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The Rewards of

Baby Boomer Partnerships

BEST PRACTICES


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Marketing programs designed to attract generation X and generation Y members currently may be top of mind at most credit unions, but that shouldn’t lead to overlooking the needs of the baby boom member segment. According to the U.S. Census Bureau, this group, commonly defined as those born between 1946 and 1964, is nearly 79 million strong. It represents roughly 25% of the U.S. population, and, according to the Credit Union National Association’s 2008 member statistics, 43% of adult credit union members. Baby boomers have shaped—and will continue to shape— trends in virtually every product and service sector in this country. In turn, not only have they had a considerable impact on your credit union, they will continue to do so. Beyond the sheer size of the baby boom generation is the magnitude of its assets. These consumers have earned substantial income throughout their lives, and their earnings peak is still ahead of them. According to the McKinsey Global Institute, baby boomers have earned more at every age (in real terms) than any previous generation, and their incomes are expected to crest in 2015 for early boomers (those defined by McKinsey as born from 1945-1954) and in late 2025 for late boomers (those born from 1955 to 1964). The Investment Company Institute reports overall retirement assets (in individually managed and employer-sponsored defined contribution plans) were worth $17.6 trillion at year-end 2007, with a

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Note

substantial percentage likely in baby boomer hands. In addition, the potential for this group to inherit a significant amount of money has stoked anticipation at many financial institutions for years. A 1999 report by the Boston College Social Welfare Research Institute put a dollar figure of $41 trillion on the amount that will be transferred by 2052. Recent reports have challenged the relevance of this figure, noting much of this sum may go to pay estate taxes or to charitable donations, and a large percentage of it is held by a small group of the country’s richest families. Regardless, baby boomers might be in a better position than your younger members to build their assets significantly through inheritance. Baby boomers are also attractive because they tend to be loyal. Many joined their credit unions early in their careers—often when the credit union had a singleemployer sponsor—and consider the credit union to be their primary financial institution. As a group, they tend to look for value and aren’t as likely to chase rates. And they trust you to do right by them—a position of honor not many financial institutions can count on today. And last, but not least, it’s important to reach out to baby boomers because, quite frankly, they need you. For all their wealth, they haven’t done a good job of ensuring their own financial future. While previous generations socked away savings during their prime earning years, many baby boomers have embraced a “live for today” lifestyle that has included substantial

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levels of spending and borrowing. Many are facing their retirement years with significantly higher levels of debt than their parents and without the safety nets of company pensions and retirement programs previous generations took for granted. Plus, rising healthcare costs, collapsing home prices, and a volatile stock market continue to erode net worth and prospects for a secure retirement. In the following pages, we invite you to learn how eight of your credit union peers reach out to this group.

They’ve discovered there are few true baby boomer products. Marketing to life stage, rather than age, is the better path to follow. And they’ve learned members of every age are tech savvy and expect their credit unions to make it possible to handle most transactions online. While challenges are many, so is the potential for reward—and the potential to be a true lifelong partner to this segment. Mark Condon

Although each credit union has tailored its efforts to meet the unique needs of its marketplace, similarities abound. Each has found it’s critical to offer a breadth of investment and retirement services—even if it can take years to change member perceptions about your resources in these areas.

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Senior Vice President CUNA’s Center for Research and Advice

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The Rewards of Baby Boomer Partnerships


Table of Contents

Resource uCredit Union National Association:

Plan It™: Retire Ready Toolkit: buy.cuna.org, enter “plan it” in the product finder.

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Anheuser-Busch Employees’ Credit Union

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Coastal Federal Credit Union

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Los Angeles Police Federal Credit Union

Become a Trusted Adviser

Create Opportunities to Meet Member Needs

Partners in a Proud Tradition

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Neighborhood Credit Union

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Suncoast Schools Federal Credit Union

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Sunmark Federal Credit Union

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Visions Federal Credit Union

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Mountain America Credit Union

It’s All About Relationships

Find Innovative Ways to Connect with Members

Broaden Your Financial Services Offerings

Prepare for a Changing World

Key In on Cross-Selling Products and Services

Written by Vicky Franchino and Judy Dahl To order a downloadable PDF, visit buy.cuna.org and enter 28531P into the product finder. © 2008 Credit Union National Association

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BEST PRACTICES

The Rewards of Baby Boomer Partnerships


1 W Anheuser-Busch Employees’ Credit Union:

Become a Trusted Adviser

When a number of its main sponsor’s employees were given the option of an early retirement package, many of them turned to their trusted financial adviser for help deciding if the offer was right for them: the Anheuser-Busch Employees’ Credit Union, St. Louis.

“We want to be a resource that members can rely on, especially for critical life decisions,” says Pier Alsup, senior vice president of marketing and business development at the credit union. “We work very hard to understand what our members need and to build relationships.” Their efforts are clearly paying off, especially with long-

Anheuser-Busch ECU at a Glance

time baby boomer members. These members, ages 44 to 62, make up 34% of the credit union’s membership. The majority have been members for more than 10 years. More important, 82% of those who have been members for five or more years view Anheuser-Busch Employees’ as their primary financial institution.

“Baby boomer members are very loyal to our credit union,” says Alsup. “They’re not rate chasers. They’re looking to build a partnership with someone they trust.”

• Assets: $970 million

Being members’ primary financial institution

• Members: 100,000 • Baby boomer members: 20,000 age 51-62, 14,000 age 44-50 • Average products/services per member: 4.3 for age 51-62; 3.8 for age 44-50; 3.5 overall • CU’s deposit and loan accounts held by baby boomers: 22% of loans (age 51-62); 16% of loans (age 4450); 27% of deposits (age 51-62); 13% of deposits (age 44-50) • Services: Retirement planning, investing, educational funding, wealth management, long-term health care, online brokerage, IRAs.

