With $30 trillion expected to transfer to Gen X and Gen Y from baby boomers through inheritances, the signs are not good that credit unions will retain this wealth unless they actively start engaging these two influential groups.
That was one of the insights shared at CUNA Brokerage Service Inc.'s FOCUS Conference on Feb. 17. CBSI is the broker-dealer affiliate of CUNA Mutual Group in Madison, Wis.
David Polet, CUNA Mutual's Voice of Customer director, and Gary Weuve, CBSI's Center for Advisor Excellence vice president and author of “Close More Sales in Financial Institutions: 12 Keys to Success,” told a FOCUS adviser workshop session that credit unions have been steadily losing younger members and as a result, the pipeline for their future personal investments is getting smaller while the competition for their money is greater.
“Research shows 71% of 18-24 year olds have little to no knowledge of credit unions,” Polet said, adding, “and that's a problem because this generation will be critically important to the future of your credit union in the years to come.”
Thirty-trillion dollars will be transferred to Gen X and Gen Y from baby boomers during the next 30 to 40 years, making it an even larger wealth transfer than prior generations, according to Accenture's “The ‘Great’ Wealth Transfer” 2012 white paper, CBSI cited.
“Seize this opportunity. Encourage current clients to bring their kids into the discussion regarding inheritance,” Weuve suggested. “This will help create awareness, and establish an opportunity to become the advisor of choice when the wealth transfer is ready to occur.”
Polet told attendees that despite common myths, “Gen Y is not a collection of lazy, narcissistic, self-promoting whiners; instead, they are hard-working, creative, collaborative people with a high awareness, and interest in engaging in financial management.”
The impacts of the dot-com bubble and recession have scarred them and made them more skittish.
“However, Gen Y and Gen X are highly open to seeking advice, and are much more likely to get that from their credit union, or primary financial institution, than older credit union members,” Polet said.
Seventy-eight percent of Gen X and Gen Y who worked with an adviser contributed to a retirement plan, as opposed to only 43% who did not work with an adviser, according to the CBSI.