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Why Treating 'Venturers' Like 'Anchoreds' Is Hazardous To Your CU

There is a retirement crisis in America. Two-thirds of the nation's 79 million baby boomers have less than $100,000 in retirement savings. Only 22% contribute to a 401(k), according to the Employee Benefit Research Institute, and 40% have next to nothing saved for this "third age," according to the National Retirement Planning Coalition.

While credit unions have claimed the mantle of trusted financial advisor to their members at other life stages, the "graying" of America has created a new imperative to provide services that can help pre-retirees through the transition to retirement. Those that do not run the risk of losing ground to banks and other financial institutions that may seem to offer a stronger destination for a member's post-retirement finances. And with the nest egg goes the member relationship.

Membership means loyalty. CUs are well-positioned to take on the often delicate role of retirement financial advisor. But only the larger ones seem to be doing so. For instance, in Texas, 63% of the top credit unions offer retirement advisory services, while only 11% of all Texas credit unions do, according to CUNA. Why aren't CU leveraging their innate advantages over banks-membership loyalty-to proactively retain the large and growing number of pre-retiree members? Part of the reason might stem from the need for additional insight into how pre-retirees view change, risk, uncertainty and expectations for retirement transition.

More often than not, retirement programs address pre-retirees with "one-size-fits-all" financial offers. While pre-retirees have many aspects in common, a recent study titled the C.U.R.E. Retirement Study, commissioned by SecurePath by Transamerica, revealed that pre-retirees have different appetites for and approaches to handling change. These preferences affect their attitudes toward retirement transition. The study identified four distinct segments-or "change personalities"-within the 50-plus age group: Venturers, Adapters, Anchored and Pursuers.

For CUs, understanding the investing dispositions and personality traits of each of these groups is integral to providing them with retirement advice.

* Venturers feel they are at their best when going through life changes and even seek out change. They feel prepared for retirement and are confident they will have enough money. An astounding 99% of this group agrees that life is in their control, with 93% admitting to being exhilarated by change. Venturers are not afraid to take investment risks, with about 44% having bought or started a business and over half rating themselves as experienced investors. This group is very knowledgeable about investment options-comfortable and adept with CDs, mutual funds, annuities and other financial vehicles.

* Adapters appreciate consistency lives and tend to handle change better as they age. More than half feel they will be able to handle the transition into retirement well, reporting that life in retirement will be within their control. Adapters look forward to retirement and feel confident they will have enough money to fund their third age. Regarding investments, Adapters tend to agree with the "nothing ventured, nothing gained" mantra. But in practice, they are more likely to make more conservative investment decisions-only 35% report a willingness to take a chance on a riskier investment. While not as financially well-informed as Venturers, Adapters are familiar with most personal savings options with 75% reporting an understanding of savings accounts, CDs and U.S. savings bonds. Many Adapters plan to continue to work during retirement and are confident that they will be able to achieve a comfortable lifestyle during their third age.

* Anchoreds resist change and seek consistency. They do not view retirement planning as easy or pleasant and many fear they won't have enough money to get by in retirement. With 62% feeling they are at their worst when handling change, this group is generally conservative when it comes to their money and often shies away from riskier options. Only about 24% of Anchoreds have investment experience. They are not looking forward to retirement, fearing it will be harder than previous life experiences. They are likely to embrace a "better safe than sorry" approach to their third age.

* Pursuers crave change in many areas of life. Yet, they face pressing financial concerns, with many fearing they will not have the money they need to live the life they want during retirement. Nearly half are not planning to leave the workforce at all, with more than one-third fearful they will not be able to afford retirement without working at least part-time. Few Pursuers hold any investments, with only 22% having investment experience and 76% having gone through past financial difficulty. Less than half the members of this group have a full grasp of investment and savings options such as stocks, bonds and money market funds.

The four groups have many differences in how they embrace change and in their investment needs and approaches. But the C.U.R.E. Retirement Study revealed that each group shares common-and surprisingly modest- retirement goals:

* 90% would like to have a steady monthly income

* 88% desire good health insurance

* 87% want enough money to survive

* 86% want to pay bills and continue living the life they are used to.

Few financial institutions place more emphasis on relationships and loyalty than credit unions. That loyalty stems from really knowing their members and their needs. Credit unions of all sizes have a tremendous opportunity to step forward and to protect their position as financial stewards for their members as they prepare for and enter retirement. And if they don't, members will be compelled to look for this guidance elsewhere.

Knowing what sets Venturers, Adapters, Anchoreds and Pursuers apart can help credit unions in their effort to retain life-long members. If credit unions provide retirement financial planning at the precise time when their members most need it, they can ensure that the Boomer retirement crisis does not become a credit union membership crisis.

Dan Zaffuto is Vice President at SecurePath by Transamerica. He can be reached at 800-211-8491 or dan.zaffuto@transamerica.com.

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