One resource Anheuser-Busch Employees’ uses to better understand its members is Harland’s Touché Analyzer, a marketing customer information file (MCIF) tool from Harland Financial Solutions, Lake Mary, Fla. “We’ve relied on this database tool for many years. We’ve added enhancements and use the appended data feature,” says Alsup. “This MCIF allows us to capture member information, create user profiles for different products, and design targeted marketing programs.” Alsup has found many baby boomers want both traditional and nontraditional services from the credit union. “We try to offer them in a way that meets their specific needs.”

• Web site: abecu.org

The credit union’s two-tiered money management

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service is a good example of product tailoring. Members have access to a full portfolio of financial services—including long-term care, retirement planning, estate planning, education funding, and wealth management—provided by longtime AnheuserBusch Employees’ partners CUNA Brokerage Services, Madison, Wis., and The Moneta Group, a St. Louis-based financial advisory firm. “Those with more basic needs are typically a good fit for the CUNA Brokerage planning services,” says Alsup. “Those with more complex wealth management requirements often choose The Moneta Group.”

The credit union makes information available to staff at the member-contact level as much as possible. “If a member calls in or comes into a branch, our staff can access information to review a member’s account profile to see what offers we’ve made to them recently,” says Alsup.

The credit union also offers traditional services such as checking and deposit products, insurance, mortgages, home equity products, credit cards, and loans. And offering excellent rates is a key component of the credit union’s brand promise. “We recently received the Datatrac Great Rate Award on our deposit products,” says Alsup. “Our baby boomers are looking for great value, and we’re known for delivering.”

Eagle Advantage. Qualifying members age 55 or older receive free checks, American Express Travelers Cheques and cashier’s checks, plus a subscription to the credit union’s Eagle Advantage publication. Members also are invited to special events. “Our new approach (which included a name change) acknowledges that there are distinct segments within the 55-plus age group,” says Alsup. “In the past, we might have sponsored an event geared to an older age group. Our most recent event was an evening at the Omnimax theater so people could bring their kids—or grandkids.”

Anheuser-Busch Employees’ complements its product and service mix with a variety of educational resources. These include both online tools—calculators, financial workbooks, and similar materials—and seminars and workshops on retirement, home buying, Social Security benefits, and more. The credit union strives to make it easy for members to stay with the credit union even if they leave the geographic area—a real draw for mobile boomers. “Free online banking and bill pay help ‘snowbirds’ keep their accounts with us. We’re also part of a national shared branch network,” says Alsup.

Personalize messages in all channels Individual member profiles, created using Customer Power from NCR, Dayton, Ohio, allow the credit union to personalize marketing messages and tools to boomers. When a member uses the credit union’s online banking resource, personalized promotions pop up based on data gleaned from the tool. “Our baby boomer members use our online channels extensively (36% of those born 1946-1957 and 48% of those born 1958-1962 use it), so this is an effective way to get a tailored message out about products and promotions that seem like a good fit,” says Alsup.

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Benefits for boomer members Anheuser-Busch Employees’ has programs designed particularly for baby boomers as well as some skewed toward them because of program requirements— typically a minimum level of deposits or loans:

Member Rewards. Though this program appeals to other age groups as well, many participants are baby boomers because of the loan/deposit requirements of the three-tier program. Participants can qualify for a variety of product discounts and free services based on their relationship with the credit union. “This program is a win for us and the member because it rewards increased relationships with the credit union,” says Alsup. Legacy Members. This new program is for members who have been with the credit union for 10 or more years. “This is a program that will focus on invitations to special events and gift offers,” says Alsup. “It’s a ‘thank you’ for choosing us to be your credit union.” Anheuser-Busch Employees’ has often found it can most effectively serve baby boomers by partnering with outside resources. But Alsup knows this can be accomplished only with effective due diligence. “We look for companies whose philosophy and service approach mesh with ours. We are very protective of our members.”

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2 L Coastal Federal Credit Union:

Create Opportunities to Meet Unique Member Needs

Larry Wilson, president/CEO of Coastal Federal Credit Union, Raleigh, N.C, has found stereotypes often are accurate when it comes to his baby boomer members. They aren’t always ready for retirement; they’re more likely to have a “live for the moment” attitude; and many of them will be challenged to get the health care they need. But that doesn’t mean his credit union takes a one-size-fits-all approach to serving this member segment.

“Each of these members is in a unique position today and has their own vision for where they want to be in the future,” says Wilson. “Our job is to recognize this and to help each one build a plan that meets their specific needs.”

Learn about your members Staff training is critical. “You need to create a cul-

Coastal FCU at a Glance • Assets: $2 billion • Members: 183,284 • Baby boomer members: 71,506 (40%) • Average products/services per member: 2.6 baby boomers; 2.38 overall • CU’s deposit and loan dollars held by baby boomers: 42% of deposits, $687.3 million ; 38.9% of loans, $638.5 million. • Services: Retirement planning, investing, educational funding, estate planning, long-term health care, online brokerage, trust services. • Web site : coastalfcu.org

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ture where your team has the skills to turn every encounter into an opportunity to uncover and meet a need,” says Wilson. “If a member comes in talking about a new baby or with a big insurance check, don’t just say ‘how nice’ or deposit the check. Direct them to resources that might make sense for them based on these changes in their life.”

Coastal Federal employees receive incentives to uncover these opportunities, and the branch with the most referrals to the financial services department receives “rainmaker” cash prizes and pizza parties. The credit union creates opportunities to interact with members such as seminars, often at select employee group facilities. Topics have included preplanning for retirement, wills and trusts, and long-term care insurance. “These sessions give us an opportunity to show our members that we are a resource they can turn to for more than a loan or as a place to keep their savings,” Wilson says. “They’re an excellent positioning tool.” Coastal Federal is a strong believer in data mining to improve member service. The credit union is currently installing business analytical software from SAS, Cary, N.C., a tool that will allow it to tap into a wealth of member information. “Knowing what

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The Rewards of Baby Boomer Partnerships


type of car a person has, where they shop, and what products and services they already have with us are pieces of information that allow us to better tweak the product and service offerings we approach them with,” says Wilson. “SAS will be an excellent way for us to uncover and meet an extended range of member needs.” When Coastal Federal decided to offer a broader range of financial and investment services to meet the needs of these members, it faced the classic dilemma: in-house or outsource? “We opted to bring expertise in-house, with compliance supervision handled by an outside vendor,” says Wilson. “This mix seemed like the best fit for our members and our organization. We hired experienced, successful financial advisers who could hit the ground running, and that’s worked out very well for us.” When the credit union branched into trust services about three years ago, it followed its established pattern and hired in-house staff overseen by MEMBERS Trust Co. “MEMBERS Trust has excellent credentials in this area and a proven track record,” says Wilson.

