New Banking Opportunities For The Generation That Won’t Go Away
OBSERVATIONS FROM THE FINTECH SNARK TANK
In the past few weeks, two contacts of mine announced new jobs on LinkedIn. Nothing unusual about that, right? Except that both of them had announced their retirements in the past two months. As one of them told me, “I failed at retirement.”
The Rise of the ReBoomers
These examples are a sign of a much bigger trend. Baby boomers aren’t “retiring” in a traditional sense. They’re downshifting to become gig workers, have side hustles, and become influencers. They don’t call it any of those things, though—they call it “consulting.”
Or, they’re coming back—full time and full force. One of my contacts is coming back to be the CEO of a $30 billion bank and the other as the Chief Revenue Officer of a startup fintech—neither of which are “no-stress jobs.”
It’s not surprising. Boomers have (or had) jobs that challenged them mentally and kept them sharp. They can’t give that up.
This down-shifting is creating new needs and demands for financial services providers in terms of cash flow management, tax planning, accounting/invoicing—and all the other things that younger gig economy workers need.
The Elder Financial Abuse Problem
There’s another Baby Boomer need—more for older Boomers than the younger ones—and it’s been around for a while now: elder financial fraud protection.
Comparitech estimates that, in 2023, Americans over the age of 60 incurred more than $38 billion in losses due to financial exploitation—triple the amount they lost in 2022. Tech support scams were the most common type of fraud reported to the FBI’s Internet Crime Complaint Center (IC3).
In 2022, the Financial Crimes Enforcement Network (FinCEN) alerted financial institutions to rising levels of elderly financial exploitation, highlighting new typologies and red flags.
Schemes generally involve the theft of an older adult’s assets, funds or income by a trusted person or the transfer of money to a stranger or imposter for a promised benefit or good that is never realized.The scams frequently involve fraudsters who are located outside the United States with no known relationship to their victims.
The Senior Financial Management Opportunity
Over the next 10 to 20 years ReBoomers’ needs will shift from managing gig work—I mean “consulting”—to fraud protection, wealth transfer, and expense management. And they’ll need help from their adult children.
As if it wasn’t hard enough to manage one’s own financial life, a new study from Cornerstone Advisors found that one in 10 Americans with parents (or a parent) over the age of 60 do all or most of the work to manage their parent(s)’ financial life, with another 28% helping from time to time.
The number of consumers involved in the management their parents’ financial lives is poised to explode. The Cornerstone study found that one in five adults with parents over 60 anticipate that, in five years, someone will need to take over the management of their parent(s)’ financial life. In 10 years, that percentage grows to almost 40%.
In fact, een most baby boomers expect they’ll need help with their finances—they’re just not sure when.
Among consumers with parents in their 60s or older, roughly 80% are interested in Senior Financial Management: Digital apps that help them prevent fraud against their parents and help manage their parents’ financial lives.
Specifically, they’re looking for features like alerts for withdrawals, recurring bills and deposits, as well as a fraud protection score and controls for spending limits. Importantly, these consumers say they’re interested in getting these tools from the banks they already do business with.
At an annual fee of $50 for the service, Cornerstone Advisors estimates the revenue potential for Senior Financial Management to be nearly $2 billion per year.
And that doesn’t include residual benefits like capturing wealth transfer opportunities or the elimination or reduction of financial losses from better fraud prevention and protection.
The New Reality in Banking
Gen Xers, Millennials, and Gen Zers aren’t going to like this, but there’s a new reality in financial services: The new emerging generation of banking consumers are Baby Boomers.
It’s the Revenge of the ReBoomers—the generation that won’t go away.
For a free copy of the report, The Boomer-ang Effect: Banks’ $1 Billion Opportunity in Senior Financial Management, click here.
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