There's a powerful scene in the 1989 movie "Dead Poets Society" where an offbeat high school English teacher introduces his students to the concept of "Carpe Diem." If you have seen the movie you know that is Latin for "seize the day." The teacher's goal is to get a group of teenage boys to think independently and not to always follow the crowd.
We bring this up because so much of what banks do these days is commoditized. In short, it is unusual to find a bank that really stands out from the pack. That doesn't mean however, that banks shouldn't seize opportunities. Carpe Diem may be in order and can offer opportunities for banks to differentiate themselves and their brand.
To illustrate our point, consider retirement planning. A good number of community banks offer retirement products, but many could probably do more to promote their financial expertise as they seek to capture and retain more customers. People are not comfortable with financial matters in many cases, so there is often a real need among customers.
As seen in numerous surveys, many Americans have no clue about how much money they'll need to fund a financially secure in their retirement. This disconnect is particularly evident when it comes to how people estimate the cost of health care after they leave the workforce. According to a 2013 study by AARP, almost 67% of respondents have never even tried to figure out how much their health care will cost them in retirement. When asked to give a rough estimate of how much money they might need, over 40% guessed that they would need less than $100K to cover their health costs throughout retirement. Meanwhile, research from Fidelity Investments presents an even bleaker picture. Fidelity's study last year of pre-retirees (ages 55-64) found that nearly half of respondents think they will need only about $50K to pay for their individual health care costs in retirement.
In reality, however, that figure is likely to be significantly higher. Fidelity's most recent Retiree Health Care Cost Estimate found that the average couple could expect to spend more than $220K in health care expenses over the course of their retirement.
Clearly, more people need to understand how much money they will need for health care and how poor planning today could seriously derail their retirement. People need more information. This presents a prime opportunity for banks to get a foot in the door with customers in their 40s and 50s who could really benefit from this type of guidance. You can help these customers with better planning for their twilight years, offer them targeted savings accounts and make a meaningful difference in their financial security.
It is always a challenge to capture new clients, but you might start by letting customers know you're available to help them with their retirement and health care planning needs. Consider offering specialized savings accounts, focus your customer facing teams on solving client issues and over time you are likely to develop a more consistent fee-based revenue stream for your bank. The good news is that you'll also be helping customers fix a real problem as you drive ancillary business in the process. It all starts with trying to be a little bit different, so get out there and Carpe Diem.