A variety of channels Coastal Federal recognizes that although baby boomer members need face-to-face connections for some transactions, they are technology savvy and increasingly comfortable using online channels. Long on the cutting edge in delivering Internet resources, Coastal Federal originally was an IBM credit union and one of the first financial institutions in the country to offer online banking. The credit union is in the midst of an extensive update to its online system. The new system will include the addition of the Brightleaf Financial Network, an interactive program developed by MEMBERS Development Co. and designed to help middle-income members with their

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finances. The system delivers access to insurance and retirement tools, and it lets members create a personalized financial plan. Members can choose to implement their own plan or can connect to financial advisers at the credit union for additional help. “This will be an excellent resource for baby boomers who don’t have an investment plan or don’t have enough set aside for retirement,” says Wilson. “The member can use the system to set short- and longterm goals, and it gives them the tools and recommendations to meet them. It’s an excellent resource for members who don’t have ready access to one of our branches, prefer to manage their finances on their own, or want some idea of where they stand before they meet with an adviser.”

Be a trusted resource “When a mutual fund provides an online tool to help with investment planning, you know they have a sales agenda,” says Wilson. “When we put tools out on our Web site, we want to give members one more reason to rely on and trust us. We aren’t trying to sell them products just to bump up our numbers. We won’t sell members a product that isn’t a good fit to meet their goals.” Wilson believes that although credit unions might have an uphill battle communicating their ability to offer services beyond savings and loans, their position as a trusted ally offers a strategic advantage. “If you’ve served these members well throughout the years, you have a good opportunity to meet their financial planning needs once members know you have the capability,” he says. The credit union gets the word out with marketing tools directed to the baby boomer market including an ongoing advertising relationship with Boom!, a local magazine that reaches the 50-plus crowd; and radio advertising on a news/talk station with heavy penetration in this age group. The credit union’s inhouse marketing team also makes extensive use of targeted direct mail and emails.

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The Rewards of Baby Boomer Partnerships


3 L Los Angeles Police Federal Credit Union:

Partners in a Proud Tradition

Los Angeles Police Federal Credit Union, Van Nuys, Calif., is a bit of an anomaly in today’s credit union world. It has a single sponsor and extremely high penetration rate—98% of current Los Angeles Police Department (LAPD) officer employees are members, and most of these have a secure retirement program courtesy of their employer, the city of Los Angeles. These factors could make it easy for Los Angeles Police Federal to take a relaxed approach to serving its baby boomer members. But the credit union has made a commitment to do just the opposite.

might not have to worry as much about their retirement— which is a huge issue for most baby boomers—but they do have all the other typical needs and concerns of this age group and are looking for help to meet them.”

Build a relationship

“Our members are extremely loyal to our credit union because we work diligently to understand their needs and meet them,” says G. Michael Padgett, president/CEO at Los Angeles Police Federal. “They

Los Angeles Police FCU at a Glance • Assets: $700 million • Members: 41,344 • Baby boomer members: 11,929 (29% of members) • Average products/services per member: 7 products, 3.2 accounts for baby boomers; 2.3 products, 2.8 accounts overall • CU’s deposit and loan dollars held by baby boomers: 30% of deposits and 44% of loans. • Services: Retirement planning, investing, educational funding, estate planning, IRA. • Web site: lapfcu.com

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Most Los Angeles Police Federal officer-members join during their police academy days. “Our members usually come to us when they’re 20 years old. They need a uniform, a belt, and a gun, and they don’t have the money to buy them,” says Padgett. “We lend them what they need to get started. Consequently, they’re intensely loyal to us.”

The credit union never takes that loyalty for granted, and it does outreach at least once a week. This includes holding an “In and Out” day at a precinct office where credit union staff partner with the LAPD’s labor union to provide burgers from a popular local chain while making loans, opening accounts, and answering questions. The credit union also runs retirement seminars and supports a memorial fund. “Our role is to be a resource at every stage of their lives and to meet all of their financial needs whether they’re buying a house, putting a child through college, or buying the car of their dreams,” says Carol Martin, the credit union’s senior vice president of member relations.

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As Los Angeles Police Federal membership also includes civilian employees and family members of LAPD staff, the credit union recognizes it can’t make assumptions about member needs. To ensure a good understanding, the credit union uses Harland’s Touché Analyzer from Harland Financial Solutions, Lake Mary, Fla., a marketing customer information file tool it optimizes by adding ServiStar sales and service training from Atlanta-based MNA Consulting. “Touché is an excellent tool, but additional training is really helping our staff get the most out of it,” says Manny Padilla, vice president of marketing for the credit union. “Now a teller, a loan officer, or a service rep helping one of our members can easily review the products and services the member already has with us and uncover new opportunities to serve them better.” An awareness of member needs and preferences means the credit union is cautious about excessive direct marketing and outbound calling. “Our members like anonymity, and they’re wary of anything that seems to impinge on their privacy,” says Padilla. “We are very judicious in how we market to them and have typically limited our phone programs.” One exception was personal calls made after the IndyMac bank failure in the summer of 2008. “We called our high-deposit members—most of whom were baby boomers—to assure them of the safety of their deposits,” says Padgett. “Those calls resulted in a $10 million increase in deposits by members who felt that we were a safer place for them to keep their money.” Martin cautions relationships are only part of the story. “Friendly, supportive staff are critical,” he notes. “But our members are also relying on us to be professionals who understand financial issues and can be effective advocates for them. We have strong training programs and have made an ongoing effort to create internal experts in a variety of areas to ensure our ability to be true advocates.”

