How Community Banks Can Keep Their Older Depositors...and Add More!

The National Adult Protective Services Association (NAPSA) suggests that the "typical" victim of elder financial abuse is between the ages of 70 and 89, white, female, frail and cognitively impaired. She is trusting of others and may be lonely or isolated, although reports show that there is a very diverse population of victims.

"Elder financial abuse has been called the 'crime of the 21st century,' " said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. "With the present state of the economy, older Americans are at a greater risk than ever of having their financial security threatened. And, for every dollar lost to theft and abuse, there are still more related costs associated with stress and health care and the intervention of social service, investigative and legal entities.

When a depositor gets a sales pitch in their home from an independent mortgage broker the compliance environment that exists in the bank is absent, making them more vulnerable to making a purchase decision that may not be suitable for them.

A bank that spends $250 - $500 to acquire a new customer, while only spending $50 or less to retain their existing customers is not optimizing profits. And if their customer retention program does not recognize the significant difference in needs of particular high value customer segment its can lose its effectiveness.

A bank, by providing an Elder Life Planning program, can build closer relationships with these maturing multi-generational families (aging baby boomers and seniors) in their customer base and communities and ensure a substantial increase in retention value and profitability. Cross selling opportunities for long term care financial products such as insurance, annuities and reverse mortgages are also available to the bank further cement the relationship with customers and produce new revenue streams.

A comprehensive, nationwide eldercare and family caregiver support program can be offered to bank customers, often for less than fifty cents per depositor, per month. Using the services of experienced eldercare professionals any bank or financial institution has the opportunity now to play the lead role in their community as the educator and supportive financial institution for elder care. The cost of the program will be shown to be lower than other most other retention efforts and yet is targeted on the most important customer segment.

The average age of a Wells Fargo Elder Service customer is 85. "They have so much to share with all of us and they have such great need," Anderson said of her clients. "When we talked to our customers and asked 'what keeps you awake at night, the answers were always health and money," she said. What Elder Services does is use money, knowledge and resources to help people manage their health needs and concerns, she said. It's a formula Anderson said could easily be replicated at any size bank so long as the service remains local and personal.

A clear and emerging crisis for maturing customers is the spiraling cost of long term care and the lack of most existing retirement plans to address it. The rules of the game have changed and customers need qualified assistance to deal with the resulting financial implications and decisions. They are seeking a trusted agent to provide easy to use and easy to understand consumer information. They want that information to be unbiased. The aging baby boomers are less trusting than their parents and they do their research, they use the Internet. They are very comfortable using self-help tools.

Important trends (such as recent Medicare and Medicaid changes) are influencing the development and sales of a host of elder care financial products such as: reverse mortgages, long term care insurance, life settlements and annuities. These products create fairly complex financial scenarios for seniors. If applied correctly these solutions can help a senior through a financial crisis. If applied incorrectly they can rob a senior of choices they might want to reserve for their long-term care. The sale of all these products influences the eventual location and value of deposits in local savings and loans. Not being involved with customers on these topics can be dangerous for a bank’s future market share.

Over the past decade, a burgeoning industry of poorly qualified, inexperienced, independent sales reps, agents and brokers has sprung up to fill the void left by banks who continue to sit on the sidelines, let deposits and profits flow out of the bank, while older consumers increasingly become victimized by the growing scandal of financial exploitation.

Wells Fargo has proven the concept of bank based elder service programs for nearly a decade. What the hell are the rest of you bankers waiting for?

Your comments and criticisms about anything published in this blog are welcome and encouraged. Please send them to me at bob@elderlifeplanning.com