Expert: Retaining baby boomer CU members is critical

BOSTON (6/24/09)--The retirement of the baby boomer generation will become a crisis for credit unions if they don't act now, Jeff Hunt, consumer program manager at CUNA Mutual Group, told attendees at America's Credit Union Conference & Expo Monday in Boston.

The retirement of the baby boomer generation will become a crisis for credit unions if they don't act now, Jeff Hunt, consumer program manager at CUNA Mutual Group, told attendees at America's Credit Union Conference & Expo Monday in Boston. (Photo provided by CUNA Mutual Group)
"The size and wealth of this generation means credit unions will face a membership drop of millions and an asset loss of billions if loss rates match up with historical averages," Hunt said. "Replacing the boomer retirees with younger generations of members is just not possible in the short term. Generation X is too small and financially stretched, and Generation Y is too far away from their peak borrowing and earning years to fill the gap."

Hunt's findings came from a study conducted by CUNA Mutual in 2008 to determine if and why boomers were leaving their credit unions and how to retain them into retirement. Using video of boomer interviews from the study, Hunt presented his case for why credit unions need to pay attention to this key demographic.

Credit unions have long enjoyed high membership numbers among middle-aged adults. The 2008 CUNA National Member Survey shows 37% among those 45-64 years old. However, the percentage drops to 26% for those 65 years and older.

"This makes sense given that the credit union business model was a good fit for middle-aged boomer members in their prime borrowing years," Hunt said. "But with that generation hitting retirement and no one to replace it, either the model has to change or the generation has to stick around; or both."

The study results bear this out. When asked how likely boomers were to stop using their credit union in retirement, 17% of boomer respondents said they were somewhat or very likely to leave. While the percentage sounds small, it translates to a loss of more than 5 million members when applied to the estimated 33 million boomer credit union members.

To retain these boomer retirees, the research suggests credit unions ultimately need to evolve from being mainly lending institutions for mid-life borrowers to retirement companies that offer a full range of solutions to boomer members.

Hunt provided six steps to help credit unions manage this transition:

  • Create an endorsed retiree product portfolio--Offer boomers the products they need in retirement, such as individual retirement accounts; income-oriented investments and annuities, Medicare-related products; and long-term care.

  • Talk retirement and never stop--Just like they have effectively with lending, credit unions need to market their retirement expertise, capabilities, and products all the time.

  • Build awareness in each channel--The communication channels should be where boomers want to read them, which includes statement inserts, brochures sent through the mail, e-mails with appropriate links, brochures and/or seminars at the branch or announcements on the credit union's website.

  • Build retirement research centers--Boomers want to research and form an opinion before they buy a product; credit unions can help drive member purchases by becoming an information resource for their members.

  • Build purchase channels--Boomers have strong purchase preferences, and they won't suffer through a purchase channel they don't like. Credit unions should be flexible and diverse in their channel offerings understanding that boomers will make trade-offs based on experience, price and convenience.

  • Make the credit union their retirement advisor--Achieving the coveted position of a member's retirement adviser requires every credit union employee to play a role, and ensuring they work as a team to be successful. The credit union itself should be seen as the adviser, not just the person with that title.

For more coverage, check out News Now's blog and Credit Union Magazine's Daily reports online. Use the links.

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Plan It: Website for Baby Boomers 40-60
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