Loyalty even if they leave Many of Los Angeles Police Federal members retire from the force quite young and may leave California. But the credit union has found effective ways to retain them as members, no matter what their zip code. Robust online services are a draw for many. Members can do online banking and bill pay, apply

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for loans, make deposits, and use a variety of online calculators. A recent Web site upgrade streamlined the site and made it easier for members to find needed information. The credit union’s electronically based Performance Checking product is also extremely popular. “We basically looked at what it costs to perform services face-to-face vs. electronically and created a product that rewarded members for using electronic services,” says Padgett. “They get high dividend rates and nocost ATMs anywhere they choose, with no minimum balance.” The credit union reimburses ATM fees when members use machines outside its network. The recent addition of EZ-Deposit, a remote deposit service in which members can use their personal computers or telephones to make deposits, combined with Performance Checking, allows Los Angeles Police Federal to serve members anytime and from any location.

Custom financial expertise Because Los Angeles Police Federal members tend to retire at a younger age than most people and because of the rigors of their jobs, they are usually in good physical health. “They’re definitely not going quietly into the sunset,” says Martin. “Many of our members are very active and fit, and they expect to stay that way longer than other generations might have. They’re going into second careers, they’re still buying ‘toys,’ they’re traveling, and they want the resources to support those choices.” “We don’t tend to segment our products by age. We’ve found that what’s good for someone who’s 20 is often also good for someone who’s 40 or 60,” says Padgett. “Our baby boomer members aren’t changing their buying and spending habits. They’ll continue to live the way they’ve always lived unless there’s a physical impairment.” Although many Los Angeles Police Federal members don’t need to worry about their basic retirement needs, the credit union has found they still are interested in investment and financial planning services. “We partner with CFS (CUSO Financial Services, San Diego) to ensure we can offer our members the

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expertise they need to make smart financial planning decisions,” says Padilla. “We’re extremely conscious of the position of trust we have with our members and are very selective about which partners we bring in to work with them.” LAPD implemented a Deferred Retirement Option Plan (DROP) program about four years ago to foster retention. Participants earn additional retirement dollars, administered by the city until retirement.

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As the first participants in DROP have begun to retire, management expects that this partnership will become more valuable to the credit union. “At retirement they can keep the funds with the city’s programs or invest it elsewhere,” says Padgett. “We have actively reached out to these members and invited them to learn how we can help them to optimize these dollars. We expect to have growing interest in these services.”

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4 D Neighborhood Credit Union:

It’s All About the Relationships

Deep in the heart of Texas, Neighborhood Credit Union is working to build partnerships with members and deliver on its promise of “Building Relationships in Your Neighborhood.” A key relationship target is baby boomers.

“About 40% of our members fall into this category, and it’s a segment that’s really growing to be an important part of our business,” says Carolyn Jordan, senior vice president of retail operations at the Dallasbased credit union. “They’re loyal—not rate chasers— and they’re usually driven by value instead of cost.”

They’re also in need of a true financial services partner. “A substantial number aren’t fully prepared for retirement, and they have excessive debt. It’s a volatile combination, and we can help to address it,” says Jordan.

Neighborhood CU at a Glance • Assets: $251 million • Members: 29,596 • Baby boomer members: 12,134 (41%) • Average products/services per member: 2.36 for baby boomers; 2.10 overall • CU’s deposit and loan accounts held by baby boomers: 43% of deposits, 46% of loans • Services: Retirement planning, mutual funds, investing, educational funding, estate planning, long-term health care, IRA/TSA/401(k). • Web site: myncu.com

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In-house financial services

Jordan believes offering a wide range of services is a key way to provide that help and to position Neighborhood for the future. “Some of our investment services— such as trust services—are a loss leader, but we know we need them to drive future growth,” she says.

The credit union currently offers trust services and financial investment resources, and can provide mutual funds, annuities, and insurance products including long-term care. They also have an individual retirement account specialist on staff. All investment staff are in-house with back office support provided by CUNA Mutual Group, Madison, Wis. “We used to deliver these services with outside staff, but that wasn’t a good fit for our members. They wanted to work with someone who was part of our credit union,” says Jordan. “Given the huge future potential for wealth transfer to this segment, we decided it was to our advantage to bring the services in-house, which we did about four years ago.” Neighborhood has a member services representative at each branch who takes care of both lobby services and investment planning. “This has worked very well for us. The reps have a chance to dive in and get to know members—sometimes before the member

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even really knows they have a need the rep can help them meet,” says Jordan. “The discussion can start with something like increasing savings and decreasing debt, and over time it can turn into a discussion about investments and retirement. There’s a right time for each of these conversations, and having internal staff ready to address these issues gives us a personal connection and a better way to meet members’ overall needs.” Paying for these services and staff was a concern at the branch level and one Neighborhood addresses by splitting salaries. Most of the cost is an operational expense for the branch with a portion covered by the investment arm, Neighborhood Financial Services. “These services are important to the long-term growth and stability of the entire credit union, so it made sense to support branch efforts,” Jordan explains. “The rep reports to the branch manager with a ‘dotted line’ connection to the vice president of Neighborhood Financial Services.” Tellers play a critical role, too. “We provide extensive training to help all front-line staff understand our product offerings and look for opportunities to expand our member relationship,” says Jordan. Jordan knows traditional credit union services are also important to this target. “They’re still borrowing money and taking out home equity loans,” she notes. “These are all areas where our reputation for great rates has proved to be very helpful. In fact, the credit union has gained national recognition for some of its products and was recently chosen by NBC’s “Today Show” as a ‘Best Bank for Boomers’ for its Advantage Checking account. (To see a clip, go to myncu.com/home/che.) Neighborhood is always looking for ways to experiment with new service offerings. For example, it currently offers reverse mortgages through a third-party relationship but hasn’t had much response to these to date. The credit union has created some reward-oriented programs designed to appeal to the baby boomer generation. Advantage 50+ Checking comes with accidental death and dismemberment coverage, a free trip, travel service benefits, and health screening and discounts. The Neighborhood Rewards Program is a pricing program that waives fees for different services once a member meets certain deposit/loan levels.

