Eight points to assess your bank’s boomer plan
By John M. Trice, “boomer” and market president, Frost National Bank, Corpus Christi, Tex.
While we bankers fret about technology, shrinking margins, and the
realities of preserving market share, there is a societal shift under
way that many of us are aware of, but few of us are paying much
attention to. Subtle now, this shift will become more pronounced over
the next ten years. It will not only challenge our industry, but will
also impact countless sectors of the U.S. economy. The shift I refer to
is the boom—no make that the sonic boom—that the baby boomers will
create as they plan for, and move towards, those celebrated retirement
years.
The “baby boom” generation is most commonly defined as individuals born
between 1946 and 1964. Demographers have dubbed it the single greatest
concentration of births that the world has ever known.
We bankers are sticking our heads in the sand if we think that the
boomers will not somehow change the banking industry we know today. As
the boomers move into the next segment of their lives, no line of
business in which we serve them will be immune.
So, how do we bankers prepare for the next milestone in the life of the
baby boomers? More importantly, how do we position our banks to
anticipate their changing needs, build and preserve their
relationships, and bring value to their lives? And equally as
important, how do we preserve our bottom line as the boomers move into
the promised years and begin to see their money and our industry
differently?
Here are eight-boomer specific ideas to consider as your bank begins to
assess what impact the boomers will have on your funding base, your
products, and the shape of your organization in the not so distant
future.
“Teach me about my money” This is the Holy Grail for all boomers. It is
the topic of water cooler conversation, keeps boomers up at night, and
becomes more poignant as each year passes. With 60 being the new 40,
boomers are looking forward to active and fulfilled lives after they
leave the work place. This will require money and, most importantly,
cash flow. Boomers may have shunned worldly possessions as young
adults, but have more than made up for this by becoming huge consumers
of everything from iPods to sports cars. Boomers will need cash, and
lots of it, to maintain their lifestyles.
Ironically, preliminary studies have shown that many boomer-age
individuals—especially those not yet 50—do not have a defined plan, and
are not saving for their retirement years. This lack of planning could
be a last opportunity for our industry to compete on a level playing
field with the brokerage houses that are constantly chipping away at
our funding source. We bankers control huge databases full of
boomer-age clients. To keep these relationships, we must begin to send
a consistent “high decibel” message that there will be a sequel to
those “peace and love” years. Only this time good financial planning,
not Karma, will get you on the Magic Bus.
Bankers who spend the time and resources to help boomers understand the
dynamics of investing and preserving money will endear themselves to
their boomer clients for the rest of their lives. At this very moment,
those clients are begging for good financial advice and ways to grow
their money, or the assets they suddenly inherit.
If you don’t think the stakes are high in this game, just look at what
Fidelity is doing with ex-Beatle Paul McCartney. By aligning itself
with a true icon of the boomer generation, and speaking through
McCartney directly to the souls of boomer-aged prospects, Fidelity is
hoping to segregate itself from other fund peddlers. It is betting that
money can buy you love, while fattening its bottom line. Bankers cannot
ignore this volley.
“Never call me a senior” As an active 54 year-old surfer, I will be
eligible for the moniker of “senior” this year. Truthfully, I would
rather spend an entire week at the proctologist than be called a
“senior.” If I am typical of my generation, I plan to go full steam
ahead into the next 30-years of my life. The moniker “senior” does not
fit into the mental picture I have of myself.
Bankers, who realize that calling boomers “seniors” is
counterproductive, will be the first to endear themselves to the boomer
generation. Seniors were our parents, courtly WWII veterans who prided
themselves on their entitlement to the rocking chair years. It does not
speak to my generation who will be scaling the Andes or working with
the Peace Corps when our professional lives come to a close. I may have
achieved senior status, but please do not remind me of it with your
product line moniker and weekly propaganda.
“Talk to me” If you want to make a difference with boomers, talk to
them. If you must have automated phone technology, give them an
opportunity early in the process to talk to a real person. Citibank has
laid down the challenge to all of us with their “Dial 1 for a real
person” message. I cannot tell you how frustrating it is to hold the
phone while a bank’s automated phone system goes into
computer-generated hell. While small banks seem to have the edge here,
big banks need to explore ways to get real phone numbers—of real
people—into the hands of their boomer customers.
As boomers see their wealth increase in the coming years, they will
become less patient with wasted phone time and more receptive to
contact with real people. Boomers may be the last generation of
customers that really want to talk to us without immediately defaulting
to e-mail. Smart bankers will strengthen their communication
opportunities with boomers. Put every customer contact person’s phone
number on you website. Talk to boomers if you want to keep an edge.
Take a hard look at your online technology In a direct contrast to
wanting to talk to a real person, boomers will demand first-rate online
technology. If all goes as planned, a great many boomers will be mobile
in their promised years and will bank with us as they want—and from
where they want. They will want technology that is safe, reliable, and
fast.
