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CBSI: CUs need to be ready for $30T wealth transfer to Gens X, Y
ST. LOUIS (2/20/14)--Credit unions stand to lose significant business over the next decade unless they woo more younger members, speakers at a CUNA Brokerage Service Inc. (CBSI) conference said Monday.
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The aging baby boomer generation will redistribute significant wealth through inheritance over the next decade, the speakers said, and credit unions will lose out on this transfer if they don't actively engage younger cohorts before it happens.
"Research shows 71% of 18- to 24-year-olds have little to no knowledge of credit unions," said David Polet, voice of customer director at CUNA Mutual Group. He added, "That's a problem because this generation will be critically important to the future of your credit union in the years to come."
Roughly 30 trillion dollars will be passed down from baby boomers to Generations X and Y over the next three or four decades, according to a 2012 Accenture white paper. Polet and CBSI Vice President Gary Weuve warned that credit unions are increasingly losing out on this money as competition for younger consumers heats up.
The pair encouraged credit union professionals to start building relationships with younger members and potential members. Weuve suggested clients "bring their kids into the discussion regarding inheritance."
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Polet said that younger adults are interested in financial management, "highly open to seeking advice" and more likely to receive that from a financial institution than an individual. A study published in April 2013 by research and consulting firm LIMRA found that 78% of Generation X and Generation Y members contributed to retirement accounts when they worked with an adviser, while only 43% who didn't have an adviser saved for retirement.
Social media and email marketing have been successful in attracting younger members, said Waylon Peterson, wealth management president at Teachers CU, South Bend, Ind. Peterson is part of CBSI's credit union advisory panel.
"We're focused on building relationships with the beneficiaries of our current investment members through direct mail, reviews, and seminars," he said, adding that the $2.3 billion-asset credit union has developed a plan using CBSI data to target younger members.

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