How Can Credit Unions Modernize Retirement Planning?
If you are looking for members with high deposit value and aren't rate sensitive when borrowing, lthen you should be prioritizing your retiring members. That's the message that our sponsored guest Rhian Horgan, President and CEO, Silvur, wants you to hear. In this episode, we discuss why retirees are often underserved and provide a contemporary blueprint for helping your members retire with peace of mind.
This episode, hosted by Joshua Barclay and Becky Reed, is a guide on transforming the financial futures of retirees, ensuring a community where every member can look forward to their golden years with confidence and peace of mind.
A HUGE thanks to our sponsor, Silvur.
Silvur is the retirement engagement solution for Americans 50+. Leading credit unions use Silvur to retain direct deposit relationships lost at retirement (up to 80%) and reach 98% of members not served by wealth management. Support your 50+ members, reduce asset flight, and capture the $70T retirement wallet. Visit Silvur.com to learn more.
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FULL TRANSCRIPT
[Joshua Barclay] Today, we're talking about how credit unions can help members successfully plan for retirement, how to gain liquidity from your oldest members, designing technology that's easy for every age group to use, and more.
Welcome to Grow Your Credit Union, the podcast where credit union leaders gather, learn, and grow. I am your host, Joshua Barclay. And with me is my co-hostess with the mostest, Becky Reed. Becky, what's up?
[Becky Reed] Howdy y'all.
[Joshua Barclay] Before we dive into today's show, I want to mention our sponsor, Silvur. You should know them by now. They are the retirement engagement solution for all Americans ages 50 and up. Stick around to learn how Silvur can help your members plan for retirement later in the show. Becky, you know what's coming up?
NACUSO. And I wanted to ask you about this because it's a very exciting conference. We have Ronaldo Hardy as the new President and CEO. And it seems like he's got a lot of tricks up his sleeve this year. So I wanted to ask you, what is one thing that you are most excited about for this year's NACUSO event?
[Becky Reed] There are so many things I'm excited about, but most notably, just the energy that surrounds the whole NACUSO conference. My favorite event at NACUSO is the Next Big Idea. And that is where a bunch of new entrants, and actually Silvur participated in the Next Big Idea a couple of years ago at NACUSO, it's kind of like a Shark Tank where new ideas and new companies come in and talk about the next big idea.
And the audience actually gets to vote for the winner. So it's a lot of fun. I think Ronaldo is going to change it up a little bit. It's a very popular part of the NACUSO conference. So he didn't want to take it away, but there are going to be some nuances that are a little bit different this year that'll make it a little more exciting.
[Joshua Barclay] Fun fact, NACUSO was the very first credit union-related conference I ever attended, back in November of 2021 in Las Vegas. And I had a great time. Becky, let's kick things off. I'd like to welcome today's guest. It's our first sponsored guest on the show.
We have with us the founder and CEO of Silvur, Rhian Horgan. Rhian, thank you so much for joining us on the show.
[Rhian Horgan] Josh, it's great to be here. I didn't realize that NACUSO 2021 was your first credit union conference. It was also my first credit union conference.
Segment 1
[Joshua Barclay] Retirement looks different for everybody, but the planning around it is changing. The pension system that provided a stable retirement is gone. My aunt enjoys that today. I love her. I hope she has fun with it. Not going to be around for me. Healthcare costs are skyrocketing. Social Security could be gone any day now.
Homeownership, have you seen the prices of houses in Salt Lake City? The point I'm trying to make here, Ian, is the retirement planning advice of yesteryears no longer holds water in today's economic environment. Credit unions need to make adjustments and modernize retirement planning for their members.
Rhian, what does the modern retirement planning blueprint look like?
[Rhian Horgan] So, Josh, I think to answer that, it's helpful to understand how we got to where we are today. So let's take a little bit of a step back in time. In 1935, during the Great Depression, Social Security was created. In 1965, Medicare was created. For decades, the American public was used to the government and their employers providing them with a secure retirement.
Remember, employers along that entire way were also providing them with pensions. But then something changed. So in 1978, 401(k)s were created. Employers said, we don't want this responsibility anymore. So what they did was they sold their pension liabilities to insurance companies and said, we're getting out of managing retirement.
