"Companies will not be able to adopt a 'one-size-fits-all' approach toward serving the market," said Baig. "They will need to thoroughly examine the value chain to determine where they are best positioned to meet customers' emerging needs, tailoring their offerings to targeted sub-segments of the boomer population."

For example, Affluent Sophisticates -- a quarter of the boomer population -- control 65 percent of boomer assets. At first glance, this appears to be a clear target for companies, but a closer look reveals a plethora of companies already targeting these consumers. Therefore, not every firm can serve Affluent Sophisticates and be profitable, and many companies will need to make strategic decisions about which segments to target.

Understanding Risk Has Rewards

"Consumers generally have a poor understanding of risk," said Paul Blase, a Partner in Diamond's Insurance practice, and also one of the study's co-authors. "Most consumers tend to underestimate long-term risk and overestimate short-term risks, whether related to finances or health. This often leads to unnecessary worry-even as boomers under-prepare and under-insure themselves for the long term. Educating consumers about risk is the first step to helping them help themselves."

There is significant benefit to improving consumers' understanding of their own short- and long-term needs. Consumers who exhibit higher levels of financial confidence-regardless of income level-purchase a greater number of financial products and services than do their less-confident, less-educated counterparts. Consider the following:

-- 59% of working baby boomers expect to rely heavily on Social Security,

and 38% have saved less than $10,000 for retirement.

-- 61% of respondents say they do not have the funds to support long-term

care should they require it. Only 13% have long-term care insurance
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