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Reach out through all channels Neighborhood has found its baby boomer members are quite tech savvy but still rely on traditional communication tools. “They’re high-tech and high-touch,” says Jordan. “Often they’ll use online resources to gather information and come in once they’re ready to move forward on something.” Although the credit union doesn’t promote products specifically to baby boomers, some—such as investment services—are naturally marketed to this group because they’re more likely to control the asset levels appropriate to this product offering. The credit union uses the iNTEGRATOR marketing customer information file (MCIF) tool from Raddon Financial Group, Henderson, Nev. It also works with the Raddon CEO Strategies Group, which provides semiannual reports that integrate and analyze its member database and credit union financial information. “These resources, combined with a variety of publicly available data, allow us to create an extremely accurate member snapshot and help us uncover member needs and opportunities,” maintains Jordan. The credit union’s newsletter includes an article from the investment staff, and seminars on investment and retirement topics are popular—especially when staff make reminder phone calls to attendees in the days leading up to the seminars. “A New Day Dawning” is a collateral tool that provides members with information on retirement and is available to all members. Baby boomer members use and appreciate a robust online system. Members can pay bills, apply for all loan types—including mortgages—open a deposit account, fund a share certificate, or transfer funds between accounts. CUNA Mutual’s Retirement Road Test is incorporated into the site and has proven to be a popular tool for doing a preliminary check of retirement readiness. “The member can get a full report of their retirement status and has the option to connect with one of our investment representatives if they want,” says Jordan.

Make your relationship a family affair Although many credit unions are focusing their efforts on generation Y, Jordan believes credit unions

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are selling themselves short if they don’t value their baby boomers. “This group hasn’t stopped borrowing and hasn’t stopped buying, and there’s the opportunity of a wealth transfer from their parents,” she says. “Plus, if you can make this group happy, there’s huge potential to serve their children.” To reach out to baby boomers’ children—and, indirectly, the baby boomers themselves—Neighborhood

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has launched youth-friendly savings programs. Its Smart CD pays 10% interest and is targeted to members age 12 to 17. The credit union also offers a prizebased savings account program. Each time members save $25, they’re entered in a contest to win prizes awarded by random drawings. (To learn more about this type of program, go to filene.org/home/innovation/i3ideas/buildwealth/15)

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5 F Suncoast Schools Federal Credit Union:

Find Innovative Ways To Connect with Members

Founded in 1934 to serve educators in Hillsborough County, Fla., Suncoast Schools Federal Credit Union, Tampa, long has been known as an innovator in delivering financial services. In 1987, Suncoast Schools Federal founded what since has become MEMBERS Trust Co. FSB, Tampa., a federal thrift institution chartered by the Office of Thrift Supervision, which now helps meet the trust and investment needs of members across the U.S. “Roughly 30% of our members are baby boomers, and as our membership ages they’re looking for a wider variety of financial services,” says Melva McKay-Bass, senior vice president of member services at Suncoast Schools Federal. “We’ve responded to their growing needs with additional products and services, but it does take time and effort to change

Suncoast Schools FCU at a Glance • Assets: $6.2 billion

perceptions of what members can expect from their credit union.”

Suncoast Schools Federal’s efforts are being rewarded. “Our annual member surveys show this member segment is starting to have a better understanding of our offerings,” says Patti Barrow, Suncoast Schools Federal’s vice president of marketing. “On average, this segment has a higher number of accounts with us [3.18 for baby boomer members versus 2.83 for members overall], and more than 70% of the members who use our trust and investment services fall into this group.”

Make meaningful connections

• Members: 461,246 • Baby boomer members: 141,348 (30%) • Average products/services per member: 3.18 for baby boomers; 2.83 overall • CU’s deposit and loan dollars held by baby boomers: $1.9 billion in deposits, $2.1 billion in loans. • Services: Retirement planning, investing, educational funding, estate planning, wealth transfer, long-term health care, IRAs and 403(b)(7), online brokerage, trust services. • Web site: suncoastfcu.org

Suncoast Schools Federal uses a variety of channels to keep in touch with members. The credit union administers one of the retirement options for 403(b) (7) plans—which are similar to 401(k) programs)— for 11 local public school districts and three community colleges, a service that links the Suncoast Schools Federal name to retirement resources. It also goes on-site at schools, select employee groups (SEG), and assisted living facilities to deliver financial workshops and seminars. Popular topics have included estate planning, wills and trusts, annuities, and retirement income planning. Once members are aware of the breadth of finan-

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cial planning services that Suncoast Schools Federal offers, member financial representatives are available to help them create their own financial plans. “Our reps are strategically located in our local branches to keep them top-of-mind and to give members ready access to their services,” says McKay-Bass. “We encourage our reps to build long-term relationships. At a minimum, they sit down for an annual review to make sure members are on target in meeting their financial goals.” “Our reps are extremely skilled and experienced. They do an excellent job of balancing goals and risk tolerance, age and time factors, and maintaining an ongoing plan that makes sense for our members, especially as members approach their retirement years,” says Tom Dorety, credit union president/CEO and Credit Union National Association chairman. “Their role has increased in importance as members deal with the economic realities of the recent past— the dramatic declines in property values and changes in the stock market.” Well-trained branch staff are also critical. “Our frontline people are a huge factor in maintaining good relationships with members. We appreciate this and hire, train, and incent accordingly,” says McKay-Bass. “We rely on our team to uncover needs, gather member feedback, and get the word out about our resources.” Suncoast Schools Federal maintains a marketing customer information file (MCIF) on all members and uses the information to find logical intersections between available services, products, and member needs. Then it markets these products and services accordingly. “We have newsletters—including one specifically targeted to members 55-plus geared to estate planning and retirement issues—and we make extensive use of targeted direct mail and e-mails,” says Barrow. “Once members hit age 47 and meet certain other criteria, they’re automatically part of an ongoing mailing matrix. This is delivered through CUNA Mutual Insurance Society and sends them information about long-term care insurance on a regular basis.” The credit union also makes strategic use of mass media, including print and television, and has found newspapers to be a good choice for promoting share

