A WAKE UP CALL TO BANKS ABOUT THEIR OLDER DEPOSITORS Part 2 OF A 3 Part Series

Maturing consumers are the wealthiest; best educated and most sophisticated purchasers of any age group. Those over age 50 now control more than 70% of the total net worth of American households. They have more discretionary income than any other age group. The data shows that discretionary income rises and reaches its peak in the fifty-five to sixty-four-age bracket. Also people age 65 can expect to live 16 – 19 years longer.

Maturing consumers own 80% of all money in savings and loan associations, but they do not hold the same feelings of loyalty to their bank, or to any brand for that matter, than previous generations once did. And this trend is getting stronger.

Maturing consumers are, quite simply, the most significant market for financial products and services. This group deserves some special attention. But banks have to understand what is important to them first.

Caring for the elderly touches virtually every family both emotionally and financially. It usually involves at least two generations and sometimes three. The personal and financial events that arise are often the most difficult a family ever faces. Just one year of long term care costs can exceed twice the annual tuition at America’s most prestigious colleges. Despite this harsh reality, families are far more likely to plan for college than for long term care.

By providing quality senior market products and services such as long-term care insurance, reverse mortgages, and annuities that are suitable for the older depositor, including new annuity products that are specifically designed to pay for long-term care costs, a bank, can build closer relationships with maturing multi-generational families.

But banks are not getting it! They are standing by dumbly staring at the growing parade of “lone rangers” who are aggressively pursuing bank customers to sell them the above-mentioned products at the kitchen table. These so-called “independent brokers” typically work from a home office, with none of the accountability that bank employees have. As numerous articles in major newspapers and other publications have illustrated, these “lone rangers” are a rogue network of predators who will sell the older consumer whatever pays them the highest commission, whether the product is suitable for the consumer or not.

With the aging baby boomers and their often very elderly parents representing the lion’s share of deposits in most banks, why don’t banks wake up and pay more attention to these critical customer segments.

If banks don’t get their act together soon they will continue to lose deposits. If they make the effort to implement a well designed, comprehensive program of educating their older customers about the importance of planning for the potentially catastrophic costs of care in old age, they will not only preserve their customer base but will see a substantial increase in attractive new depositors resulting in improved profitability. In fact, the rapidly shifting financial services marketplace is likely to penalize those banks that are not well positioned to address a broad range of planning issues faced by the bank’s maturing depositors.