When Medicare was first created, the deductible that you paid for Part A was $40 annually. $40 back in 1965 is actually $160. It's $60 today, but the deductible for Medicare is not $160, it's $1,600. Social security, they will not be able to fully pay benefits starting in 2034. So 10 years from now, social security won't be fully solvent.
So as a result, your members are deeply afraid of running out of money in retirement. So what does that mean for credit unions and members? You asked, Josh, about the blueprint. Well, the first thing I would say is it's not as simple as just checking the box and saying I have a wealth management team.
And I think a lot of folks start there and say, well, I'm going to get a wealth management team. We can feel good that we're doing the right thing for our members. When I talk with most credit unions that have wealth management, and by the way, most credit unions don't, but for those that do, only two to three percent of their members are being served by the wealth management team.
So that means you're only actually serving a tiny percent of your membership, but every single one of your members is retiring. Ninety-nine percent of them are enrolling in Social Security and Medicare. And so this means that credit unions have to do more. If you really want to make sure that your members aren't aging into poverty, then you've got to guide them through these two programs.
Think about the work that most credit unions do to help members understand student loans. Or to help understand a mortgage, those two programs actually pretty easy to understand relative to social security and Medicare social security. I would just say is it's the only source of lifetime income that members have.
It has inflation production for life. It's a real amount of money. So $2,000 a month, which is the average social security benefit adds up to $500,000 over the course of retirement. How many members at your credit union have saved $500,000 for retirement? Not a lot. And so, if you really want to help members, actually Social Security is the number one place to go.
Now, I think it's both guiding them through the decision, it's being there to capture the 25-year direct deposit opportunity, but it's also advocating for members. And this is where I think AARP is eating credit unions' lunch. I get emails three times a week from AARP telling me that they are fighting for Rhian, who they think is 50, but I'm not quite 50 yet, advocating for me in Washington, telling my congressman that healthcare costs are too high, telling my congresswoman that they need to fix social security.
And over time, the American consumer believes that brands like AARP are standing up for them. When we think about advocacy in the credit union space, this is actually where we really need credit unions stepping in, because we need to advocate for members' retirement. We have to find a bipartisan solution to make it solvent, because if your members aren't getting that $2,000 a month paycheck in retirement, they will be aging into poverty.
There is no other backstop. The employers are not there. Like, it has to be Social Security.
[Joshua Barclay] Becky, is there anything you'd like to add on this?
[Becky Reed] I think Rhian made an excellent point, and I have to honestly say, Rheanne, I have never thought about credit unions advocating on the Hill for members who are looking at retiring. I think that is a fantastic idea, and that's absolutely something we should look at as an industry.
Segment 2
[Joshua Barclay] According to an article on CBS News, people over the age of 55 control over $97.3 trillion, or more than 10 times the wealth held by people under 40. Now, with the potential for significant deposits and investments from the 55 and older demographic, it's crucial to explore how credit unions can innovate and adjust their offerings to be more inclusive and supportive of their older members' financial well-being.
With liquidity top of mind, Rhian, are credit unions doing enough to serve their aging members, or is there some untapped opportunity here?
[Rhian Horgan] Josh, 83 percent of the wealth in America is held by Americans over the age of 50. The false narrative I often hear is that, Oh, these members' borrowing days are over, so they're not, like, interesting anymore from a financial perspective. And I would counter that and say that these are actually your most valuable members from a financial perspective.
It's the member segment with the highest deposit value, so if you're looking for liquidity to lend out to younger members, it is much cheaper to get that liquidity from these members rather than going and borrowing. In a world where rates have gone up and a large group of members are very rate sensitive, this group of members is actually not as rate sensitive, but they still want to borrow.
So if I'm retiring today and I've always wanted to buy an RV, I'm going to buy my RV. I'm just not going to get the 40-footer. I'm going to get the 24-foot Minnie Winnie. But by the way, I'm not going to actually buy it, even though I have the cash for us, because that would have huge tax implications.
