Boomers Look for Advisers
Failing to capture baby boomers' retirement assets could deal a big blow to CUs.
Kevin Mummau travels the country talking to credit union managers. As he does, he of-ten notices a troubling disconnect in credit unions’ focus.
“The question I’m asked most is, ‘How can you help me get the 20-year-old as a member?’ ” says Mummau, executive vice president for program development at CUSO Financial Services L.P.
“The problem with that,” he says, “is credit unions can lose sight of older members. It’s not that they take them for granted, but they often fail to focus on their needs as much as they should. If baby boomers don’t receive the attention and services they need, they’ll go elsewhere.”
Such an exodus could deal a big blow to a credit union’s bottom line. Mummau says the biggest concern among the top 20% of members—in terms of their worth to the credit
union—pertains to retirement assets and benefits distribution.
Mummau, who defines baby boomers as consumers age 51 to 70, says that as members age, their need for traditional loans diminishes. “Their needs change to asset
management, income supplements, and income distribution. So your outreach must focus on their needs for this stage of life.
“What they need most is a trusting relationship with a credit union that can walk them through these life-stage changes,” he continues. “For instance, until retirement, their 401(k) plans have been a matter of accumulation. Now they’re ready for distribution. How will they manage that?”
Publicize your strengths
Credit unions must understand that it’s typical for boomers nearing retirement to streamline their financial relationships and consolidate their advisers.
“Over the years they’ve developed multiple relationships with advisers for 401(k) plans, fund accounts, real estate investments, and so on,” Mummau says. “As they approach retirement, they want to reduce their advisory relationships to one.
“The key for credit unions is to overcome the belief that they can’t compete with other providers,” he adds. “That’s not true. I’ve been in this business for 30 years and I’ve learned that credit union advisers are better listeners than anybody. They’ve earned the trust of millions of people over the years because they listened.”
For Mike Gatrell, brokerage sales manager at Vantage Credit Union, Bridgeton, Mo., the hope is that as boomers age, they become used to the close relationships they’ve
developed with their credit unions.
“When they learn that credit unions offer the same services as other financial institu-tions, that closeness may become a deciding factor in their decision to stay with the credit
union,” Gatrell says. “The ‘one-stop shop’ concept is a huge asset and credit unions should leverage it.”
Jennifer Green, investment services group administrative manager at Vantage, says “one successful emphasis we make is that because we’re one-stop, we can take the worry out of retirement. The task for us is to overcome the perception that we can’t handle their needs, such as investments or 401(k) rollovers.”
One way to change boomer perceptions is with education. “You know that retirement concerns are keeping boomers up at night: ‘Where’s the money going to come from? How do I safely invest?’ ” explains Mummau. “So build awareness with educational workshops.
"One good way is to offer a generic retirement needs and planning presentation in a comfortable meeting room on a weekday night," he continues. "The speaker addresses general concerns and invites questions. Make the presentation informal. If you hit the right chord, attendees will come back and ask for one-on-one sessions with the credit union’s
Mummau advises giving the presentation even if only one person signs up for it. “The attendee will appreciate the attention and consideration, and will tell his friends. The next time, he’ll generate three more attendees. You’ll often be surprised—20 people will sign up for a presentation and 30 will attend.”
Green agrees that outreach shouldn’t go overboard with details. “Don’t overwhelm members with too much information. Listen carefully and adjust your presentation to what you know members can comfortably process.”
She believes each credit union branch should have a resident expert on investment and retirement services. “That person makes referrals, lets members know about investment options, and keeps boomers in the loop.”
Next: Be aggressive
Because boomers typically aren’t aware of all the services and products that credit unions offer, Green advises credit unions to make a strong effort to retain boomers’ assets, even when it might seem to be too late.
“When we get requests for outgoing asset transfers, we’ll call those members and tell them we offer the same services as the institutions they’re making transfers to,” she says. “They’re often surprised to hear that. Even though it might be too late to make them change their mind and stop the transfer, we’ll often see that money return to us at a later date.”
Gatrell says such calls save a certain percentage of members. “Some of them almost seem reluctant to make a transfer, and I think our call gives them a last-minute reason not to go through with it.”
He adds that the financial advisers at Vantage offer independent advice and sell a range of products, giving members many options. “Also, we thoroughly explain products to members—advantages and drawbacks—so they truly understand what they’re getting.”
Forge generational ties
One side effect of losing boomer assets goes back to the concerns credit unions often express to Mummau: their ability to attract younger members.
“Credit unions that don’t focus on retirement services will lose those members’ descendants,” says Mummau. “For many people, membership in a credit union is a ‘pass-along’ thing, where children follow their parents. If boomer accounts leave you, most likely so will their descendants.”
Cindy Harbison, president of credit union service organization operations at Vantage, says credit unions need to keep in mind just how close a relationship members expect. “How people talk about their financial institution is revealing. Most bank customers say, ‘I have to go to the bank.’ But many members say, ‘I’m going to my credit union.’
“That sense of ownership is important,” she adds. “That’s why credit unions shouldn’t be intimidated by the size and name recognition of other financial institutions. They often overlook their own strengths, such as the inside track they already have with members.”
Gatrell advises emphasizing that, although credit unions offer the same services as large institutions, “We are not like them. That point will resonate with many members.
“For many boomers, retirement isn’t the end,” he continues. “Many go on to new careers, start businesses, and reinvent themselves. They want to stay actively involved in their
financial affairs, so keep that in mind as you deal with them.”