Baby boomers, the ubiquitous post-World War II generation that changed the way America thought, worked, played and conducted business, is in the throes of entering retirement. Yet they are still financially active, and credit unions that know how to reach them have the best chance of benefitting from their relationships with this still dominant member demographic.
Charles Spilman knows that baby boomers constitute almost half the share certificate and mortgage business at United Federal Credit Union in St. Joseph, Mich. But Spilman, director of product planning and card services at the $1.8 billion institution, has no intention of creating a separate portfolio of products and services for his boomer members.
"We've been designing and offering products for boomers for decades, but we don't specifically target boomers with programs," Spilman said. "Our approach has been to meet the needs of each individual member by having a broad range of products."
As the aging demographic enters retirement, baby boomers still carry a significant amount of financial clout. Boomers as a group earn an estimated $2.4 trillion annually that accounts for 42% of all after-tax income, according to the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey. Experts say that boomers are and will remain a financially significant – and a significantly large – age cohort for the next 30 years.
Despite the fact that the generation born between 1946 and 1964 is financially active, credit unions caught up in the media buzz over courting Gen X, millennial and even centennial generation members may not be fully tapping the financial resources they already have in hand. Because of that, the performance of services for some of credit unions' most loyal and economically viable members may be suffering.
Many credit unions are addressing boomer needs, but some of the most effective programs avoid AARP-like menus of specially designed services in favor of taking a tightly targeted, yet fully integrated approach to serving the age cohort, according to Bill Cheney, president/CEO of the $11.4 billion SchoolsFirst Federal Credit Union in Santa Ana, Calif.
Cheney agrees with United FCU's approach. Although the credit union doesn't measure individual member profitability, Cheney knows that boomers comprise 26% of the educational credit union's 651,000 members, and as such are a financial force to be reckoned with.
"Baby boomers are experiencing a wide range of life events, from meeting the needs of teenage children, to sending their children to college, planning for retirement or enjoying retirement," Cheney said. "Our role is not to put them in broad segments, but instead to understand them individually and ensure our products and services meet their unique needs, with the goal of bettering their financial lives."
Bucking trends has been the hallmark of baby boomer culture from the beginning, and serving nontraditional personalities with a nontraditional approach to financial products is critical for continued success, Cheney said.
"Understanding each member's needs and situation and providing them expert financial guidance is our best strategy for serving them," Cheney said.
Read more about boomer services in the August 5, 2015 print issue of CU Times.
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