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Come January, there will be few headlines declaring the oldest baby boomers are turning 64. Newsweek and others will hold off on their boomer covers until 2011 when they can show aging hippies pulling Medicare cards from their hemp-made wallets. But while the rest of America can survive without another new year’s article on how large, rich and influential the boomers are, the credit union movement should keep reading. We need to continually be reminded credit unions are missing out on the greatest generational opportunity since the boomers entered the workforce-their retirement. It’s a safe bet credit union leaders are more focused on the tough challenges of 2009 than on the changes their boomer members are going through. But it’s imperative that as 2010 planning is finalized, credit unions take steps to address the potential five-year loss of more than 5 million boomers who already plan on leaving their credit unions. That’s right. Our research tells us more than 5 million boomers already intend to retire their credit union memberships when they leave the workforce. What’s most troubling about this statistic is the fact that credit unions actually have an edge over other financial services firms in capturing the boomer retiree market. Indeed, Forrester Research’s customer advocacy 2009 report shows credit unions tied for first place with USAA as the most trusted financial institution. This study explains that putting customers’ needs first translates into retention and deeper relationships. And trust is also what brings new members to financial companies during life changes and uncertain times. So, while companies like Fidelity, Ameriprise, Bank of America and MetLife have to run expensive campaigns to win boomer customers, credit unions must only provide for their needs. Last fall, CUNA Mutual conducted a boomer retiree retention study so credit unions could hear directly from their members and potential customers. The study confirmed that boomer members are interested in having their credit unions provide for their retiree needs. It also busted many widely held myths or excuses we accept for why our retirees leave. We found they don’t leave because they move away or do less financial business but because they stop seeing their credit union as relevant. Boomers also said they already have other financial relationships to replace their trusted credit union relationship if their needs are not met. But most importantly, boomer members provided three areas where credit unions can beat their competitors. The first is providing for member product needs. Boomer retirees want products that help them manage their income and health coverage. Being able to replace a paycheck with a safe source of income is critical to most retiree decisions including when to retire, where to consolidate, how early to elect social security, what lifestyle can be maintained and how to leave assets to heirs. Credit unions have an edge in this area since turning assets into reliable income includes many high rate and safe credit union products like CDs, savings accounts and rollover IRAs. Additionally, credit unions can provide access to other income products such as bonds, dividend paying stocks, fixed annuities, reverse mortgages and permanent life insurance. Having continuous health coverage also affects key retiree decisions like whether to leave work before 65, how to pay for the out-of-pocket expenses left over from traditional Medicare and what to do if custodial care is necessary. Most customers have to go to separate financial institutions to get financial and health care products, but credit unions can now offer Medicare Advantage, Medicare Supplemental, Medicare Part D and long-term care insurance. Unlike other financial institutions that are often distracted by nonconsumer divisions, credit unions can focus on being a true one-stop shop for retiree members. The second area where credit unions can be competitive is providing retirement expertise. Seventy-four percent of members said they’re more likely to buy a product if it’s accompanied by free and accessible advice. Unlike other financial institutions who develop advice units only to give up on them as soon as they need a short-term sales push, credit unions can increase long-term relationships and fulfill their mission of helping members by staying the course in providing retiree advice. Many credit unions already have financial planners and advisers in the branch, and their members are open to getting answers to their retiree questions in other credit union communications including newsletters, e-mail and Internet and by phone. In fact, if credit unions would establish retiree centers in their branches and online, members would pay attention and buy. The final area where credit unions can succeed with retirees is customer service. Credit union employees and those who support credit unions are typically more attentive than most financial services representatives. For aging members who need extra attention to maintain independence, credit unions can provide easier access to both retirees and those who help them. It requires the willingness to invest in verifications systems unrelated to a direct sale, which would be unlikely from a credit union competitor. If credit unions are to realize their advantage with boomer retirees, they must break from their normal business model, move beyond the urgent, and evolve into true retiree-focused organizations. The evolution must start now. The cutting-edge credit union that steps up to take the lead would be worth at least a cover story.

Peter Westerman

Credit Union Times

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