Retaining baby boomers is critical to CU success

The retirement of the baby boomer generation will become a crisis for credit unions if they don’t act now, warned Jeff Hunt, consumer program manager at 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,” said Hunt. “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.”

Credit unions have long enjoyed high membership numbers among middle-aged adults. CUNA’s 2008 National Member Survey shows 37% among those 45 to 64 years old. However, that number 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,” said Hunt. “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.”

To retain boomer retirees, credit unions ultimately need to evolve from being mainly lending institutions for midlife 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:

1. 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.
2. 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.
3. Build awareness in each channel. The communication channels should be where boomers want to read them—including 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 Web site.
4. Build retirement research centers. Boomers want to research and form an opinion before they buy a product.
5. Build purchase channels. Credit unions should be flexible and diverse in their channel offerings, understanding that boomers will make trade-offs based on experience, price, and convenience.
6. Be a retirement adviser. Being a member’s retirement adviser requires every credit union employee to play a role, 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.