Lifecycles and how they impact financial services.

• Author: Dychtwald, Maddy
• Position: Q & A - Maddy Dychtwald - Interview

For nearly 20 years, Maddy Dychtwald has analyzed and forecast lifestyle and consumer marketing trends. Earlier this year, she published a book entitled, "Cycles: How We Will Live, Work, and Buy" (The Free Press, 2003).

Q: Your book states that there is a lifecycle revolution going on right now. What do you mean by that?

A: Throughout history, we have lived linear lives that were primarily defined by age. We learned when we were young; we worked at one job when we were middle-aged; and we retired for a few years before we died when we were elderly. But the lifecycle revolution is a release from this age-old assembly line of life passages that told us that "Fifty was over the hill." We are beginning to make decisions based less on age and more on lifestyle.

Q: What is causing this change to happen?

A: For the first time in history, three powerful demographic trends are converging to create this lifecycle revolution. The first trend is longevity. One hundred years ago, people lived, on average, to 47. Today, life expectancy has skyrocketed to 77. Secondly, as life expectancy continues to climb, the overall composition of the general population is shifting away from youth. Just 100 years ago, the median age was 17; today it's 36 and will continue to climb, reaching 39 by 2025. And, finally, the aging of the influential boomer generation is shaking up how we live, work and save. Boomers, born between 1946 and 1964, make up one-third of our population. They have rarely followed the status quo set by previous generations, so the idea that they'll age like their parents or grandparents or just disappear from the workforce when they hit age 65 doesn't seem likely.

Q: Why is this so important to the financial services industry?

A: You can no longer define customer needs based primarily on age. Cyclic lives mean people are going back to school in their 30s, having kids in their 40s, changing careers in the 50s, and "unretiring" in their 60s. You could have applications for student loans from someone who is 18, 38 or 58. The same is true for small-business loans.

Q: What about saving and investing patterns?

A: The whole cycle of wealth accumulation begins to shift. Customers are...