And so I would rather be a cashflow borrower and I want to borrow against my social security. I'm going to do home improvement. I'm going to buy that car that I always wanted to buy. And then, by the way, let's not forget the like low-hanging fruit that's probably the most valuable thing of all, which is a 25-year direct deposit stream from Social Security.
What's fascinating is that when I ask most credit unions what they're doing to capture direct deposit from Social Security, I get a blank look back. And it's because the team has been trained to think about capturing W-2 deposits. So today our Silvur data shows that credit unions only have two percent of the member wallet.
They're about to consolidate their balance sheet from eight financial institutions to two, and the question is, are you going to remain as their FI or are you going to be consolidated out? This is the generation that actually solves your liquidity issue. They have the deposits that you can lend out to a younger generation.
I know that many credit unions want younger members, but you can't actually fund this goal without having older members.
[Joshua Barclay] And that is a very good point because when we're looking at the most talked about topics in the space right now, it's always, how do we get Gen Z? How do we win over the younger generation? But as you're saying here, Rhiann, the money is actually in the hands of the older generation.
Becky, are credit unions sleeping on the liquidity potential of older members and directing too much attention maybe to the younger people?
[Becky Reed] I think, to some degree, yes, and I'm going to use an analogy that I recently posted on LinkedIn, and for those of you that know me well, I am a huge Star Trek fan, and I was reading an article around the whole Star Trek franchise, and it was interviewing the producer of the recent television series, uh, that have kind of spun off from the Star Trek franchise, and what he was saying reminded me of credit unions because credit unions today, and I've mentioned this before, serve five different generations.
Oftentimes we as a credit union take for granted the deposits that we have from the older generations that frankly do not move. Rhianna's right. They are not as rate sensitive as the younger members' deposits are. They don't shop for rate. They have their portfolio and they have a place they want to park their liquid after-tax savings and they put it at their credit union and that's where they leave it.
What the producer of the Star Trek television series was saying, the recent producer, they were asking him, how do you attract the younger generations to this franchise, which is 60 years old. And what he said is you can't desert the fan base. You have to cater to the ones who brought you to the dance.
If you don't do that, you're not going to attract new fans. I learned about Star Trek because my dad watched Star Trek. My son knows about Star Trek because I love Star Trek. His children may watch Star Trek because my dad, who is 82 years old, watched Star Trek. And so that I think is the lesson for credit unions is that we can't forget who brought us to the dance.
We actually do quite a good job serving people over the age of 50, and we should double down on making those folks happy. Because at the end of the day, when there is a wealth transfer, we want their children to keep those deposits at our credit union.
Segment 3
[Joshua Barclay] Touching back on our first segment about retirement. I want to talk about a Fidelity report that states that on average, Americans have saved just 78 percent of their retirement needs and over half of American families will likely struggle to cover essential expenses. Becky, what are some of the most common challenges you've seen when it comes to credit unions helping members navigate their retirement planning?
[Becky Reed] When people come in or they call on the phone and they say they're about ready to retire, the top three things that concern them are, am I going to have enough money? How do I know how much to take out of social security, IRAs, you know, just that mix of things that to, in order to make my money last and have the best tax benefit that I can, and healthcare.
There are technology solutions that can put the ideas and the tools in the members' hands that they can use today. And I'm going to tell you that it is a mistake to think that older folks do not use technology. My parents who are 80 plus years old and all of you on this podcast right now, have parents that I promise use an iPhone or use the internet in some way.
And so it's a mistake to think that technology solutions aren't popular with older generations.
[Joshua Barclay] We've talked about these challenges and hurdles when it comes to retirement planning. How does Silvur help credit union members successfully plan for retirement?
[Rhian Horgan] So Josh, I think a credit union member said it best when they said that Silvur is retirement simplified. Our goal is to be the one place a member can come to navigate their full retirement picture, their health, and their wealth, everything in one place. Leading with a credit union mission, lead with education rather than product sales.
Our platform at Silvur is eally built around a couple of tenets. The first is to deliver a personalized experience to members. So Becky, you talk about technology that we're all using. So I think about Netflix, you watch Star Trek last night, you come back in, they're going to tell you, keep on watching.
