Missing Out on a Critical Mission

The largest generational transfer of wealth is about to happen in the United States, and credit unions are failing to help their members navigate the journey. Yes, I know your credit union claims to make wealth management services available to members. However, sitting around waiting for members to come forward for services they may not know they need is not a service mission strategy. Only measuring the margin on investment sales is certainly inadequate.

Let’s apply the model of financial education, where credit unions have long and proudly held a moral advantage and action-oriented commitment. We aggressively seek out youth, the financially troubled and recovering, and households with low credit scores to educate and guide them to financial equilibrium. These efforts are quite honorable and should be extended to middle-class baby boomers who are managing their day-to-day finances well but may need help with longer-term planning.

Boomers may benefit significantly from two assertive moves by their credit union: (1) helping members develop a comprehensive wealth management strategy by understanding the laws and instruments that maximize full transfer of wealth, and (2) upgrading their understanding and navigation of “fintech” solutions for money management.

Try this exercise: Have a group of staff who are knowledgeable about the overall financial status of your boomer members estimate what the average net worth may be across this membership demographic. Do these estimates include home equity? Even a modest home owned outright may add $250,000 to that figure. What about savings with other financial institutions, retirement accounts, and other property and investments?

Estimating the net worth of a typical boomer member provides a context to consider the value of more assertive interventions with this demographic. Now multiply that net worth average by the number of boomers in your membership to assign a value on how much wealth may be at stake within your membership. This may prove to be a surprising figure. If this exercise doesn’t help your credit union reassess how assertive your wealth management education program should be, nothing will.

Moving on the second recommendation, consider that technological disruptions in banking in the near future—just a decade or two out—will position smartphones and tablets as the default “branch” for members of all ages. Most credit unions have waded into the online banking ocean driven primarily by cost savings and expectations of younger members who prize technological convenience. Remote deposit capture, electronic bill pay, P2P cash transfers, balance inquiries, automated reporting, internal and interbank funds transfer, interest rate inquiries, personalized prompts—the list of mobile services keeps growing.

Can you estimate how many of your boomer members rely on these remote services? More and more members in their 50s, 60s and 70s are discovering the convenience of mobile banking. Maybe their kids and grandkids are introducing them to these services, or maybe they’re discovering on their own how easy it is to manage their accounts while they travel and from the comfort of their patios. Though older members may be more cautious about using remote banking channels, they are likely to gain trust as these services become more commonplace.

Your credit union may be among the few that are properly addressing older members’ needs for wealth management and tech channel adoption. Even so, it’s a good idea to take stock of what your organization offers in these areas and how many members are taking advantage of these services. Consider these questions from a strategic standpoint:

• Does your credit union offer wealth management services, including guidance on wills, estate planning, trusts, investment instruments and tax implications?
• What is the current utilization rate of these services?
• What’s the best way to reach members with information about the positive value of a more sophisticated wealth management strategy?
• What incentives might be most effective in attracting member participation in education about wealth management and transfer? (Free food, gift cards, car washes, presentations by notable authors and appearances by sports figures are a few examples.)
• How might members use online and mobile channels to manage their investment and other accounts? What’s the best way to educate your members about using remote delivery? (Consider, for instance, “geek squad” consultants, “Internet 101” seminars and online instructional videos.)

Assertive discussions and planning by the board and executive team may lead to questions about possible partners to ensure that sophisticated tools are available to your members to manage their wealth transfer. Few credit unions will complete these conversations content that they have done all they can do. It’s more likely you will discover a nuance or two—or maybe even a few breakthrough ideas that can be implemented over the next year.

Thank you for considering these possibilities. Advancing your credit union’s wealth management education and services for members is an excellent but often overlooked aspect of helping members achieve their financial goals. Reaching out to provide technology education can support that initiative. Innovative thinking around these two themes may lead your credit union to enhance how you fulfill your mission to enhance the financial success and security of all your members.

Les Wallace, Ph.D., the 9Minute Mentor, is president of Signature Resources Inc. He is co-author of A Legacy of 21st Century Leadership and author of Principles of 21st Century Governance. He is a frequent speaker and consultant on leadership and governance.