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Boomers are taking control of their finances – unless banks demonstrate how their products help, they will become a casualty of newly engaged boomers looking for change.

For most boomers, the recession has not had a major impact on their retirement hopes – because their retirement hopes were always modest. The recession and stock market losses may have forced a few baby boomers, particularly moderately wealthy boomers, to adjust their image of retirement. However, almost three-quarters of baby boomers have less than $100,000 in investable assets. For these “mass market” boomers, the stereotypical pre-recession image of retirement was always far outside of their financial means. Mass market boomers have modest retirement expectations: they will reduce their living expenses, continue to work part-time, and travel very little.

But before mass market boomers consider even this modest retirement, they must overcome significant financial hurdles that threaten their current financial security. The Financial Services Division surveyed 1,250 baby boomers to understand the impact of the recession on their financial decisions and behaviors. The recession has hit these boomers particularly hard, with over two-thirds of them experiencing a major financial event such as a job loss, a major health expense, or a major expense for a child.

These events have prompted many boomers to take control of their finances, but they have a difficult path ahead of them with little support. With few financial plans and relatively weak financial knowledge, these boomers are basing their financial decisions on their gut. When they change their financial situation, they often change their bank as well. And satisfaction with bank characteristics, the usual suspect, isn’t to blame – boomers moving deposits away from their bank are just as satisfied with their bank as those staying put. Banks are being lumped in with boomers’ current financial distress and are poised to lose significant boomer deposits.

Unless banks act, they will become a casualty of newly engaged boomers looking for change. However, there is an opportunity for banks to not only retain but also to grow boomer relationships. Successful banks leverage boomer engagement by clearly demonstrating how their products and services help boomers meet their financial priorities. A strategy several banks have adopted to achieve this is to develop simple, inexpensive products that address basic financial needs, as exemplified by two of the products profiled in the Council’s Top Consumer Banking Product Trends ^[1].

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[1] Top Consumer Banking Product Trends: https://cfc.executiveboard.com/Public/Default.aspx