NEW YORK - Terms like "401k eligibility" and "long-term investing" might seem off topic in a public relations publication, but they are becoming an increasingly important part of marketers' vocabularies, according to Lawrence Kudlow. The economist and author presented his views on "The New Investor Class" and its implications for the communications industry during the first "Rowland Roundtable" last Wednesday in New York.
The new investor class includes the rapidly growing number of Americans who, at all ages and income levels, are active in long-term investments such as 401k plans and IRAs.
This class totals about 125 million people or half the U.S. population, a 50% increase over the number of investors in the early '80s.
Kudlow attributes this growth to cultural and political change and to the ability of the Internet, personal computing and the media to spread information faster and less expensively. He is chief economist, senior VP and director of research at American Skandia Life Assurance, a Connecticut-based financial services firm
"People don't trust social security or government plans and probably, in some ways, don't trust traditional corporate pension plans," Kudlow told an audience of about 45 press members, Rowland clients and industry representatives. "They want to control their retirement outlook, and they're willing to take the personal responsibility to do it. I really think they've come to believe that over the long run, markets rather than government will create wealth. They're pro-business. They like profits. Capitalism is running rampant."
And it's rampant for more people than ever before. According to Kudlow, 50% of Americans earning between $25,000 and $50,000 a year now own at least $5,000 worth of stocks. One of the largest percentage investment growth segments is occurring in the $10,000 to $25,000 income segment. "This is not a rich person's story anymore," he said.
A Front Page Story
What does this mean for the corporate PR professional? More consumer interest in investment markets and financial news means a change in the way marcom practitioners they view different segments of the population.
"A lot more people are much more interested in financial stories," Kudlow said. "It's not just a dialogue among a small group of CEOs, analysts and a couple of newspaper reporters who cover particular companies. What people are talking about today, in fact, is the stock market, not because they're experts but because their holdings, their wealth, their retirement nest eggs are tied to it. It's moved the story from the business pages to the front pages."
As a result, corporate PR pros have to focus to a greater degree on "truth-telling, because there are no secrets in the information age," Kudlow said. "More people are demanding more information about the performance of companies."
Kudlow also noted that this demand for information would force advertisers to generate more factual "to-the-point" copy that can be customized for different market segments.
The Rowland Company, which sponsored the event, also backed Kudlow's viewpoint, with its own take on how changing economic dynamics and growing consumer interest in investments are affecting society and the communications industry.
The effects of an investor-class mindset throughout all levels of the population have led Americans to feel more connected to, and responsible for, the nation's prosperity, creating what Rowland terms a "Prosperity Factor."
The implications of this dynamic are far-reaching, ranging from the ability of Americans to take more control of their life-styles to changing the way marketers and communicators work with their clients.
A New Investor Standard
Mark Weiss, president and CEO of Rowland Worldwide, says that the significant number of people who are now stakeholders in the U.S. economy are the foundation of the prosperity factor concept.
"These people will be judging a company based on how they feel that company is propelling the economy and how it is contributing to the whole of the investor class," Weiss said.
"I don't think it only relates to a person judging a company by `do I own stock in that company.' People are beginning to consider the prospering of the social economy as well, how they are contributing to the investor class, to the prosperity of the country and the world at large. That's going to require communicators, when they provide advice and counsel to their clients, to view a company and the way they present that company in much different ways."
Milliennial Trends
Looking to the future, Kudlow forecasted continued growth for the investment class due to the increasing accessibility and reduced costs of savings instruments. He also noted that expansions to IRA and 401k eligibility, currently under discussion in the Senate, will also contribute to the rise of American investing.
"This will also have a tremendous impact on marketers and communicators," Weiss added. "We have always given `lip service' to the fact that there's tremendous wealth among retirees, viewing that wealth as the kind that would get them through their retirement years, the non-working years.
Today, with the kind of savings and investing for wealth outlined in the Investor Class concept, this is a new marketplace that is not going to be characterized by older people sitting on lounge chairs around a pool in a retirement community.
These people are going to be spending - taking vacations, buying residences, new cars and products. They're going to have quite a robust lifestyle because in addition to money, they have probably the single most valuable commodity outside of money: time. These people will have to be viewed differently by marketers. Quite honestly, it opens up opportunities for marketers and communicators. We just need to pay attention to it."
(The Rowland Company, 212/527-8885)
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