Boomers will demand meaningful links to their entire portfolios. As
banks become better at integrated selling, put the boomer’s banking,
investment, and insurance products together on their own home page.
Pepper this home page with meaningful links to financial advice,
health, and retirement issues. When they need to talk to their banker,
let them talk to you over the computer—with live video. Get the folks
in IT to affix a camera to every customer-contact computer in the bank.
Let your boomer customers dial in over their computer and see who they
are talking to. This will set the bar higher for your front-line
personnel, while keeping your technology personal.
Become an expert at small business
Recent surveys have shown that many boomers will retire and then start
their own business. They will be looking to banks for advice, loans,
and other business services. Will you have enough trained staff to help
guide this process? Keep in mind that these clients will be seasoned
veterans of multiple industries. They will eat a fresh-faced business
banker alive if that banker is unprepared.
Bankers who invest in strengthening their small business lending, and
communicate this effectively to their boomer clients will benefit
greatly as boomers become entrepreneurs. In the eyes of boomers, small
business lending should be face to face and personal. Don’t give
boomers a form and then credit-score it. They will see right through
this process. Remember, if you are on top of small business lending,
seeing a boomer’s balance sheet is a great tool for cross-selling your
products and services. Show them you know business and their
relationship is yours for the asking.
Prepare the next generation Many boomers will leave the workforce in
droves over the next five to ten years. Several of my boomer friends
will leave before they turn 60 if the economy treats their investments
favorably.
To fully understand the magnitude of this, have your HR department
conduct a demographic census of your staff and match the results with
hierarchical job titles. This should give you an insight as to what
your organization will look like five years from now. While technology
may replace some of the boomers, our huge branch networks will keep us
in the people business for many years to come.
Will your younger staff be prepared to accept the boomer’s roles? Smart
bankers will begin to strengthen their mentoring programs while the
boomers are still in their prime. Let boomers pass on their skills and
job knowledge to the next generation while there is the luxury of time.
Banking is a unique industry and must be learned through practical
application. Simultaneously, be on the lookout for good young talent.
Bankers who are relentless in their pursuit of talent will fair much
better when the exodus begins.
“Can you spare a job?”
Those boomers who do want to stay gainfully employed into their 70s
will not want the shackles of a full-time job. Many will opt for
lower-tier jobs on a part-time basis.
Banks who begin to understand this and reengineer their thinking about
traditional job structure will suffer less as the boomers begin to
leave the work force. Banks who embrace job sharing and flextime
employment will not only keep their organizations more balanced as the
younger talent is seasoned, but will maintain crucial intellectual and
operational talent longer. Allowing two boomer-aged loan officers to
share one job annually, for example, could meet both corporate and
personal needs. For the bank, it keeps seasoned veterans in jobs that
must be learned hands on. For the boomer, it allows them the freedom of
six months of down time.
Additionally, both win because the boomer maintains their
ever-important health insurance, while the banks loses the obligation
for vacation time and 401(k) contributions.
The elephant in the room
Much like the boomers changed the size and scope of suburbia over the
years, we bankers have been building brick and mortar facilities at a
breakneck speed. A great deal of this expansion has been fueled by the
upward mobility and purchasing power of the boomer generation. Boomers
have been conditioned to utilize our branches in a very traditional
manner—with high levels of walk-in and drive-thru traffic. Will this
continue as the boomers begin to see their lives change and become more
adept with our online technology?
As an exercise, walk into your lobby or drive-thru on any busy day and
count the number of twenty- and thirty-something customers you see. Now
count the number of boomer-aged customers in contrast. If your bank is
like most, the boomers outnumber the younger crowd.
It is sadly ironic that the “elephant in the room” that we keep
ignoring as bankers is the juxtaposition of pushing our
clients—including boomers—headlong into our online technology and
delivery systems, while continuing to build expensive brick and mortar
facilities. This becomes more poignant considering the fact that we
sell a product you cannot put in a sack and carry home like a pair of
jeans. We sell a product that is ideal for internet delivery.
The boomers may be important lifelines to our industry until we find
ways to leverage the hidden sales potential locked away in our branch
networks. As the boomers age, we must keep them coming into our
branches to not only support overhead, but to begin to experiment with
alternative products and services that we can sell. This may buy us
precious time while we try to understand just what the branch bank of
tomorrow will deliver to our customer base—if and when—they choose to
walk through our door.
There is still time… I think
With the first concentration of boomers turning 60 this year, we still
have an adequate amount of time as an industry to prepare for the next
segment of the boomer’s lives as it relates to our products and
delivery systems. Time may not be as generous when it comes to tapping
into the boomer’s psyche about preparing for retirement. Likewise,
replacing the boomers in our ranks and strengthening our small business
skills may necessitate a longer time line. At minimum, our industry
must understand that a great many of our boomer-aged clients—both
business and consumer—will face life-changing milestones in the
not-so-distant future. Will our industry be prepared to face these with
them? And, will we add value? The future of our banks and many of our
jobs may depend on it. BJ
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