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certificates, typically in areas with a large retirementage population. Suncoast Schools Federal recognizes many members prefer a hands-off approach to their finances, especially baby boomers. The credit union has found this age group more likely than the average member to use a variety of online resources including e-banking, e-statements, and online bill pay. This group also is more likely to provide their e-mail address to the credit union. Suncoast Schools Federal’s Web site includes “Retirement Road Test” from CUNA Brokerage Services, Madison, Wis. It provides an easy way for members to determine their retirement readiness and also offers a variety of calculators to evaluate everything from retirement savings to college planning to insurance needs. Suncoast Schools Federal believes in making meaningful connections instead of inundating members with unwanted solicitations. “We don’t make cold calls to follow up on our marketing materials, but we do warm-calling to follow up on member requests and referrals,” says McKay-Bass.

Part of something good As the credit union strives to offer the right mix of financial products and services, Suncoast Schools Federal doesn’t forget the core values that set credit unions apart. “In addition to great rates and services, we believe members want to do business with a company committed to the good of the larger community,” says Barrow. The credit union makes a continuing commitment of time and resources to address family and health concerns—issues paramount for all members but especially baby boomers. In 1998, Suncoast Schools Federal established the Suncoast for Kids Foundation, which provides funding for initiatives related to health and education for children. Since its inception, the foundation has raised more than $4.8 million. Nonmember ATM charges fund health initiatives and its Suncoast for Schools Rewards Check Card program funds education initiatives. “The landscape is changing rapidly in our area, and there are no state banks headquartered here,” says Dorety. “This means there’s no local decision making and less of an emphasis on community at other institutions. We’ve chosen to make our community a priority.”

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


6 T Sunmark Federal Credit Union:

Broaden Your Financial Services Offerings

Today baby boomers need your credit union even more than earlier in their lives because now they must plan for their future. They typically don’t have traditional safety nets—pensions and the promise of health care after retirement—and many aren’t financially savvy, which is especially problematic given the increasing complexity and breadth of financial planning needs. “Many people in this segment have never had a budget or a spending plan,” says Sue Siegel, senior vice president of marketing and branch operations for Sunmark Federal Credit Union, Latham, N.Y. “They grew up in a time where they didn’t postpone doing or buying things. And if they don’t know how to budget for the present, it’s even more difficult for them to learn how to create a contingency plan for the future.”

Sunmark FCU at a Glance • Assets: $436 million

Siegel believes credit unions have an ideal opportunity to help this market segment. “Preparing for your future is all about trust. It’s a valuable commodity and not one people bestow lightly,” she says. “With the financial upheaval in the marketplace, credit unions may be very well-positioned to play a growing role for members if we can communicate and deliver on credit unions’ traditional role of people helping people.”

Build relationships Organizationally, you have to decide what role you want to play in your members’ lives, according to Siegel. “If you truly want to create relationships, you’re obligated to provide the services and advice your members are critically in need of,” she says.

• Members: 48,889 • Baby boomer members: 19,067 (39% of membership) • Average products/services per member: 6 products for baby boomers, 4 services for all members • CU’s deposit and loan accounts held by baby boomers: 44% • Services: Retirement planning, investing, educational funding, estate planning, long-term health care, online brokerage, IRAs. • Web site: sunmarkfcu.org

Siegel recognizes member perceptions can make it challenging to break into financial planning services. “Most people think of credit unions as a place to get a great rate on a loan or a deposit account,” she explains. They use us to manage their expenses and go elsewhere for their investment needs. Getting them to come to us with their investment portfolio will often mean changing their understanding of what we can offer and ending a relationship elsewhere. Frankly, that’s not so easy to do.” Sunmark Federal has had success partnering with

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BEST PRACTICES

The Rewards of Baby Boomer Partnerships


centers of influence. “We reach out to business owners and professionals such as accountants and attorneys, and have found this to be an excellent way to connect with people who need financial planning assistance,” says Siegel. “We’re also exploring opportunities to co-sponsor events with them, which is a great way to increase our visibility among those interested in investment and insurance services.” But she cautions that the decision to offer these services isn’t a risk-free proposition. “If you choose to enter this arena, you must do an exemplary job,” she says. “You must be able to offer the level of service and sophistication members expect from any of the big players.” There are a number of ways to gain the expertise you need. “Contact a local credit union peer, sign a noncompete agreement relative to the investment services you want to learn about, and explore opportunities to partner or outsource the service to tap into the expertise of others,” says Siegel. “It allows you to address the needs of your members in a timely fashion, assess interest in these services, and determine if and when these activities might be successfully brought in-house.” Once your credit union is offering financial planning services, get the word out through every possible channel—especially face-to-face. “We have a very robust staff training program. Our employees are skilled at listening and identifying opportunities based on member needs and concerns,” says Siegel. “Whether the member is talking to a loan officer or a teller, our staff has the expertise to understand when it makes sense to connect the member to one of our financial services specialists.”

Uncover member needs Although every baby boomer member either is or should be thinking about investments and retirement

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planning, their other financial needs can vary widely. “We try to address member needs based on their stage of life rather than their age,” says Siegel. “A 43-yearold with an infant might have more in common with a 23-year-old whose child is the same age than with another 43-year-old who’s sending kids to college.” To uncover member needs, Sunmark Federal uses FocalPoint from The Marketing Mix, Manchester, N.H. and P$ycle from Claritas, San Diego.—tools that segment members using demographic data such as income, age, presence of children, financial product use, and home ownership. The credit union uses the data to develop targeted marketing pieces aimed at life stage rather than age. “Our baby boomer members aren’t as old at 60 as their grandparents were,” says Siegel. “They might not be planning to retire anytime soon, or, if they are retiring from one job, they often have a second career in mind. Some of them are coming to us for traditional services like a car loan. Others are taking out a home equity loan to start a small business. We have opportunities with this age group that we often didn’t in the past.” Sunmark Federal has found members of every age rely on different channels to interact with the credit union. “We have people who want brick-and-mortar and people who do a lot of their account servicing by phone. Our online resources are very well used by our baby boomer population,” says Siegel. Online resources include online banking, loan applications, and access to a host of calculators that cover everything from home financing to investments to retirement. The credit union’s online tools are provided through Time Value. “Credit unions are in an excellent position to get to know members and meet their needs,” says Siegel. “They’re not just account balances. They’re individuals.”

