Member loyalty has its limits. And the limits look something like this: 17% of boomer members will probably leave their credit unions when they retire, according to CUNA Mutual Group’s Boomer Retiree Study. If there are about 33 million boomer members, credit unions can expect about 5.6 million of them to walk out the door when they retire.
“A lot of these members already have one foot out the door,” says Jeff Hunt, CUNA Mutual Group’s consumer product manager for the age 55-plus strategic market.
If 17% of boomer members say they’ll probably leave upon retirement, it would be a mistake to assume the other 83% will stay. “While they prefer to stay with their credit unions after they retire, many are perfectly willing to leave if their needs are better met elsewhere,” Hunt reports.
So why do so many boomers (those born from 1946 to 1964) plan to leave their credit unions at retirement? You might think it’s because they plan to relocate. But out of 13 possible reasons for leaving, relocation ranked No. 11, garnering only a 4% response from participants in the CUNA Mutual study.
The top four reasons members gave for abandoning credit unions at retirement were:
1. It’s not where I conduct most of my transactions (52%);
2. It’s not where I have most of my assets, investments, and savings (49%);
3. It’s not convenient to use (38%); and
4. It’s not where I receive financial guidance and advice (31%).
Losing members at retirement isn’t new. Credit union penetration among U.S. adults is 36% in the 45-to-54 age bracket and 37% in the 55-to-64 group. But it drops to 26% among those age 65-plus, according to CUNA’s National Member Survey Report.
“Credit unions historically lose many members at age 65 and beyond,” Hunt says. “Our research shows we could lose the boomers at retirement, too.”
In fact, he warns that boomer members might be even more likely to drift away. “They’re more technologically advanced,” Hunt says, “and more aware of alternatives” than previous generations of retirees.
Hunt’s mission isn’t to deliver a sky-is-falling message. Rather, he wants credit unions to open their eyes to the immense, ongoing opportunities in the boomer member segment.
“Boomers can be a viable target for member relationships for decades,” says Hunt. “We already have relationships with many boomers; we just have to better meet their changing needs.”
Still, some may wonder, why all the fuss about boomers? Doesn’t the movement’s future rely on attracting younger people?
In the future, generation Y (born between 1976 and 2000) will soon be borrowers and major users of other services. “The problem is a lot of boomer business could go away before you get to that future. Credit unions need to focus on both gen Y and the boomers.”
Consider, too, that gen Yers look to their parents for financial advice, and those parents often are boomers. Reach the parents, and you reach gen Y. In fact, the influence of the boomer “sandwich” generation extends further still.
“When you keep the boomers, you keep their parents and their children,” Hunt says. “Boomers are helping both their parents and their children with financial decisions.”