As a result, Americans’ confidence in their ability to afford a comfortable retirement is at historically low levels. According to this year’s Retirement Confidence Survey, conducted by the Employee Benefit Research Institute, only 14% of workers are “very confident” that they’ll have enough money to live comfortably in retirement.

As a result, Americans are looking to locales like Vilcabamba, Ecuador (see the picture)…where a two-story traditional Ecuadorian house of 1,600 square feet on two acres of land with an awe-inspiring view of the valley below, that is for sale for $49,000. At an elevation of 5000 feet, with average temperatures spanning from 65-81 degrees, surrounded by fig, avocado, and banana trees, where monthly expenses range between $1,000 and $2,000; it is not hard to imagine why areas like this are so alluring to some retired Americans.

Where is this happening?

Each year, International Living, a magazine for retirees who live overseas, publishes the World’s Top Retirement Havens. By creating an index to eight categories that are important to retirees (i.e. real estate, special retirement benefits, cost of living, ease of integration, entertainment & amenities, health care, retirement infrastructure, and climate) they are able to rank the most desirable venues from a retirement perspective.

Top-ranked retirement havens for 2012 are:

  • Ecuador
  • Panama
  • Mexico
  • Malaysia
  • Colombia
  • New Zealand
  • Nicaragua
  • Spain
  • Thailand
  • Honduras

Within this ranking, Ecuador is the clear winner in the cost of living category, New Zealand ranks high for retiree integration, and communities like Panama City/Panama, Medellin/Colombia, and Bangkok/Thailand come out tops with respect to entertainment and amenities.

How can financial advisors help?

Financial advisors who are interested in carving out a niche with Americans who retire abroad should first become well versed in the various informational resources that appeal to the American expatriate. Some examples include:

www.internationalliving.com. Their tagline is, “Live better, for less, abroad.”

www.worldscheapestdestinations.com. Provides information on teaching learning, volunteering, and living overseas.

www.iscworld.com. Sources of international employment.

www.retirementliving.com. All-purpose retirement resource for individuals who are planning and making decisions about their retirement.

www.investorsoffshore.com. Independent offshore and alternative investment guide for expatriates and the globally aware investor.

The other important area where financial advisors can help is to provide objective financial advice and support to the prospective American expat who, in their excitement for the adventure, overlook hidden expenses.  Andrew Bender, a travel writer for Forbes magazine, cites a phenomenon called the Palm Springs Syndrome. This is where residents in Los Angeles look at the real estate values in Palm Springs, and say, “I’ll retire there because it’s cheaper”, yet overlook important factors like air-conditioning, which alone might cost many hundreds of dollars a month. Bender thinks this same syndrome also applies to Americans who look to living overseas and neglect the harsh practicalities of expat life, e.g. currency and tax issues, political instability, personal safety, the cost of travel, etc.

tenerifeOf course, the American overseas retiree niche might appeal most to the financial advisor who, themselves, is considering a similar life move, at least on a second-home basis. Do you need a better excuse to take a trip to say…the isle of Tenerife in the Canary Islands in order to do your own research with respect to the community of American expats? Call it "due diligence"!

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Topics: Client Acquisition Marketing Approach Business Development

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