New banking options for the generation that will not disappear

OBSERVATIONS FROM THE FINTECH SNARK TANK

In recent weeks, two of my contacts have announced new vacancies on LinkedIn. There’s nothing unusual about that, right? Except they had both announced their retirements in the past two months. As one of them said to me, “I failed when I retired.”

The rise of the ReBoomers

These examples are a sign of a much larger trend. Baby boomers are not retiring in the traditional sense. They downshift to become gig workers, have side jobs and become influencers. However, they don’t call it any of these things at all; they call it ‘consulting’.

Or they’ll come back – full time and in full force. One of my contacts returns as CEO of a $30 billion bank and the other as 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 downward shift is creating new needs and demands for financial services providers around cash flow management, tax planning, accounting/invoicing – and all the other things younger gig economy workers need.

The problem of elder financial abuse

There is another need for baby boomers – more for older boomers than younger ones – and it has been around for a while: financial fraud protection for the elderly.

Comparable estimates that Americans over the age of 60 will have suffered more than $38 billion in losses due to financial exploitation in 2023 – triple the amount in 2022. Tech support scams were the most common type of fraud reported to the Internet Crime Complaint Center the FBI (IC3).

In 2022, the Financial Crimes Enforcement Network (FinCEN) warned financial institutions about the increasing financial exploitation of the elderly, highlighting new typologies and red flags.

Such schemes typically involve the theft of an older adult’s assets, money, or income by a trusted person, or the transfer of money to a stranger or impostor for a promised benefit or good that never materializes. The scams often involve fraudsters located outside the United States. States with no known relationship to their victims.

The opportunity for senior financial management

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 will need help from their adult children.

As if managing your own financial life isn’t hard enough, here’s a new one study by Cornerstone Advisors found that one in ten Americans with parents (or a parent) over age 60 do all or most of the work managing their parent(s)’ financial lives, while another 28% help out occasionally .

The number of consumers involved in managing their parents’ financial lives is about to explode. The Cornerstone research shows that one in five adults with parents over 60 expect someone will have to take over the management of their parent(s)’ financial lives within five years. In 10 years, that percentage will grow to almost 40%.

In fact, most baby boomers expect they will need help with their finances; they’re just not sure when.

Among consumers with parents aged 60 or older, approximately 80% are interested in Senior Financial Management: digital apps that help them prevent fraud against their parents and manage their parents’ financial lives.

They’re particularly looking for features like alerts for withdrawals, recurring bills and deposits, as well as a fraud protection score and spending limit controls. Importantly, these consumers say they are interested in getting these tools from the banks they already do business with.

At a $50 annual fee for the service, Cornerstone Advisors estimates the revenue potential for Senior Financial Management at nearly $2 billion per year.

And that doesn’t include residual benefits such as taking advantage of wealth transfer opportunities or eliminating or reducing financial losses through better fraud prevention and protection.

The new reality in banking

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It is the revenge of the ReBoomers: the generation that will not disappear.

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For a free copy of the report, The Boomer Ang Effect: The $1 billion opportunity for banks in senior financial managementclick here.