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


7 T Visions Federal Credit Union:

Prepare for a Changing World

The world may have come crashing down for many of your baby boomer members—especially those who expected to retire in the next three to five years. Their houses likely have dropped in value, those who had investments probably have watched their value sink, and the rapid jump in health-care costs is likely to take a hefty bite out of even a fairly decent nest egg. What can a credit union do to help? “Offer a broad range of resources, help members deal with the reality of changing expectations, and, most important of

Visions FCU at a Glance • Assets: $2.1 billion • Members: 118,076 • Baby boomer members: 40,000 (about 35%)

• Average products/services per member: 3.4 per baby boomer member; 2.8 overall • CU’s deposit and loan dollars held by baby boomers: 32% of deposits, 44% of loans • Services: Retirement planning, investing, educational funding, estate planning, long-term health care, online brokerage, trust services Trust services: baby boomers constitute approximately $8.3 million (23%) Investments: baby boomers hold approximately $11.7 million (33%). • Web site: visionsfcu.org

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all, listen,” advises Frank Berrish, president/CEO of Visions Federal Credit Union, Endicott, N.Y.

One of Visions Federal’s most popular tools has been a self-service retirement center located in the main branch.

The center offers computers loaded with calculators that help members determine the nest egg needed to achieve different retirement lifestyles. Members also have access to information about credit union products and upcoming educational seminars as well as contact information for staff resources—plus coffee and support. The calculators are also available on CDs members can take home with them. Last year the credit union handed out 5,000 of them. “It’s a place for members to get ideas and for us to start the conversation about retirement,” says Berrish. “It’s an excellent way for us to highlight the variety of services we offer in a very low-key manner.”

Listen to members “We strongly believe in training our staff to really listen,” says Berrish. “We mine records for marketing opportunities, but we’re also doing a better job of hearing what our members have to say.”

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


The ability to deliver on these opportunities relies on a broad product offering, what Berrish calls a lifestyle or “womb to tomb” approach. “No member is going to have all their assets with you. National numbers say you’re lucky to get 14%. But the more products and services you do offer, the better chance you have to expand your relationship.” Visions Federal uses sales opportunity software from CoreTrac, Austin, Texas, which integrates well with its core system from Symitar, San Diego—and creates cross-selling opportunities for front-line staff. Member information is built into the system. When employees interact with a member, a pop-up appears onscreen that reminds staff about products or services that might be a good fit based on the member’s life stage. Like most credit unions, Visions Federal has found that baby boomer members still are frequent users of traditional products such as vehicle and home equity loans. In addition, a growing number of baby boomers turn to Visions Federal for nontraditional products such as trust services. “It’s a challenge to get the word out, so you have to remain focused and keep reinforcing the message. Most members do not know we offer a broad crosssection of investment services and retirement products,” Berrish explains. “But once they do know, they might be more likely to come to us, either because they trust their credit union or because they haven’t built up a lot of assets and feel a lot more comfortable approaching us for help in these areas than going to another financial services resource.” Visions Federal has found it fills a niche for members who have less than $100,000 accumulated toward retirement, while other financial institutions might prefer to deal with clients who have at least a quartermillion dollars on account. But offering these services requires a large commitment of time and money, and payback can take years. “There’s a lot of spade work before you start to see any results,” says Berrish. “These are complicated services, and people are very conscious of the expertise needed to deliver them well. It’s imperative that your representatives are knowledgeable and experienced.” The credit union recently began to offer reverse mort-

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gages, and member response has been very strong. “This has become a survival option for many, and I think they’re going to continue to be very popular,” says Berrish. “We’ll have 30 or 40 people at a seminar, and 10% of them will sign up that night. Health care costs are driving a lot of changes for our members, and they’re being asked to make some hard choices. This generation has unprecedented demands on their financial assets, and we can offer products and services that give them more flexibility and control.”

Unique ways to reach out Visions Federal uses a range of channels to promote its products, services, and expertise. It holds roughly 400 educational seminars a year—40 to 80 are geared to topics such as retirement and investments—and also dedicates roughly a quarter of its member newsletter pages to these topics. The credit union offers a variety of online tools and resources. Although baby boomers are frequent users of online billpay and banking, some of the other tools haven’t proven to be as popular. “We have an aggregator tool available, but of 100,000 members, we’re seeing maybe 200 to 300 using these,” says Berrish. Although members who fall into the baby boomer category typically have done business at the credit union for a long time, there are exceptions. “Our trust officer is extremely creative about going after new business. He’s been sponsoring cultural events and art events, and reaching out to new people,” says Berrish. “About half of the $39 million that we currently have in trust funds has actually come in through new accounts.” That same trust officer also has successfully tapped into the credit union’s wellestablished member business area to build personal accounts. “We added $4 million through this route,” Berrish adds. As someone who’s committed to truly meeting member needs, not just selling them products, Berrish always is looking for new ways to connect with members. A recent addition was the Senior Good Life Expo. “I borrowed this idea from a group in Hawaii. We had representatives from our credit union, plus AARP, travel companies, health groups, cancer information resources, and real-estate agents. It was all about educating and helping our members.”

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


8 A Mountain America Credit Union:

Key In on Cross-Selling Products and Services

Although baby boomers don’t make up the majority of West Jordan, Utah-based Mountain America Credit Union’s membership—about 79,000 of more than 311,000 members are boomers—they’re a vital segment.

