Pre-Retirees: An Untapped Opportunity for Financial Institutions

Study after study suggests that most Americans aren’t well-prepared for retirement – even if it’s just a few years away.

One recent survey of U.S. households found that only 18% of older workers feel they’re on track with financial planning, and only 26% report they have enough money saved. This is a part of a long trend, but the COVID-19 pandemic and its impact on inflation and interest rates have only led to more uncertainly and stress for pre-retirees.

It’s been called a “looming crisis,” but it’s also a vital opportunity for banks and credit unions to foster financial wellness and elevate their brand.

Reaching Pre-Retirees Is a Must

Older workers have long been underserved by investment firms and national banks in their pursuit of high-net-worth individuals and commercial clients. Despite their pressing money concerns, pre-retirees represent a large and lucrative demographic. Consider the following statistics:

Meanwhile, because of pre-retirees’ pressing concerns, community financial institutions with a tradition of personalized service are well positioned to cater to this segment. Even without factoring in formal advisory services and investment products, banks and credit unions can become trusted financial partners to this demographic. They are able to provide support and advice on a broad range of financial wellness topics and offer mutually beneficial solutions like home equity loans and flexible IRAs.

But financial institutions continue to leave cash on the table. In one study, only 20% of pre-retirees said their financial institution helps them to save for retirement – while 82% said this would be of value to them.

Why the disconnect? A lot of it comes down to communication. Financial institutions that can effectively reach this demographic with a holistic, service-oriented message will gain a competitive advantage and lay a strong foundation for long-term banking and lending relationships.

Tips For Marketing to Pre-Retirees

“[Provide] advice that doesn’t come off like trying to sell something. I want to trust you before I give you my money.”

That’s what one survey respondent said when asked what financial institutions should do to help consumers with retirement. Happily, most marketing professionals in the finance vertical have come to understand the value of educational content and meaningful dialogue over narrow sales pitches. For a segment that is experiencing extra uncertainty and anxiety, it’s all the more important to lead with empathy and dependable advice.

Here are some other insights we’ve garnered over 15 years of helping community banks and credit unions to forge meaningful connections with pre-retirees:

  1. Create a Digital Retirement Resource: Building a one-stop retirement shop online is a smart way to optimize local search visibility, demonstrate expertise, and retain interest. Provide robust, up-to-date information on topics that are important to pre-retirees even when there isn’t a product tie-in. Credibility beats convertibility.
  2. Diversify Your Channels: The perception that older professionals aren’t mobile-friendly is aging quickly: 83% of U.S. adults 50 to 64 now have a smartphone. Still, it’s smart to deploy retirement-related promotions and content across a variety of media, including email, social networks, local newspapers, radio, and in-branch collateral.
  3. Leverage the Workplace: With employers playing a significant role in retirement awareness and planning as the source of 401(k) plans, workplaces are a promising venue for tailored marketing efforts. Banks and credit unions with established business relationships can offer exclusive planning services and perks to those employees.
  4. Don’t Neglect Debt: Research shows that a large proportion of pre-retirees cite reducing debt as a “conflicting priority” hindering their savings goals. Many don’t realize that banks and credit unions can provide many solutions for managing and consolidating debt – like low-interest loans that tap into their home equity.
  5. Above All – Keep It Simple: Every industry has its jargon, but banking lingo can be especially brain-numbing for the typical consumer. Focus on end goals rather than product features, and use bite-sized educational modules to demystify complex concepts and define commonly conflated terms. Give your prospects the gift of clarity.

Here at LIGHTSTREAM, we’ve specialized in empowering banks and credit unions to connect with their communities. Interested in learning more about how we can help you develop an innovative strategy for attracting and retaining pre-retirees? Get in touch with our team today!