People like you love that third episode, come back in and watch it again. And by the way, if you like Star Trek, here's another show that you like. We do the same thing when it comes to retirement education, which is it's a place for members to come back to. This is a, unfortunately, a 10-year-plus journey for members as they're doing the upfront education.
Education and research and then it's ongoing after that. They need a place that will allow them to adjust to changes in their lives. They may have planned to retire at 62, but they lost their job at 57 and can't get back into the job market. They might have lost a spouse early. They might have gotten divorced.
They might have health issues. Retirement is not this like single straight line. It is a constant evolution. It's also personalized based on fact patterns. So for example, we work with a number of credit unions that have a lot of educators as members. So one of those examples is Mission Federal in the state of California, teachers don't pay into social security.
Actually figuring out social security for Mission Fed members is a little more complicated because depending on how long they worked in education, they may or may not be eligible for social security. They may or may not be eligible for spousal benefits. We know that, and we can answer those questions.
Number two is make it accessible. So the average member using the platform today is 59 years old. I'm really excited that one of the data points that makes me feel comfortable that we're like really reaching folks is that we have a 50, 50 split between men and women. So we have created an experience that feels really welcoming.
What's wild though, is that when you go into the dataset, what we see is that the women who are using our platform are two times more likely than the men to be single, widowed, or divorced. And that's not because they're 85 and their spouse has died. These women are in their fifties and their sole decision-makers.
These women, 80 percent of them fire their financial advisor when their partner dies. So these women are making decisions for themselves and they're coming to the credit union to get that guidance. The last thing I would say is they are engaged. And this is like, if you're a CMO listening today, the one thing I would just say for you is that I think what, for a younger generation, the question is always like, how can we grab their attention?
Their attention span is really short. Like how do we engage them and retain them? What's wild when you, when it comes to retirement is that because folks have paid so much into these systems, The result here is that members are really engaged. Last month was Women's History Month, and we hosted a couple of webinars for our partners on social security for women.
And one of our partners had 300 members sign up for the webinar after one email that went out, one email, 300 members signed up. Those 300 members submitted a hundred questions. And these were not basic questions. These were very specific about my fact pattern type of questions. So we answer those questions on the webinar.
But even more importantly, those questions are handed back to the credit union so that the credit union teams can reach out, whether it's the wealth management team, whether it's the branch team to really make sure the member is getting the answers that they need to help them navigate their retirement.
For those that are maybe a little bit younger and you're trying to figure out like how complicated can it really be. We had a member at Mission Fed recently who said to me, you know, I'm a patent attorney and my husband is a VP at a large multinational corporation. So we're not dummies. And she said, yet I have learned so much from Silvur's information and tools.
And I think one of the things that's fascinating and to think about is that your members may be really savvy and smart and whatever the business is that they run or the job that they have, but they are not experts at navigating Medicare and they are not experts at social security. So you're asking them to make very complicated decisions about topics that they don't know a lot about.
[Joshua Barclay] Let's take the plane and let's try to land it. Let's walk through a scenario and I'll use myself as an example, okay? I want to plan for retirement because I want the sailboat. I want the talking parrot on my shoulder on a beach in Florida with Jimmy Buffett playing in the background.
You know, I want that tropical retirement fantasy. I go into my credit union. They tell me about Silvur and they say, Hey, I know you want a talking parrot and you want to live on the beach in retirement, check Silvur out. Now, what makes this app so personalized? Do I put all my information in it? And then it kind of guides me through my financial life.
Is it embedded into my accounts? So you're actually looking at my money and where I'm at, at a certain point in time, walk me through what it looks like in my day-to-day life.
[Rhian Horgan] So the first thing is we are not a standalone app. And I think that's important to know because if you're thinking about engaging a younger generation, it might make sense to be co-branding a product with a tech company so that you get the halo effect of like their brand plus your brand together.
For this age demographic, they really trust the credit union. So we are either embedded in the credit union app. So we have integrations with Alchemy, Jack Henry, and more, or we're just a standalone custom website that we can build in 24 hours for our credit union partners. We know that many credit unions have long backlogs on integration work, and so we want to make it really easy for you to spin up.