“We’re very aware of their presence and their influence on the credit union’s success,” says Christopher Kennedy, research analyst at Mountain America. “Our data show even though they’re not the majority of our credit union’s population, they pay the freight for the majority of what we’re doing.”

Mountain America CU at a Glance • Assets $2.8 billion • Branches: 62 • Members: 311,000 • Baby boomer members: 79,000 • Average products/services per member: About 3 traditional products per boomer household (with online products added, about 5); 2.5 overall • CU’s deposit and loan accounts held by baby boomers: $830 million in deposits; $852 million in loans—about one-third of all deposits and loans • Services: Retirement and estate planning, investing, educational funding, wealth management, long-term health care, online brokerage, IRAs. • Web site: www.macu.com

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Member surveys show more than 60% of baby boomers look at Mountain America as their primary financial institution, while in the membership as a whole it’s closer to 50%. They’re a little more loyal than the overall membership, too. About 50% of baby boomers describe themselves as extremely loyal, as opposed to 45% of the overall membership.

The credit union tracks use of its traditional products, and baby boomers use almost three per household, while in member households overall it’s 2.5. “With a large membership like ours, that half-product figure represents substantial business,” Kennedy notes. “If you add in products we don’t track, such as Web-only options like home banking and bill payment, or shared branching, it’s probably closer to five products per boomer household.” Baby boomers account for a disproportionate share of the credit union’s loans and deposits as well. Around one-fourth of members are baby boomers, but they hold roughly one-third of Mountain America’s loans and deposits. They also use online products and more traditional ones equally. “The stereotype is boomers are averse to technology, but they use our online products as much as any other members do,” says Kennedy.

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


“They’ve been with us a long time—more than 10 years for most of them—which gives us interesting opportunities,” he says. “They already use a lot of our products and services, but we need to key in on them and cross-sell others, because they’re a highly stable group.” The return on investment for sales to baby boomers tends to be high, Kennedy explains, because they’ll likely be longtime users of the products.

Competitive products and regular promotion Baby boomers “want and need certain products and services,” Kennedy says. “For this age group, borrowing is more discretionary. Most are homeowners— more than 75% in our membership—and they usually borrow for things such as a new car, a motor home, a second home, or recreational property. We have to make sure we offer those things at a very competitive position and promote them regularly because our market is highly competitive.” Deposits also are very important to baby boomers, and Mountain America recently launched a product aimed squarely at them. “We created money market checking for them,” says Kennedy. “We found through research that they wanted it. It’s more liquid than a regular money market account, which usually has restrictions on how often people can make withdrawals. This one has unlimited checks, and the rates are significantly higher than for regular savings accounts.” Boomers look to the credit union for investment products as well, and Mountain America is ready for them. “We’ve developed an investment arm of the organization, and we offer a full range of products including mutual funds, stocks and bonds, annuities, individual retirement accounts, and 401(k) plans,” Kennedy explains. He notes Mountain America offers education, retirement, and estate planning. In addition, the credit union provides an online, interactive planning assistant that lets members start the process for opening these products. Third parties facilitate the process for investment services and some other products. The credit union partners with LPL Financial (locations in Boston, San Diego, and Charlotte, N.C.) for investment services and MEMBERS Trust Co., Tampa, Fla., for trust services, and it uses the Department of Housing and Urban Development’s reverse mortgage products. It offers shared branching through CU

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Service Center, Rohnert Park, Calif. Educational seminars spread the word—while benefitting baby boomers and other members. “Many of our after-hours seminars appeal to boomers,” says Jodi Jones, Mountain America’s public relations officer. “We cover everything from identity theft to elder abuse to help seniors avoid scams,” she says. “The reverse mortgage session is quite popular with this group. We also staff a table at an annual senior expo, and have trust, reverse mortgage, and investment officers there to answer questions.”

Segment by lifestyle Mountain America uses the iNTEGRATOR MCIF from Raddon Financial Group, Henderson, Nev., to examine membership demographics and track preferences and habits. “It helps us better understand their needs,” Kennedy says. “When we’re looking at boomers, it helps us home in on what products and services might be important to them.” The credit union segments members by lifestyle characteristics, and baby boomers are part of three of the more lucrative ones: the upscale, middle market, and middle-income depositor segments. “The upscale group is members making more than $100,000 a year, who are 45 or older,” Kennedy explains. “They likely use all of our services more than the average member.” The middle-income depositors are typically 55 or older, with incomes of $40,000 to $100,000 a year. “They’re homeowners and look more at deposit products—investments, money markets, CDs,” he says. “They often don’t want loans for used cars. They like new ones. They use credit cards but pay off their balances each month. And they like rewards cards.” A software product from Solonis, Phoenix, helps Mountain America use the MCIF-generated information to serve baby boomer members. “When a member comes up to a member services representative, pop-up screens give a summary of preferred products for that member segment and which ones the member already has, so the rep can offer others. They might say, ‘Were you aware that we have loans for a second home, or a special CD promotion that might be of interest to you?’” says Kennedy. The credit union holds sales training for staff and shares

BEST PRACTICES

The Rewards of Baby Boomer Partnerships


member-related data regularly. “We do a fairly indepth membership survey every two years,” Kennedy notes. “We always meet with our branch managers about the results to talk about how we can best serve members, what their preferences are, and how we can gauge their loyalty.”

Speak their language When communicating with baby boomers, Kennedy believes you need to give them the respect they’ve earned. “This is a generation that, back in the ’60s, wanted to do things differently from their parents,” he says. “We have this rebellious generation raising a new

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one that’s maybe a little more disciplined—they’ve seen a lot of financial upheaval and are a little more wary than this group. But this group has certain demands,” he adds. Baby boomers don’t see themselves as old. “We flavor our messages to them around the concept that they have plenty of opportunities, they still have a lot of life, energy, and things they want to accomplish,” says Kennedy. Above all, he says, don’t discount them. “There’s a tendency to chase gen X and try to figure out what’s going on with gen Y. But don’t forget the boomers.”

BEST PRACTICES

The Rewards of Baby Boomer Partnerships

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