Boomer Loyalty Has Limits

Baby boomers want objective financial advice, developed just for them. If they don’t get it, many will walk out the door.

April 1, 2011




  • About 33 million members are baby boomers.
  • Boomers are more technologically advanced and aware of financial service alternatives than previous generations.
  • Board focus: Strengthen member retention strategies for boomers or they will leave your CU.



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.

Why boomers?

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.”

Mental gyration

Boomers’ needs are as diverse and complex as the people in this cohort, who will range in age from 47 to 65 in 2011. Some are worried about putting their children through college, while others are trying to provide for their elderly parents. Some have a substantial retirement nest egg, while others are barely meeting current living expenses.

The 2010 Retirement Readiness Rating™ from the Employee Benefit Research Institute shows that 47.2% of the oldest cohort of boomers are “at risk” of not having enough money to pay for basic expenses and uninsured health-care costs during retirement. That drops to 43.7% for younger boomers.

Boomers need sound financial advice today and will continue to need it in coming decades. How do they cope with a volatile investment environment? How can they make their money last as long as they do? How can they leave something behind for heirs?

“They’re in a state of mental gyration now,” Hunt says. “Whatever their financial situation, they need a basic plan. They want to make sure they have the right financial institution with the right products and advice.”

Investment advisory services are part of the picture. But simply adding an investment service to your credit union’s offerings isn’t enough, Hunt emphasizes. Consider that about 41% of credit union members are boomers. Having a couple of investment advisors connected with your credit union can’t begin to meet all the financial-guidance needs of all your boomer members.

Boomers’ financial needs in retirement also could include vehicle loans, business start-up loans, certificates, 401(k) rollovers, reverse mortgages, long-term care insurance, and Medicare supplemental insurance.

Serving boomers will require some effort. “Boomers are saying, ‘You served me well in midlife. Can you do that for me in my later years, too?’?” says Hunt.

‘Roadmap to Retirement’

Offering a wide spectrum of products and services is key to retaining boomers, agrees DyAnn Longseth, senior vice president of communications for Veridian Credit Union, Waterloo, Iowa. “You also have to be intentional about getting the word out about what you have to offer, and explain that in terms people understand,”
she says.

This approach permeates through to Veridian’s front line. “We have a robust referral program,” Longseth says. “We’ve trained our staff to make referrals” to guide members to products and services meeting their individual needs.

The $1.8 billion credit union recently solidified its image as the go-to place for retirement help. “We didn’t find the vehicle to actually get people’s attention until we put together our ‘Roadmap to Retirement’ seminar,” Longseth says.

At a November 2010 seminar, the credit union served dinner, during which boomer members learned about identity theft. Then attendees chose which breakout sessions they wanted to attend. Topics included investing, long-term health care, estate planning, and retirement readiness. Various business partners presented basic information on the topics, with an understanding that there would be no selling. Longseth describes members’ response as “phenomenal.”

“We thought members might come to eat dinner and then take off on us,” she adds. “But nobody left early.” The credit union asked a cross-section of boomer members to pick seminar topics in advance. The top choices made it into the final program.

Longseth even sought boomer members’ advice in naming the seminar. The co-workers who helped her plan the seminar were all 30-somethings who came up with “Plan Your Path” as the program title.

“It turned me off,” says Longseth, herself a boomer. “It made me feel old and like I had a foot in the grave.” She did a quick survey by cruising through a branch office and asking other boomers to pick from a list of possible seminar titles. Their unanimous choice was “Roadmap to Retirement.”

“When you market to boomers, you need an advisory group or some way to test ideas with some of your boomer members,” Longseth says. “You have to be careful about the words and images you use. We boomers don’t think we’re getting old.”

Advisory groups

Finding ways to keep boomers in the fold is also a focus at $3 billion asset Hudson Valley Federal Credit Union, Poughkeepsie, N.Y.

“Our vision statement is that we’re going to be the Hudson Valley’s first choice for a lifetime financial services partner,” says Lisa Morris, director of marketing. “So we do a lot of messaging to members, as well as internally to staff, that we’re here to help our members at each life stage.”