So that's the first thing. Um, the second thing is, you were asking about like, how do we deliver personalization? Well, we need data to deliver personalization. Again, this is what's interesting about this age demographic. You, You think about grabbing the data you need for a 22-year-old. All you really need to do is connect into their credit union account and you see everything.
You get to this age group and 98 percent of the wealth is not held at the credit union. So actually, the credit union data is not so helpful because you don't have the money. So what we do is we ask the member to give us some information about them demographically. So we understand marital status, gender, when they want to retire, what they've been earning.
And then we pair that with data about their savings alongside the 000 other data points around social security, Medicare, taxes, all of that. At the end of the day, we used to both personalize the education for members, but we also have a set of tools and calculators that answer the members. Number one question, which is have I saved enough for retirement?
And we deliver that through a retirement score. Think about the retirement score as the FICO. for retirement. Whether I have a 650, a 700, or 800 FICO does not tell me whether I can be a parrot head and live in Florida and enjoy my retirement. But what our retirement score does tell you is whether your savings are going to last 85 or 90.
And then by the way, I know you love Florida, but actually, you might be better off moving to Tennessee because the taxes are as low and the healthcare costs are much lower.
[Joshua Barclay] I love everything that you just said except for moving to Tennessee instead of Florida, Rhiann.
[Rhian Horgan] I'll tell you, Josh, the savvy retirees are doing that. They're realizing that they can add seven or eight years to the longevity of their money by living in Nashville rather than living in Florida. Just, just saying.
Segment 4
[Joshua Barclay] The World Health Organization predicts that the global population aged 60 and over will double by the year 2050. Given these trends, it's essential for credit unions to prioritize digital inclusivity for their aging membership. This means embracing intuitive UI/UX to ensure easy access and usability for all.
Rhian, you are the CEO of a software company that serves older generations. So you are at the forefront of addressing these challenges in some ways. Could you share the insights and strategies Silvur has developed for creating digital experiences that are accessible and intuitive for aging users?
[Rhian Horgan] In the early days of our company, one of the biggest insights I gained was that there was a tremendous amount of bias in the market around how quote unquote, older Americans engage with technology. So the first thing I would just think about is that there is this big presumption that if you're over the age of 50, you don't know how to use technology.
But if we think about it, modern technology was built by boomers. There's another generation younger than them that's continued to build on it, but this is where it all started. I often hear people say, and when even on this conversation today, we were talking about our grandparents and we talk about people that are 80.
Our platform is built for people that are in their 50s and 60s and 70s, folks who are making these decisions, it's probably many of you in the executive suite at your credit union. This is the platform that you need to navigate your own retirement. The split right now between Boomers and Gen X is actually age 59.
So half of Gen X is above the age of 50 already. So this is about Generation X. It's about baby boomers. What do Gen X and boomers do to navigate technology differently? Think back to the 80s and think about interacting with a desktop for the first time. Everything was very linear. And you were very afraid of something going wrong.
Remember when like the system crashed and there was like a reboot? Like I can just, I can hear that ringing and that noise in my head right now. So one of the fascinating things that we've seen when it comes to design patterns is that boomers are in some ways almost like scarred from that early desktop experience.
And so they're much more cautious in how they interact with screens. So the design pattern I would flag there is that we've moved in a lot of technology UX to A swipe left, swipe right pattern, which suggests there's only one direction that you're moving when you're interacting with that screen. And that feels high risk for a boomer because if they feel like they can't go backwards, they feel like they're kind of back in the eighties with that desktop.
One of the small things we've done in our experience is that we use the Airbnb plus minus buttons to connote that. You can play around with this, with this assumption, like, do I wanna retire at 62 or 63? And by the way, women in their fifties and sixties are the most successful hosts on Airbnb. So they're in Airbnb all the time.
They know how to use that pattern. And so that is a pattern that they're really comfortable with. The second thing that we know is that high trust decisions don't happen online. This age demographic is on Google. They're on Facebook. They're doing their research online. But they are not going to purchase a lot of these high stake products online.
So there's a reason that they research Medicare online, but they call an agent to buy the policy. Or they research rates online, but they go into their credit union to actually purchase the CD. If these transactions were 1 types of transactions, they might do it online. But that is not what these are.
