Friday, October 28, 2005

Is AARP making money but losing its way?

I rarely get as much response as I did from a recent column about a Philadelphia consumer who was disturbed by high price quotes he'd gotten for AARP auto insurance. He's still waiting for an explanation beyond the obvious - that auto coverage is so complex nowadays that next-door neighbors may get widely varying quotes from the same company, and no single company offers the best deal to anyone - for premiums that were three or four times as high as his current coverage.

Many readers focused on the devil's bargain made by AARP: It supports its extensive advocacy work by licensing its name and marketing products through a for-profit subsidiary, and sometimes the potential conflicts-of-interest are painfully obvious. AARP threw its weight beyond President Bush's prescription-drug plan for Medicare - its support was probably the single biggest key to its passage. Now AARP stands to profit from marketing a Medicare Part D prescription plan.

Last year, I discovered when I looked at AARP's financial reports, its royalties and related fees brought in $350 million. Today's New York Times points out how AARP is upping the ante on its commercial ventures.

As the Times' Claudia Deutsch reports, AARP has big plans for next year, with these products in its wings:

There is an investment fund aimed at people over 50, the first such product it has developed on its own. There is a consulting service to help companies develop their own products for the 50-plus crowd. There is a "seal of approval" program in which, for a fee, AARP will endorse products it likes.

AARP is also talking to several drugstores about possibly selling AARP-branded items that are now available only by mail. And it is prodding companies to develop new products for older people, not just passively vetting the products that industry comes up with. For example, it is looking for a telecommunications partner to help it devise an elder-friendly cellphone service, and for vendors who will make easy-to-open luggage, better home lighting and other products that AARP can sell.

"We're finally being proactive, instead of waiting for companies to come to us with ideas, " said Dawn Sweeney, president of AARP Services, the for-profit subsidiary that handles product sales.

Judging from what I heard - much of it from AARP members - the group has a big-time brand identity problem. It risks losing at least a little credibility each time somebody discovers that just because it says AARP, it isn't necessarily a good deal for seniors.

Is AARP an advocacy group, or is it something else?


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Monday, October 31, 2005  
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