One way the credit union connects with boomers is through its boomer member advisory group. In keeping with the life-stage approach, advisory groups also exist for generations X and Y, plus one for nonmembers.

Several products and services are designed to meet boomers’ needs. A quarterly online newsletter for investors targets members who are at or near retirement. “We’re averaging a 61.5% open rate, which is huge,” Morris says. “Members are actually looking at our e-newsletter.”

Hudson Valley Federal’s monthly local radio show provides financial advice for various ages, boomers included. Morris notes that many boomers in the area have lost their jobs late in life. “On the show we’ve talked about how to preserve what they have,” she says, “and how to get back on track financially.”

The credit union also has offered seminars on retirement re-engineering, and it has participated in educational seminars offered by Offices for the Aging in local communities. Jeffrey Thatcher, director of HVFCU Financial Services, writes a column on retirement planning for a local newspaper’s special Sunday section for boomers.

Like Veridian, Hudson Valley Federal uses a consultative sales approach, with staff trained to spot individual needs. “We’re not into selling credit cards because it’s time to sell credit cards,” Morris says. “We want our staff to get to know members and to realize that even a 64-year-old might need a mortgage.”

Being there for boomers one-on-one is important, Morris adds. Boomer members know they can sit down with someone at the credit union and have an honest discussion about finances.

“Maybe they need to make up what they lost in their 401(k) a couple of years ago,” Morris says, “or they want to retire in three years and need help to figure out how. What we’re seeing is that people want to deal with someone they trust. And credit unions have that hometown touch, no matter how big we might get.”

‘Retirement central’

Trust is credit unions’ ace in the hole in retaining boomer members, Hunt says. But, he cautions, don’t assume that’s enough. “You have to tell them you have retirement solutions for them,” he says.

Credit unions of all sizes have boomer-pleasing elements in place, he notes. For example:

  • The $72 million asset FME Federal Credit Union, St. Clair Shores, Mich., offers members over age 55 a special bonus rate on 401(k) rollovers or IRA rollovers from other institutions.
  • The $207 million asset Evergreen Credit Union, Portland, Maine, will be adding CUNA’s “Plan It™: Retire Ready Toolkit” to its website.

By building on what they already do and staying focused, credit unions can become “retirement central” in boomers’ eyes, Hunt believes. This will help your credit union retain boomers for decades. “Credit unions have all the right ingredients,” he says. “We just need to blend them and make the cake.”



At 59, Dale Rogers of Janesville, Iowa, is a few years away from retiring. Like most people today who are contemplating retirement, he can’t be sure what to expect. But he’s certain about a couple of things.

First, he plans to enjoy a comfortable retirement, nothing exotic or luxurious. “We’ll stay in the Midwest and enjoy the winters,” Rogers says wryly.

Second, he’ll continue to be an active member of Veridian Credit Union, Waterloo, Iowa, which he joined eight years ago when he started working on the small tractor cab assembly line at John Deere’s Waterloo plant. John Deere was Veridian’s original sponsor; the $1.8 billion asset credit union now has a community-based field of membership.

Rogers likes the fact that Veridian has some of the best rates on certificates. Although he has no borrowing needs now, he knows his credit union offers a full range of loans at good rates, if and when he does need to borrow. He has been seeking financial planning and investment advice through his credit union to help him fund his retirement. And when it’s time to roll over his 401(k), he intends to do that at Veridian, too.

He and his wife have “always been good savers,” he says. Still, he worries more about his retirement readiness now than he did a few years ago.

“We lost a lot of money in our 401(k)s in 2008 but have since recovered most of it,” he says. “That was a reality check. This can happen, and it can happen fast. When I’m retired and, say, age 75, I don’t want to risk losing 30% of my funds.”

Rogers plans to work part-time after retiring in three or four years. “Before it was becauseI wanted to,” he says. “Now it’s because I have to, for health insurance more than anything.”

Throughout his coming retirement, “I’ll stick with the credit union for sure,” Rogers says, “because they have every product and service I need.”