The Real Underserved Market In Banking: Gen WHY

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An article titled The Credit Union World Attracting Gen Y to Ensure Its Bright Future contains the following passage:

“Every day since January 1, 2011, more than 10,000 Baby Boomers reach age 65, and that is going to continue every single day for the next 19 years. That adds up to about 64 million skilled workers who will be able to retire in the near future. What does this mean for the American workforce and nearly every business or company, large and small? The future of the workforce will depend on the next generation of young workers and professionals – Generation Y. Companies, businesses, non-profits, and other organizations with an employee base (including credit unions) must learn to successfully market to Gen Y in order to attract and retain them, and ultimately ensure their own existence and growth.”

My take: If you believe this, you need a serious reality check. 

I’m not disputing the Boomer numbers. Yes, (on average) 10k boomers reach the age of 65 every day. With 77 million boomers, 10k is pretty small number, though. 

What I am disputing is this: “That adds up to about 64 million skilled workers who will be able to retire in the near future.”

Here’s reality: Many boomers — I won’t quantify it here — will not be able to retire in the near future OR do not want to retire in the near future. 

Are there really people out there who cling to the out-dated notion that on people’s 65th birthday, they go into work, get their gold watch, eat a piece of cake at their going-away party, then go home to pack up the house for the move to Florida next day?

What this really means for “nearly every business or company” is that older employees will be sticking around a whole lot longer than they did in the past. 

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What this really means for banks and credit unions goes way beyond having to “learn to successfully market to Gen Y in order to attract and retain them.”

Let me share with you a data snippet or two from a recent study conducted by Aite Group. Compared to older consumers, Gen Yers are more likely to do household budgeting, to categorize and forecast their expenses, and to seek out advice on how to make better financial decisions. Even though they’re only in their 20s (or maybe early 30s), many are already concerned about, and saving for retirement. 

People over the age of 65 are the least likely to budget, to categorize and forecast their expenses, to access financial education material, and to analyze the allocation of their investments.

Is that because they already have this stuff nailed down, and it’s no longer a problem or issue to manage their financial lives because they’re swimming in dough, and don’t have to worry about it on a day-to-day basis? Yeah, sure. 

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The real underserved market in banking isn’t Gen Y — it’s Gen WHY: Gen We Haven’t-stopped-working Yet (sorry, feel free to come up with a better label and I’ll go with it). 

What Gen WHY needs is help managing their financial lives: Understanding how much they’ll need in retirement, how to manage their money in retirement, how to pass down their money after their retirement is over. 

But the banking industry doesn’t have a product for that. Financial advisors (some of whom work for banks or credit unions) can provide a service to fill that need. 

But many people have never paid for financial advice. They’re used to paying for financial products: A checking account, a savings account, a CD, etc. And what banks and CUs have learned to do (in varying degrees of effectiveness) is sell financial products, not financial services.

Bottom line: The bottom line here is two-fold: 1) The bigger short-term opportunity presented by the 10k of boomers who reach 65 every day is not selling to Gen Yers, but providing better support and help to those boomers who aren’t retiring, can’t retire, but might want to; and 2) The real challenge to the industry is not “learning how to market to Gen Yers,” but how to transition from selling financial products to financial services.

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