And that I think goes to my third point, which is trust is paramount. We in the industry have to figure out how do you build digital experiences that deliver trust. And that actually, Josh, is one of the reasons we're not a standalone app. We know that being a standalone app, we won't be as trustworthy as being part of the credit union.
And so we have chosen to white label all of our software so that it's the credit union brand that's front and center, because we know the member will be much more likely to make decisions and buy the financial products and services with the credit union. If our service is embedded within us, we do a ton of user research.
And I think the consistent piece of feedback that we get, and I heard this recently from another member from Michigan state was that they were, they're looking for a one-stop location for retirement planning. They are tired of having to go to five different places to put this jigsaw puzzle together.
And again, this is where digital has a huge advantage, which is we can pull it together. So lean on your strengths, build the place that members can come to get the answers to all their questions, and then bring them into the branch to talk to a financial planner, bring them into the branch to do direct deposit for social security, bring them into the branch You know, to buy a Medicare policy, like that is how you design a, like a member-centric solution for a generation that has huge decisions to make that require trust.
[Joshua Barclay] Becky, I want to hear your take on this.
[Becky Reed] Well, again, I'm gonna go back to, I think it's a mistake to believe that older generations don't interact with technology. To Rhian’s point, they might utilize it differently. If you've ever seen a two-year-old use an iPad, you understand that being a digitally native user is quite different than being somebody who started out with a desktop or dial-up or a Palm Pilot.
I think that user experience and trust is paramount. And so I reiterate what Rheanne says about being that trusted financial advisor for the member. I call that being the doctor. Actually diagnosing the problem and being that subject matter expert that is able to provide the tools and the solutions that members need.
[Joshua Barclay] That brings us to the end of the show. Rhian, do you have any plugs or final thoughts for our listeners?
[Rhian Horgan] So I want to maybe end with member impact. The credit union industry has a lot of members that have come through indirect channels like car loans and they've come in through single products. And you know, the goal of the credit union is how do you help the members see everything that you can do?
A NASA Federal Credit Union member shared with us that they saw Silvur as this unexpected bonus of being a member of the credit union. Your member, much to our marketing team's disappointment, always still thinks about you, oftentimes by the first product they bought or the first product they interacted with you on.
And I think we have this opportunity in this particular moment of time to, like, get members to think more broadly about how the credit union can serve you. In a recent study we did, 92 percent of members said that Silvur was adding value to their membership. You're adding value to their membership at a time when they're in a moment of need, at a moment that they're about to make major decisions.
They control 80 percent of the household wealth in America, and they're the first generation to retire without a pension. This has been a major experiment. And we're now on the back side of this experiment. The members need us, right? They need the credit union to step in because employers have left members high and dry.
And this is what credit unions do really well. Your bread and butter is financial wellness for all. 99 percent of your members are going to be enrolling in social security and Medicare, but most credit unions today don't guide their members through these decisions.
[Joshua Barclay] I just heard you have created something that is going to help me live out my Floridian parrot head fantasy. So thank you and thank you for what you're doing because it's obviously creating an impact. And when I hit those sandy beaches in Florida, I'm going to thank you. If people want to get in touch with you, how can they go about doing so?
[Rhian Horgan] All right, two easy ways to reach me. The first is on my email and it's rhian@silvur.com. Or you can just go onto our website. It's www.silvur.com, and you could learn more about us and pick a time to have a conversation.
[Joshua Barclay] Becky final plugs, final thoughts hit us with it.
[Becky Reed] I want to say that who knew retirement could be so fascinating. I have really thoroughly enjoyed the information that Rhian’s provided. I've learned something. I think it's really a fascinating topic, so I hope our listeners really enjoy it too. The last thing I'll say is credit unions were created to serve the underserved.
Let's not forget that the underserved might be right under our very nose and already be members and we're not providing the services that they need.
[Joshua Barclay] Thank you, Rhian. And another huge thanks to Silvur for sponsoring the show. We've talked a lot today about retirement and how Silvur exists to help your members thrive. So do your members a favor and go see what they have to offer at Silvur. com. And a special thanks goes out to our listeners.
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Thank you for listening and we will see you next time. Take care and bye bye.